Opinion ID: 775962
Heading Depth: 4
Heading Rank: 3

Heading: Industry Recognition

Text: 33 Plaintiff also contends that defendants' own conduct and apparent perceptions support the alleged product market. The complaint alleges that defendants perceive and recognize the relatively low level of cross-elasticity of demand for the services of MPT employees with experience in the oil and petrochemical companies... because they rely primarily on integrated oil and petrochemical industry salary information in setting salary and wages. Compl. ¶ 99. In other words, the very fact that defendants rely on data regarding MPT salaries in the oil and petrochemical industry suggests that this is the relevant market. The complaint further alleges that defendants have gone to considerable lengths to compile the data, spending significant time and effort. Id. ¶¶ 61, 74, 116. Plaintiff argues that it is unlikely that defendants would do this if industry-specific experience did not have a bearing on the wages of MPT employees and, in turn, on plaintiff's alleged product market. 34 The district court rejected this argument, stating that it would lead to the circuitous result that the scope of the relevant product market in any antitrust action challenging salary exchanges would be defined by the scope of the salary exchange itself. Todd, 126 F. Supp. 2d at 325. The district court dismissed this argument too hastily. Industry recognition is well established as a factor that courts consider in defining a market. See Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962). It is significant because we assume that the economic actors usually have accurate perceptions of economic realities. Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 792 F.2d 210, 219 n.4 (D.C. Cir. 1986). In AD/SAT, for example, this Court noted that the litigants themselves considered the electronic transmission of advertisements to be in competition with physical carriers, and used this information in finding that the market included both products. 181 F.3d at 228. Considering facts analogous to the instant case, the court in Ansell Inc. v. Schmid Labs., Inc. noted that the defendant hired a statistics compilation company to develop data on competitors' pricing. 757 F. Supp. 467, 472 (D.N.J. 1991), aff'd w'out opinion, 941 F.2d 1200 (3d Cir. 1991). The court emphasized that the consultant maintains its data separately for sales of latex condoms to U.S. retail outlets, and used this information in finding that this was an economically distinct market segment from the broader market for wholesale distribution of condoms. Id. 9 Such an analysis might be useful in the instant case. For example, defendants would often prepare in advance certain topics for discussion at their meetings. One such question asked whether there [is] any move to consider non-oil companies in the competitor group. Compl. ¶ 93. Discovery regarding how this question was addressed could be instructive with regard to the players' own perception of the relevant market. 35 The complication in this case is that the alleged violation is the information exchange itself, whereas in the above-cited cases the evidence of industry recognition was used as a means to analyze a monopolization claim or proposed merger. As a result, using the evidence in this case creates an appearance of bootstrapping - an aspect seized upon by the district court. This concern, however, does not negate the well-established probative value of defendants' perceptions in defining the market. We therefore decline to exclude evidence of industry recognition from the analysis, while recognizing that this factor alone is not dispositive of market definition in this type of case. It is merely one factor to consider in the subtle, fact-specific inquiry which focuses on the ultimate issue of cross-elasticity and interchangeability. Evidence of industry recognition, therefore, would not save an alleged market that was clearly implausible otherwise. Thus the circuitous result feared by the district court will not always follow. Moreover, the market power inquiry as a whole is but one part of the rule of reason analysis in a Gypsum data exchange case; even defendants with substantial market power will avoid liability unless the exchange meets certain criteria suggesting anticompetitiveness. 36 In sum, plaintiff's complaint alleges a plausible product market. The district court erred by requiring that the different MPT jobs be interchangeable with one another, by rejecting plaintiff's allegation about industry-specific experience on a Rule 12(b)(6) motion to dismiss, and by failing to consider allegations about industry recognition. 37