Basic Antitrust Concepts and Principles
| Date | 01 February 2010 |
CHAPTER
II
BASIC
ANTITRUST
CONCEPTS
AND
PRINCIPLES
A.
Interstate
Commerce
The
federal
antitrust
statutes,
by
their
terms,
apply
only
to
“trade
or
commerce
among
the
several
States,
or
with
foreign
nations.’
In
addition,
because
the
antitrust
laws
were
enacted
pursuant
to
the
congressional
constitutional
power
over
interstate
and
foreign
commerce,
a
federal
court lacks
subject
matter
jurisdiction
over
antitrust
cases
absent
the
requisite
effect
on
interstate
or
foreign
commerce.
The
interstate-commerce
requirement
may
be
satisfied
by
showing
that
the
challenged conduct
directly
interferes
with
the
flow
of
goods
or
services
in
interstate
commerce
or
that
the
parties’
activities
substantially
affect
interstate
commerce.”
1.
See
15
U.S.C.
§§1,
2.
For
discussion
of
the
interstate-commerce
requirement,
see
ABA
SECTION
OF
ANTITRUST
LAW,
ANTITRUST
LAW
DEVELOPMENTS
36-46
(6th
ed.
2007)
[hereinafter
ALD
VJ].
2.
See
McLain
v.
Real
Estate
Bd.
of
New
Orleans,
Inc.,
444
U.S,
232,
241-
43
(1980)
(noting
that
interstate-commerce
jurisdiction
over
Sherman
Act
claims
extends
“beyond
activities
actually
in
interstate
commerce
to
reach
other
activities
that,
while
wholly
local
in
nature,
nevertheless
substantially
affect
interstate
commerce”);
Hosp.
Bldg,
Co.
v.
Trs.
of
Rex
Hosp.,
738,
743-46
(1976)
(observing
as
“settled”
law
that
the
Sherman
Act
‘encompasses
far
more
than
restraints
on
trade
that
are
motivated
by
a
desire
to
limit
interstate
commerce
or
that
have
their
sole
impact
on
interstate
commerce”
but
may
also
reach
wholly
local
restraints
so
long
as
they
substantially
and
adversely
affect
interstate
commerce);
see
also
Freeman
v.
San
Diego
Ass’n
of
Realtors,
1133,
1143
(9th
Cir.
2003)
(““Monopolizing
the
local
lemonade
stand
doesn’t
get
you
into
federal
court.
To
make
a
federal
case,
a
plaintiff
must
show
that
the
activities
in
question,
although
conducted
within
a
state,
have
a
‘substantial
effect
on
interstate
commerce.’”);
Highmark,
Inc.
v.
UPMC
Health
Plan,
160,
171
(3d
Cir.
2001)
(Lanham
Act
case
explaining
that
“Congress’s
authority
under
the
interstate
commerce
clause
extends
even
to
purely
intrastate
activity
if
that
activity
substantially
affects
interstate
commerce”).
25
26
Antitrust
Health
Care
Handbook
The
Supreme
Court,
in
Summit
Health
v.
Pinhas,’
established
a
low
threshold
for
satisfying
the
interstate-commerce
requirement.
In
that
case,
the
Court
focused
on
the
possible
effect,
if
successful,
of
an
alleged
conspiracy
to
prevent
the
plaintiff
physician
from
practicing
at
one
hospital.
The
Court
held
that
the
plaintiff
sufficiently
alleged
that
the
conspiracy
would
reduce
the
amount
of
services
provided
in
that
market,
that
the
services
were
delivered
to
out-of-state
patients
and
generated
revenue
from
out-of-state
sources,
and
thus
that
the
alleged
conspiracy
sufficiently
affected
interstate
commerce.*
The
plaintiff
need
not
quantify
the
adverse
effect
of
the
challenged
conduct.’
Prior
to
the
Pinhas
decision,
courts
frequently
dismissed
health
care
antitrust
cases
pursuant
to
Federal
Rule
of
Civil
Procedure
12(b)(6)
for
failure
to
allege
a
sufficient
effect
on
interstate
commerce.®
In
recent
years,
however,
courts
have
rarely
dismissed
federal
antitrust
claims
based
on
lack
of
a
sufficient
connection
with
interstate
commerce.’
(1991).
id.
at
329-30.
£.g.,
Carpet
Group
Int’!
v.
Oriental
Rug
Imps.
Ass’n,
62, 75
(3d
Cir.
2000) (explaining
that
“plaintiffs
.
.
.
need
not
quantify
the
actual
effect
defendants’
conduct
had
on
interstate
commerce
to
support
federal
jurisdiction”).
6.
£.g.,
Furlong
v.
Long
Island
Coll.
Hosp.,
922,
926-28
(2d
Cir.
1983).
7.
