Opinion ID: 3011015
Heading Depth: 2
Heading Rank: 2

Heading: Anticompetitive market effect

Text: Section 1 of the Sherman Act, 15 U.S.C. S 1, prohibits contracts, combinations or conspiracies `in restraint of trade.'  City of Pittsburgh v. West Penn Power Co., 147 F.3d _________________________________________________________________ 2. The District Court erred by incorporating the issue of anticompetitive market effect into its standing analysis, confusing antitrust injury with an element of a claim under section 1 of the Sherman Act, 15 U.S.C. S 1, which prohibits contracts, combinations or conspiracies `in restraint of trade.'  The court's approach may have been the result of the similar antitrust injury label which is applied to the injury component of antitrust standing analysis and to the marketplace harm element under section 1. 9 256, 267 (3d Cir. 1998). To establish a section 1 claim under the rule of reason test,3 plaintiffs must prove, (1) that the defendants contracted, combined, or conspired among each other; (2) that the combination 953 or conspiracy produced adverse, anti-competitive effects within relevant product and geographic markets; (3) that the objects of and the conduct pursuant to that contract or conspiracy were illegal; and (4) that the plaintiffs were injured as a proximate result of that conspiracy. Tunis Bros., 952 F.2d at 722 (citations omitted). The second element may be satisfied in two ways: The plaintiff may satisfy this burden by proving the existence of actual anticompetitive effects, such as reduction of output, increase in price, or deterioration in quality of goods and services. Due to the difficulty of isolating the market effects of the challenged conduct, however, such proof is often impossible to make. _________________________________________________________________ 3. We reject Angelico's assertion (citing Klors, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 212 (1959)) that the hospital defendants' acts should be held illegal per se. Courts follow one of two lines of analysis to assess the validity of section 1 claims. See Arizona v. Maricopa County Med. Soc'y, 457 U.S. 332, 342-47, 102 S. Ct. 2466, 2472-74 (1982). The first, rule of reason analysis, applies in most cases under this section, while the second, per se analysis, applies only to agreements whose nature and necessary effect are so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality. National Soc'y of Prof. Eng'rs v. United States, 435 U.S. 679, 692, 98 S. Ct. 1355, 1365 (1978). Group boycotts or concerted refusals to deal are not always per se violations of the Sherman Act; rather, the analysis turns on the facial effects of the challenged practice. See Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 105 S. Ct. 2613 (1985). Similar cases involving medical professionals have utilized the rule of reason analysis. See Betkerur v. Aulthman Hosp. Ass'n, 78 F.3d 1079, 1088-93 & n. 9 (6th Cir. 1996) (discussing and rejecting application of per se analysis to a doctor's claims under section 1 and citing, in the footnote, Lie v. St. Joseph Hosp., 964 F.2d 567, 570 (6th Cir.1992), and other cases holding that rule of reason analysis is normally applied to claims by physicians in the position of Angelico). We see no reason to depart from this approach. 10 Accordingly, the courts allow proof of the defendant's market power instead. Market power--the ability to raise prices above those that would prevail in a competitive market--is essentially a  `surrogate for detrimental effects.'  Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1367 (3d Cir. 1996) (citations omitted); see also VII Phillip E. Areeda, Antitrust Law: An Analysis of Antitrust Principles and Their Application P 1511, at 429 (1986). Although the District Court considered Angelico's proffered evidence of an actual anticompetitive market effect, we will not address that evidence because it is appropriate that the District Court reconsider it within the legal framework we have outlined.4 This will give the court the opportunity to address Angelico's claim that he need not show actual anticompetitive market effect in this instance because of the Appellees' alleged market power.5 _________________________________________________________________ 4. We note in this regard that Angelico's counsel conceded at oral argument that he did not need further discovery into the element of marketplace harm. We likewise decline the hospital defendants' suggestion that we affirm the District Court's holding on the ground that Angelico failed to properly define or prove the relevant product and geographic markets because the District Court did not address the issue. See Angelico II, 984 F. Supp. at 313 (assuming for the purposes of the limited motion for summary judgment that the relevant product market was cardiothoracic surgical services and that the relevant geographic market was the greater Lehigh Valley consisting of Carbon, Monroe, Lehigh, Northampton and Schuylkill Counties). 5. Moreover, a finding of no anticompetitive market effect would not suffice to dispose of Angelico's claim under section 2 of the Sherman Act. See Mahone v. Addicks Util. Dist., 836 F.2d 921, 939 (5th Cir. 1988) ([P]roving an injury to competition is not an element of a monopolization-based antitrust claim.). It is sufficient to note that it remains for the District Court to further assess these issues at the summary judgment stage. See Brader, 64 F.3d at 876 ([T]he adequacy of a physician's contentions regarding the effect on competition is typically resolved after discovery, either on summary judgment or after trial.). 11