By Greg Hammond, J.D.
A heavy construction equipment importer and seller failed to construct adequate group boycott, exclusive dealing, and monopolization claims against a number of equipment manufacturers. In dismissing the various Sherman Act and Clayton Act antitrust claims, the federal district court in Wilmington, Delaware, concluded that the complaint’s bare conclusory allegations were insufficient to state a claim (International Construction Products LLC v. Caterpillar Inc., January 21, 2016, Andrews, R.).
In 2014, International Construction Products LLC (ICP) announced its partnership with IronPlanet, the largest online marketplace for the sale of used heavy construction equipment. ICP claims, however, that heavy equipment manufacturers Caterpillar Inc., Komatsu America Corp., and Volvo Construction Equipment North America, LLC, as well as Associated Auction Services, LLC, conspired to block ICP’s entry into the market. In particular, ICP alleges that the three manufacturer defendants issued the same or similar threat to IronPlanet, within days of one another, that they would stop selling their used equipment through IronPlanet if IronPlanet continued to deal with ICP. IronPlanet subsequently informed ICP that it would not perform under the terms of their agreement. ICP filed its antitrust claims and the defendants moved to dismiss.
Group boycott. The court first concluded that there were no facts that directly show the existence of an agreement between the three manufacturer defendants in support of a group boycott claim. Although allegations that each of the manufacturer defendants made similar threats to IronPlanet and that those complaints were made within days of one another were sufficient to infer that the defendants issued boycott threats, such parallel conduct—without more—did not suffice, the court determined.
Exclusive dealing. Second, the court found that ICP did not state a claim for exclusive dealing because: (1) ICP failed to adequately plead lack of alternative channels of distribution; and (2) ICP did not sufficiently allege substantial foreclosure of the relevant market. Specifically, the court noted that ICP simply concluded, without factual support, that it was deprived of any “feasible way to reach consumers,” which was insufficient to demonstrate absence of alternative channels of distribution. Additionally, the court found that besides allegations that all of the manufacturer defendants engaged in exclusive dealing, and that there were risks and costs associated with dealerships switching suppliers, ICP failed to provide any factual basis upon which the court could consider the practical effects of the exclusive dealing arrangements.
Monopolization. ICP brought claims for monopolization, attempted monopolization, and conspiracy to monopolize, but these claims were also dismissed. The court determined that the complaint failed to allege a relevant market and to plausibly suggest monopoly power. With regard to a relevant market, the court found that ICP provided no facts for its equipment-specific market, but instead simply concluded that the closest substitutes for each type of new heavy construction equipment were used heavy construction equipment of that type. ICP made no attempt to define the relevant markets with reference to the rule of reasonable interchangeability and cross elasticity of demand.
In addition, allegations that Caterpillar has “substantial market power,” engages in “oligopoly pricing,” and possesses a market share of “approximately 40 percent or more” were insufficient. An allegation of 40 percent market share, according to the court, did not suffice to show monopoly power. Furthermore, the court concluded that there were no factual allegations concerning an agreement to create a single dominant firm. All three monopolization claims were therefore dismissed.
Unlawful merger. Lastly, the court determined that ICP failed to allege unlawful merger under the Sherman and Clayton Acts. ICP attempted to allege a vertical merger between Caterpillar and Associated Auction Services but the complaint instead referred to a horizontal merger between Associated Auction and IronPlanet. Since ICP’s unlawful merger claim depended on a vertical merger theory that could be sustained, the claim failed, the court concluded.
The case is No. 15-108-RGA.
Attorneys: John W. Shaw (Shaw Keller LLP) and David Boies (Boies Schiller & Flexner LLP) for International Construction Products LLC. David J. Baldwin (Potter, Anderson & Corroon LLP) and Robert J. Brookhiser, Jr. (Baker & Hostetler LLP) for Caterpillar Inc. M. Duncan Grant (Pepper Hamilton LLP) for Volvo Construction Equipment North America, LLC. Denise S. Kraft (DLA Piper LLP US) for Komatsu America Corp. Edward F. Eaton (Connolly Gallagher LLP) and Quentin R. Wittrock (Gray Plant Mooty) for Associated Auction Services LLC.
Companies: International Construction Products LLC; Caterpillar Inc.; Komatsu America Corp.; Volvo Construction Equipment North America, LLC; Associated Auction Services, LLC
MainStory: TopStory Antitrust DelawareNews
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