Use of Private Sources of Market Share Data and Experts in Antitrust Litigation

• Author: Andrew Berg,John Siegfried,Terry Calvani
• Published date: 01 March 1982
• DOI: 10.1177/0003603X8202700101
• Date: 01 March 1982
• Subject Matter: Article

The Antitrust Bulletin/Spring 1982

Use

of

private sources

of

market share

data and experts in antitrust litigation

1

BY TERRY CALVANI,· ANDREW

BERG,"

and JOHN SIEG-

FRIED···

I.

Introduction

Determining market share is exceedingly

important

in

antitrust

litigation since market power is often inferred

from

market

share

and

market power is a necessary element to antitrust causes

of

action. Market

power-power

over

price-must

be demonstrated

to establish unlawful

"monopolization"

under

section 2

of

the

Sherman

AcL) The

market

has also been held to be a necessary

element in attempted monopolization cases by most

courts.'

•Visiting Professor of Law, University of Virginia School of Law,

Charlottesville, Virginia.

•• Morgan,

Lewis

&Bockius, Philadelphia, Pennsylvania.

••• Professor of Economics, Vanderbilt University, Nashville, Tennes-

see.

ISee, e.g., United States v. Grinnell Corp., 384U.S. 563

(1966).

Section 2 provides: "Every person who shall monopolize, or attempt to

monopolize, or combine or conspire with any other person or persons,

to monopolize any part of the trade or commerce among the several

States, or with foreign nations, shall be deemed guilty of a misde-

meanor

....

" 15 U.S.C. §2

(1976).

2See, e.g., Diamond Int'l Corp. v. Walterhoefer, 289 F, Supp. 550

(D. Md.

1968).

But

cf.

Lessig

v. Tidewater Oil Co., 327 F,2d 459 (9th

Cir.), cert. denied, 377 U.S. 993

(1964).

©1982 by Federal Legal Publications, Inc.

2 : The antitrust bulletin

Courts have relied heavily on market share calculations in judg-

ing the legality

of

horizontal mergers' under section 7

of

the

Clayton Acr' and their potential effect on market competition.

And the "reasonableness"

of

aparticular alleged restraint

of

trade often depends upon the market share

of

the parties con-

cerned.'

It

is one thing, however, to understand the need to prove

market power, and quite another to actually establish afirm's

market share, from which market power may be inferred, at trial.

Aggregate market size and individual market shares can be

approximated in certain industries (e.g., steel, petroleum, beer,

autos) by physical output

figures"

compiled for either regulatory

purposes or by industry trade associations. In general, however,

individual firm market share

data

are unavailable, and in many

cases antitrust enforcement authorities have had to resort to

canvassing an entire industry to generate their own figures,

obviously an expensive and time-consuming process. But the

recent expansion

of

private marketing-oriented

data

bases has

changed the character

of

fact-finding in antitrust litigation by

providing new opportunities for the identification

of

individual

firm market shares. At least four different firms, whose metho-

dologies are described in the first

part

of

this article, are now in

the business

of

determining individual brand market shares for

products sold in grocery stores, and similar services are available

3See, e.g., BrownShoe Co. v. United States, 370 U.S. 294 (1962).

4

Section

7, as amended,

provides

in pertinent part: "No corpora-

tion

engaged

in

commerce

shall acquire, directly or

indirectly,

the

whole

or any part of the stock or other share capital . . . of another

corporation

engaged

also in

commerce,

where

in any line of

commerce

in any

section

of the

country,

the effect of such acquisition may be

substantially to

lessen

competition, or to tend to create a monopoly." 15

U.S.C. § 18 (1976).

52P.

AREEDA

&D.

TURNER,

ANTITRUST LAW 321 (1978).

6See id. at 350-51. Areeda and Turnerconclude output

figures

to

be preferable to capacity

figures,

since

output

figures

are more readily

obtainableand

less

ambiguous than capacity

figures.

[d.

Market share data :3

for some other products. Each data source focuses on the flow

of

economic activity at a different stage

of

production. Economic

Information Systems, Inc. (EIS), measures the distribution

of

economic activity at the manufacturing stage. Selling-Areas

Marketing, Inc. (SAMI), examines warehouse withdrawals-ac-

tivity in the wholesale sector. A.C. Nielsen Company measures

product movement through retail outlets, and Market Research

Corporation of America (MRCA) collects product information

directly from final consumers. Since those data are at different

levels

of

the vertical flow of goods, differences between the

market shares based on the various data sources result. 7

How valuable are these private market share data sources in

the antitrust litigation context? Use

of

private market share data

in antitrust cases has received mixed reviews from the courts. In

two recent cases wherein SAMI data were utilized, two different

judges reached very different conclusions as to the accuracy of

that data source for purposes

of

antitrust litigation. Judge New-

comer, in allowing SAMI data to be used to establish both

relevant product market definition and market shares in Mrs.

Smith's Pies Co. (the "frozen dessert pie case"),' concluded that

"SAMI is a nationally respected authority on sales of products

through warehouses, and persons in the industry consider it an

accurate reflection of market share data

....

"9

Observing that

the defendant itself subscribed to SAMI reports at a substantial

cost, Judge Newcomer suggested that the purchase and use by the

defendant of the data for marketing purposes indicated the

defendant's own positive assessment

of

the accuracy and useful-

7There also have been new entrants into this industry which are

not discussed in this paper. These include Sum of the Squares, Inc., and

Davee, Koehnlein &Keating (DKK). Sum

of

the Squares, Inc., is briefly

described in Sum of the Squares, Inc. v. Market Research Corp. of

America,

401

F. Supp. 53 (S.D.N.Y.

1975),

where it was a litigant. DKK

is discussed in Warner-Lambert Co., 87 F.T.C. 812 (1976).

8440 F. Supp. 220 (E.D. Pa.

1976).

9[d. at 224.