Opinion ID: 164786
Heading Depth: 3
Heading Rank: 2

Heading: Cluster markets

Text: 36 Courts also recognize the existence of cluster markets. A cluster market exists where a seller provides a full line of products or services that create a separate product market consisting of that cluster of products or services. See United States v. Phillipsburg Nat'l Bank & Trust Co., 399 U.S. 350, 360-61, 90 S.Ct. 2035, 26 L.Ed.2d 658 (1970) (holding that products and services offered by full-service banks constituted cluster market); United States v. Grinnell Corp., 384 U.S. 563, 572-73, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966) (holding that central station protective services including automated burglar alarms, automated fire alarms, sprinkler services, and watch signal services constituted cluster market); United States v. Phila. Nat'l Bank, 374 U.S. 321, 356-57, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963) (holding that products and services offered by commercial banks constituted cluster market). 37 A cluster market exists only when the cluster is itself an object of consumer demand. See Westman Comm'n Co. v. Hobart Int'l, Inc., 796 F.2d 1216, 1221 (10th Cir.1986) (rejecting cluster market approach where cluster was not itself the object of consumer demand). In other words, the cluster approach is only appropriate where `the product package is significantly different from, and appeals to buyers on a different basis from, the individual products considered separately.' Id. (quoting JBL Enterprises, Inc. v. Jhirmack Enterprises, Inc., 698 F.2d 1011, 1016-17 (9th Cir.1983)). 38 Plaintiffs argue that even if Pepsi products themselves cannot constitute a relevant product market, Bottling Group distributes a full line of beverage products that together constitute a cluster market over which Bottling Group has monopoly power. Specifically, Plaintiffs point out that Bottling Group distributes approximately 60 Pepsi branded products, approximately 25-30 Dr. Pepper branded products, and other branded apple juices, teas, sport drinks, and water products. In total, Bottling Group distributes approximately 155 branded beverage products. 39 There are two problems with Plaintiffs' argument. First, Plaintiffs have presented no evidence that the 155 different products distributed by Bottling Group together constitute a cluster that is itself the object of consumer demand, as our precedent requires. See Westman, 796 F.2d at 1221. Plaintiffs offer no evidence establishing that the package of grocery products distributed by Bottling Group appeals to grocery stores on a different level than Pepsi, Dr. Pepper, Slice, etc. considered separately. They have not offered evidence, for example, that Plaintiffs' customers enter the store with the intent to purchase both Pepsi and Dr. Pepper together and the absence of one of those products would cause the customer to go to another store to purchase both. Nor have they introduced evidence that grocery stores significantly benefit from purchasing Dr. Pepper products and Pepsi products as a package rather than individually. 40 Second, Plaintiffs do not argue that Bottling Group has monopoly power even if the product market is defined as a cluster market. If a cluster market exists, then presumably that market would include all distributors who provide a similar cluster of soft drink or other beverage products and affiliated services to grocery stores for retail sale in the relevant geographic market. Plaintiffs have come forward with no evidence demonstrating that Bottling Group has monopoly power even in this more narrowly defined product market. 4 Plaintiffs appear to misunderstand the significance of a cluster market — the fact that an entity distributes a number of different products does not of itself give it monopoly power in a cluster market; it merely defines the product(s)/service(s) offered by the distributor as a package and then limits the relevant product market to those entities that can offer a competitive package. 41 Accordingly, the district court did not err in holding that the products exclusively distributed by Bottling Group in the Tulsa area cannot, as a matter of law, constitute a relevant product market. 5