Opinion ID: 164786
Heading Depth: 3
Heading Rank: 1

Heading: Products of a single manufacturer or brand

Text: 29 In general, a manufacturer's own products do not themselves comprise a relevant product market. 1 ABA Section of Antitrust Law, supra, 527-28. As the Supreme Court stated in du Pont: 30 [W]here there are market alternatives that buyers may readily use for their purposes, illegal monopoly does not exist merely because the product said to be monopolized differs from others. If it were not so, only physically identical products would be a part of the market. 31 351 U.S. at 394, 76 S.Ct. 994. Similarly, we have said that a company does not violate the Sherman Act by virtue of the natural monopoly it holds over its own product. TV Communications Network, Inc. v. Turner Network Television, Inc., 964 F.2d 1022, 1025 (10th Cir.1992) (holding that TNT is not relevant product market for purposes of Sherman Act). Even where brand loyalty is intense, courts reject the argument that a single branded product constitutes a relevant market. Disenos Artisticos E. Industriales, S.A. v. Work, 714 F.Supp. 46, 47-48 (E.D.N.Y.1989) (defining relevant product market as market for high quality decorative giftware, despite intense brand loyalty among some customers for certain brand of porcelain figurine); see also Grappone, Inc. v. Subaru of New England, Inc., 858 F.2d 792, 797 (1st Cir.1988) (Although virtually every seller of a branded product has some customers who especially prefer its product, that fact alone does not show market power (emphasis in original).). 32 Nonetheless, products of a single manufacturer may in rare circumstances constitute a relevant product market. Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 481-82, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). In Eastman Kodak Co. v. Image Technical Services, Inc., the Supreme Court held that the relevant product market must be defined in terms of the choices of products and services available to Kodak equipment owners. Id. Because Kodak equipment owners were locked into Kodak parts and services, Kodak parts and services were not interchangeable with the parts and services of other manufacturers. See id. at 482, 112 S.Ct. 2072. Accordingly, only those companies that serviced Kodak machines comprised the relevant product market. Id. 3 33 The Supreme Court has acknowledged in dicta that the soft drink industry is a prototypical example of an industry in which products are so interchangeable that control over one brand cannot be an illegal monopoly. The Court said that this power that ... soft-drink manufacturers have over their trademarked products is not the power that makes an illegal monopoly. du Pont, 351 U.S. at 393, 76 S.Ct. 994. [T]here are certain differences in the formulae for soft drinks but one can hardly say that each one is an illegal monopoly. Id.; see also Coca-Cola Bottling Co. of Shreveport, Inc. v. Coca-Cola Co., 696 F.Supp. 97, 131 (D.Del.1988) (There can be no serious dispute that Coca-Cola products are in competition with many other soft drinks.); Barq's Inc. v. Barq's Beverages, Inc., 677 F.Supp. 449, 455 (E.D.La.1987) (Based upon the theory of interchangeability, which allows for closely related product substitutes to be considered in the relevant market, the appropriate unit here is all soft drinks. Barq's root beer is merely one soft drink in a market of competing soft drinks.). 34 Accordingly, Pepsi branded beverage products cannot alone comprise a relevant product market. Plaintiffs attempt to avoid this conclusion by offering evidence that consumers are brand loyal to Pepsi branded products. Mr. Davis, one of the grocery store owners in this case, testified that in his experience, people are brand loyal to Pepsi because instead of substituting Coke if they do not find Pepsi on the grocery store shelves they look elsewhere for Pepsi. Brand loyalty of consumers to particular soft drinks is an insufficient basis for concluding that Pepsi constitutes a relevant product market. Plaintiffs have offered no other evidence to show that Pepsi products are not reasonably interchangeable with Coke products or other branded soft drinks. 35 Nor have Plaintiffs offered any evidence pertaining to the specific factors listed by the Supreme Court in Brown Shoe, such as evidence that Pepsi prices are insensitive to price changes in other branded soft drinks. See 370 U.S. at 325, 82 S.Ct. 1502. In short, Plaintiffs have offered no evidence — other than their own testimony pertaining to brand loyalty — to prove that Pepsi branded products constitute a market distinct from other soft drink products.