See,
e.g.,
Carpet
Group
int'l,
227
F.3d
at
75
(explaining
that
“a
plaintiff's
burden
of
establishing
effects
on
commerce
sufficient
to
confer
jurisdiction
is
not
great”);
Brader
v.
Allegheny
Gen.
Hosp.,
869,
873-74
(3d
Cir.
1995)
(interstate
commerce
requirement
satisfied
where
physician
alleged
that
hospital
unlawfully
terminated
his
staff
privileges
and
thus
limited
his
ability
to
serve
patients
in
the
relevant
market);
BCB
Anesthesia
Care
v.
Passavant
Mem’!
Area Hosp.
Ass’n,
664,
666
{7th
Cir.
1994)
(reversing
dismissal
of
antitrust
claims
on
interstate
commerce
grounds,
finding
sufficient
connection
with
interstate
commerce
based
on
allegation
that
hospital’s
termination
of
contract
with
nurse
anesthetists
increased
costs
to
out-of-state
patients
and
payors).
But
see
Wahi
v.
Charleston
Area
Med.
Ctr.,
2004
WL
2418316,
at
*6
(S.D.
W.
Va.
2004)
(granting
defendant’s
motion
to
dismiss
plaintiff’s
antitrust
claims
because
“plaintiff
does
not
mention
the
words
‘interstate
commerce’
in
his
Complaint,
nor
does
he
describe
any
nexus
between
the
defendants’
alleged
antitrust
violations
and
interstate
commerce”);
Nash
v.
N,
Ark,
Human
Servs.
Sys.,
1997
WL
314385,
at
*4
(E.D.
Ark.
1997)
BY
Basic
Antitrust
Concepts
and
Principles
27
B.
Relevant
Markets
Generally
A
relevant
market
is
the
market
in
which
the
alleged
adverse
effect
on
competition
resulting
from
the
challenged
conduct
is
examined.*
That
effect
is
with
respect
to
a
product
or
service
in
a
geographic
area.
Definition
of
relevant
product
and
geographic
markets
is
the
starting
point
for
analyzing
many
antitrust
claims
because,
as
the
Supreme
Court
has
explained,
“[w]ithout
a
definition
of
the
market
there
is
no
way
to
measure
{a
party’s]
ability
to
lessen
or
destroy
competition.””
This
is
because
market
definition
is
usually
the
first
step
in
determining
whether
a
firm
or
firms
have
market
power,”
and
absent
market
power,
a
firm,
or
firms
acting
jointly,
cannot
adversely
affect
competition.
Thus,
definition
of
the
relevant
market
is
necessary
in
assessing
most
rule
of
reason
claims
under
Section
1
of
the
Sherman
Act,|!
claims
of
monopolization
and
attempted
monopolization
under
Section
2
of
the
{interstate
commerce
requirement
not
satisfied
where
former
employee
chalienged
agreement
among
local
mental
health
centers
not
to
hire
each
other’s
employees
for six
months
following
resignation,
because
plaintiff
failed
to
allege
how
reimbursement
from
out-of-state
payors
would
be
affected
by
the
agreement
and
a
market-wide
impact
could
not
be
presumed).
8.
For
a
general
overview,
see
Jonathan
B.
Baker,
Market
Definition:
An
Analytical
Overview,
74
ANTITRUST
L.J.
129
(2007).
9.
Walker
Process
Equip.
v.
Food
Mach.
&
Chem.
Co.,
172,
177
(£965);
see
also
Little
Rock
Cardiology
Clinic,
P.A.
v.
Baptist
Health,
591,
396
(8th
Cir.
2009).
10.
£.g,,
Geneva
Pharms.
Tech.
v.
Barr
Labs.,
485,
496
(2d
Cir.
2004)
(noting
that
“[e]valuating
market
power
begins
with
defining
the
relevant
market”).
ll.
See,
eg.,
Craftsmen
Limousine
v.
Ford
Motor
Co.,
380,
388
(8th
Cir.
2007)
(explaining
that
plaintiff's
“burden
begins
with
the
task
of
properly
defining
the
relevant
market”);
E.
Food
Servs.
v.
Pontifical
Catholic
Univ.
Servs.
Ass’n,
1, 5
(Ist
Cir.
2004}
(“[T]Jhe
identification
of
market
power
is
ordinarily
the
first
step
in
any
rule
of
reason
claim
under
section
1....
This...
requires
the
identification
of
some
economic
market
in
which
power
can
be
measured
and
the
consequences
of
the
act
or
transaction
assessed.”);
Doctor’s
Hosp.
v.
Se.
Med.
Alliance,
301,
310
(Sth
Cir.
1997);
Oksanen
v,
Page
Mein’
Hosp.,
696,
709
(4th
Cir.
1991)
(en
banc).
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