SW Legal studies in Business

Retailer Failed to Establish that Competitor Had Market Power
Description Appeals court affirmed the dismissal of a claim of antitrust violations. The plaintiff failed to establish that its competitor retailer had damaged either inter-brand or intra-brand competition. The fact that the plaintiff suffered losses is not evidence of illegal market power by its competitor.
Topic Antitrust
Key Words Monopoly; Market Power
C A S E   S U M M A R Y
Facts 42nd sued E Street for monopolization in violation of the Sherman and Clayton Acts. The companies are both retailers in direct competition in Highland Park, a suburb of Chicago. 42nd claims that E Street threatened and coerced manufacturers, also named as defendants, not to do business with 42nd, so it could not obtain certain desired brands. 42nd sued for lost sales and loss of customer goodwill. The trial court dismissed the suit. 42nd appealed.
Decision

Affirmed. The rule of reason analysis requires a plaintiff to show that the alleged restraint has adversely impacted competition in the relevant market. Courts look at the effect on inter-brand and intra-brand competition. 42nd failed to establish that other retailers could not compete with E Street. 42nd failed to establish that E Street had market power. The fact that E Street raised its prices does not mean that competition has been harmed. The key inquiry is whether a defendant has the ability to raise prices without losing business; no evidence was provided on that issue.

Citation 42nd Parallel North v. E Street Denim Co., 286 F.3d 401 (7th Cir., 2002)

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