Opinion ID: 436172
Heading Depth: 4
Heading Rank: 2

Heading: Defining a relevant market

Text: 35 The relevant market is defined generally as the area of effective competition. Brown Shoe Co. v. United States, 370 U.S. 294, 324, 82 S.Ct. 1502, 1523, 8 L.Ed.2d 510 (1962). The market must contain both a product dimension (determined by the availability of substitutes to which consumers can turn in response to price increases and other existing or potential producer's ability to expand output), and a geographic dimension (the area in which the product or its reasonably interchangeable substitutes are traded), both of which must be shown to be economically significant. Id. at 324-26, 82 S.Ct. at 1523-25; Hornsby Oil Co. v. Champion Sparkplug Co., 714 F.2d at 1393. Within a broad market, economically significant submarkets can exist that in themselves constitute relevant markets. Brown Shoe Co. v. United States, 370 U.S. at 325 & 336-37, 82 S.Ct. at 1523 & 1529-30 (thus, although the geographic market in some instances may encompass the entire nation, under other circumstances it may be as small as a single metropolitan area). 36 Assuming arguendo that retail shot sales constituted a relevant product for which there are no readily apparent substitutes, the defendants argue and the district court found that Ladsco offered insufficient proof to create a jury question on the relevant geographic boundaries of the shot market. We agree. 37 In determining the area of effective competition in which a product or its reasonably interchangeable substitutes are traded, such economic and physical barriers to expansion as transportation costs, delivery limitations and customer convenience and preference must be considered. Hornsby Oil Co. v. Champion Sparkplug Co., 714 F.2d at 1394. The location and facilities of other producers and distributors are also essential in determining the relevant geographic market. See Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 327, 81 S.Ct. 623, 628, 5 L.Ed.2d 580 (1961). Economically significant geographic barriers limit the ability of sellers outside the market to operate within, and the ability of purchasers to obtain the product from suppliers outside the geographic area. Id. Price data, corroborated by the factors listed above, are perhaps the most probative evidence on the relevance of the given market. 38 If sellers within the area are making price and output decisions protected from the need to take account of sellers outside the area, there is the distinct [geographic] market. If sellers within the market must take account of sellers outside it, either because those sellers are mobile and can easily come into the area to sell, or because buyers are mobile and can easily go outside the area to buy, the market is being defined too narrowly. 39 L. Sullivan, Handbook of the Law of Antitrust, Sec. 19 at 68 (1977). See also II P. Areeda & D. Turner, Antitrust Law, p 522 at 355 ([w]hen prices and price movements in two territories are closely corrollated, a single market definition is strongly indicated).