Opinion ID: 491721
Heading Depth: 2
Heading Rank: 1

Heading: Market Analysis

Text: 46 Lomar argues that the relevant market consists of only two competitors, Lomar and GF. 8 Based on this argument, Lomar apparently contends that any competitive injury to its own business results in an anticompetitive impact on the market as a whole. The flaw in this reasoning was recognized by the District Court: 47 ... Lomar's assertion that it was injured in its attempt to sell the 180 items is simply a way of saying that it lost business and profits which, in turn, shows that competition was injured. The diversion of business and the corresponding loss of profits is a natural consequence of honest and vigorous competition. 48 Lomar II, 627 F.Supp. at 118. That the antitrust laws are not designed to protect individual competitors from the natural consequences of the competitive process is clear. See Rose Confections, Inc. v. Ambrosia Chocolate Co., 816 F.2d 381, 387 n. 3 (8th Cir.1987); see also D.E. Rogers Associates, Inc. v. Gardner-Denver Co., 718 F.2d 1431, 1439 (6th Cir.1983), cert. denied, 467 U.S. 1242, 104 S.Ct. 3513, 82 L.Ed.2d 822 (1984). Moreover, the same axiom applies in markets containing very few or even only two firms. The distinction between injuries to competitors and injuries to competition is therefore crucial; if we fail to recognize the distinction, then the effect of the antitrust laws in the few- or two-firm market is to prohibit all injuries to competitors, and thus to discourage legitimate competition between the small number of firms comprising the market. 49 As this Court previously has observed, analysis of the injury to competition focuses on whether there has been a substantial impairment to the vigor or health of the contest for business, regardless of which competitor wins or loses. Richard Short Oil Co. v. Texaco, Inc., 799 F.2d 415, 420 (8th Cir.1986). Even in a two-firm market, when one of the competitors is eliminated, other factors in the market may indicate that competition is not substantially impaired. For example, if entry barriers to new firms are not significant, the elimination of the competitor may not significantly affect competition as a whole, because a new firm or firms easily can enter the market to take the place of the old one. In such cases, competitive pressure from potential market entrants may still exist, and the departure of the defendant's sole competitor does not necessarily mean that competition is threatened. 50 In Henry, the plaintiff also alleged that the relevant market consisted of only two firms. However, the market in that case involved significant customer loyalty and reliance on the expertise of the existing salesmen, and there was evidence that cross-elasticities of demand for products in related markets was very low. 809 F.2d at 1342. Those factors posed entry barriers to potential competitors, and to some extent insulated the market from external competitive pressure. As a result, the plaintiff's showing of injury to competition occasioned by the plaintiff's demise (as a result of the price discrimination) was sufficient to withstand a motion by the defendant for judgment n.o.v. Id. at 1343. 51 However, these same considerations make it clear that Lomar has not produced sufficient evidence to support a market analysis theory of competitive injury under section 2(a). 9 First, Lomar has attempted to demonstrate below-cost pricing on only four of the 180 items allegedly subject to discriminatory pricing by GF. For the other 176 items, Lomar rests solely on the allegations contained in its pleadings, and on the supposed inferences to be drawn from the evidence on the four items. Through extensive discovery, Lomar had access to pricing and cost information on all 180 items. We do not believe it rational to infer from the evidence submitted on these four items that the pricing of the other 176 was below cost. Hence, if any competitive injury under section 2(a) occurred, it was solely the result of GF's pricing on the four items for which Lomar submitted price/cost comparisons. 52 More significantly, although Lomar characterized the 180 items as mainstay products which together account for a significant part of any specialty food distributor's sales, I App. at 279-80 (emphasis added), the record shows that Lomar's sales increased by more than 20% in 1982, during the pendency of the alleged price discrimination. I App. at 211. Lomar's president still characterizes Lomar as the dominant firm in the relevant market, and Lomar admits that within the relevant geographic market, its sales exceed those of GF. Id. at 211-12; see also IV App. at 12, 56. Finally, Lomar has neither alleged nor submitted evidence to support the inference that its difficulty in selling these four items had any measureable impact on its overall viability as a competitor. A plaintiff's increased sales volume does not inevitably preclude recovery in a Section 2(a) case. See Rose Confections, Inc., 816 F.2d at 387 (citing Utah Pie Co. v. Continental Baking Co., 386 U.S. 685, 702, 87 S.Ct. 1326, 1335, 18 L.Ed.2d 406 (1967)). However, where there is no evidence of a drastically declining price structure, Utah Pie, 386 U.S. at 703, 87 S.Ct. at 1336, or of increasing concentration in the market, see id. at 700, 87 S.Ct. at 1334, an increase in the plaintiff's sales volume is inconsistent with a finding that the defendant's pricing has caused competitive injury, see Borden Co. v. FTC, 381 F.2d 175, 179 & n. 12 (5th Cir.1967). This is especially true where the plaintiff claims to be the defendant's sole competitor. Lomar has pointed to no evidence suggesting the erosion of competition. In these circumstances, we agree with the District Court that, despite ample opportunity, plaintiff has failed to come forward with evidence ... to support its theory that it can show anticompetitive effect through market analysis. Lomar II, 627 F.Supp. at 118-19.