Opinion ID: 479383
Heading Depth: 2
Heading Rank: 1

Heading: The Relevant Market Requirement

Text: 16 Proof of a relevant market is the threshold for a Sherman Act Sec. 2 claim. The plaintiff must establish the geographic and product market that was monopolized. This proposition has been practically incontrovertible since Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177, 86 S.Ct. 347, 350, 15 L.Ed.2d 247 (1965). See, e.g., American Hoist & Derrick Co. v. Sowa & Sons, 725 F.2d 1350, 1366-67 (Fed.Cir.), cert. denied, 469 U.S. 821, 105 S.Ct. 95, 83 L.Ed.2d 41 (1984); RCM Supply Co. v. Hunter Douglas, Inc., 686 F.2d 1074, 1076 (4th Cir.1982); Photovest Corp. v. Fotomat Corp., 606 F.2d 704, 711-12 (7th Cir.1979), cert. denied, 445 U.S. 917, 100 S.Ct. 1278, 63 L.Ed.2d 601 (1980); Spectrofuge Corp. v. Beckman Instruments, Inc., 575 F.2d 256, 276 (5th Cir.1978), cert. denied, 440 U.S. 939, 99 S.Ct. 1289, 59 L.Ed.2d 499 (1979); FLM Collision Parts, Inc. v. Ford Motor Co., 543 F.2d 1019, 1030 (2d Cir.1976), cert. denied, 429 U.S. 1097, 97 S.Ct. 1116, 51 L.Ed.2d 545 (1977); Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338, 1348 (3d Cir.1975); E.J. Delaney Corp. v. Bonne Bell, Inc., 525 F.2d 296, 305 (10th Cir.1975), cert. denied, 425 U.S. 907, 96 S.Ct. 1501, 47 L.Ed.2d 758 (1976); George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., 508 F.2d 547, 550 (1st Cir.1974), cert. denied, 421 U.S. 1004, 95 S.Ct. 2407, 44 L.Ed.2d 673 (1975); Agrashell, Inc. v. Hammons Products Co., 479 F.2d 269, 286-87 (8th Cir.), cert. denied, 414 U.S. 1022, 94 S.Ct. 445, 38 L.Ed.2d 313 (1973). 9 17 Consul, undaunted by the weight of this authority, claims to have found three theories on which Sec. 2 liability can be rested without reference to a relevant market. In the alternative, Consul proffers the two natural gas fields, Holiday Creek and Greens Creek, as well as all other sources of natural gas from which there is no presently economically feasible alternative means of transportation other than Defendants' pipeline 10 as the geographical limits of a relevant market, and natural gas at the wellhead as the product in question. We are not convinced by either branch of the argument. 18 Consul strenuously urges that there is more than one type of Sec. 2 claim; in fact, it argues, there are at least four types, of which three--leveraging cases, essential facility cases, and market foreclosure cases--are not concerned with market definition. We take no issue with the usefulness of Consul's typology or the aptness of these labels in describing forms of action under the Sherman Act. The fact remains that a relevant market must be proven under any of these theories. This is clear from a reading of the authorities cited by Consul. See, e.g., Otter Tail Power Co. v. United States, 410 U.S. 366, 369, 93 S.Ct. 1022, 1025, 35 L.Ed.2d 359 (1973) (The aggregate of towns in Otter Tail's service area is the geographic market in which Otter Tail competes for the right to serve the towns at retail.). 11 19 As Justice Frankfurter first noted, 12 and as this court recently reasserted, the relevant geographic market is the area in which buyers or sellers of the relevant product effectively compete. See Satellite Television v. Continental Cablevision, 714 F.2d 351, 357 (4th Cir.1983). The formulation approved by this court in RCM Supply is helpful: the geographic market should consist of an area in which the defendants operate and which the plaintiff can reasonably turn to for supplies. 686 F.2d at 1077 (emphasis in original). See Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 327-34, 81 S.Ct. 623, 628-32, 5 L.Ed.2d 580 (1961). The penultimate question, towards which this preliminary inquiry into market definition is directed, is whether the defendant has market power: the ability to raise prices above levels that would exist in a perfectly competitive market. 13 The geographic demarcation should not be too tightly drawn, unless clear evidence exists that potential competitors outside the region are hindered from entering. A market drawn too tightly, either in geographic terms that exclude potential suppliers or in product terms that exclude potential substitutes, creates the illusion of market power where none may exist. See Jayco Systems v. Savin Business Machines Corp., 777 F.2d 306, 319-20 (5th Cir.1985), cert. denied, --- U.S. ----, 107 S.Ct. 73, 93 L.Ed.2d 30 (1986); American Key Corp. v. Cole National Corp., 762 F.2d 1569, 1580-81 (11th Cir.1985); cf. American Football League v. National Football League, 323 F.2d 124, 129-30 (4th Cir.1963) (describing limits on market in terms of the defendant's activity, but viewing that activity broadly to include all locations where the defendant might choose to do business). Such a misleading start in antitrust analysis, always a difficult area for judicial resolution, cf. Standard Oil Co. (California) v. United States, 337 U.S. 293, 322, 69 S.Ct. 1051, 1063, 93 L.Ed.2d 1371 (1948) (Jackson, J., dissenting) (noting the difficulty raised by economic problems presented for judicial action in Clayton Act cases), makes accurate determination of the ultimate question--whether the antitrust laws have been violated--impossible.