If you work much on antitrust lawsuits, you learn the names of cases that inspire strong feelings on both sides of the "v." Concord Boat lives in that realm.

The Eighth Circuit ruled after a jury trial in Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039 (8th Cir. 2000), that 24 boat-makers had no antitrust claim against Brunswick, the dominant provider of boat engines. The vessel-builders alleged that Brunswick kept its top engine spot by keying discounts to how few engines boat-makers bought from Brunswick rivals. A jury agreed and found Brunswick guilty of violating the Sherman Act, awarding more than $140 million (after trebling). But the Eighth Circuit reversed and directed entry of judgment for Brunswick. Id. at 1063.

What makes Concord Boat hateful to plaintiffs and marvelous to defendants? Blawgletter senses that the total acceptance by the court of Brunswick's multitudinous arguments explains much of the passion. The panel held that:

  • Limitations barred the plaintiffs' claims under section 7 of the Clayton Act;
  • The damages findings could not stand due to the failure of the secion 7 claims;
  • The plaintiffs' expert on liability didn't account for "all relevant circumstances", and his testimony therefore carried no weight;
  • The evidence failed to show enough "foreclosure" of competition, enough exclusivity, and enough barriers to entry by competitors to make out a section 1 claim; and
  • Brunswick's "market share" discounting didn't amount to anticompetitive conduct.

You see? Something to use for almost every defendant, and something to overcome for just about every plaintiff.

Blawgletter has a reason for mentioning Concord Boat today. For on this date, in Southeast Missouri Hospital v. C.R. Bard, Inc., No. 09-3325 (8th Cir. June 8, 2011), an Eighth Circuit panel split 2-1 in favor of okaying a discount program that, Concord Boat-like, rewarded hospitals for their loyalty to a catheter-maker rather than the volumes of catheters they bought from it. And, citing Concord Boat, the majority held that the case turned mainly on the failure by a class of hospitals "to identify a relevant submarket". Id., slip op. at 16.

The duo seem to have meant by "relevant submarket" that they didn't accept the plaintiffs' product market definition, which focused on competition by catheter-makers for contracts with group purchasing organizations (GPOs). Competition at that level mattered, the plaintiff hospitals urged, because hospitals buy almost all of their catheters from the vendor — in this case, overwhelmingly C.R. Bard – that secures cathether contracts with GPOs. Hospitals suffer as a result of the winning vendors' freedom, as a result of the contracts, to sell catheters to an effectively captive group of buyers. But the panel said no to that.

The dissenting judge would have answered the opposite way. Judge Beam wrote that the hospitals

did present evidence tending to show that (1) both purchasing hospitals and medical manufacturers recognized GPO sales as separate and distinct from non-GPO sales; (2) the GPO prices were distinct from non-GPO prices; (3) a small but significant non-transitory increase in price in the GPO sales did not cause customers to switch to a different distribution channel; and (4) the GPO's were, in effect, specialized vendors.

Id. at 21-22 (discussing factors for identifying "submarkets" under Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962)). The record thus raised a fact question about the relevant market, Judge Beam concluded.

We have a few thoughts about the outcome.

First, we marvel at how anti-antitrust (and anti-jury) the Concord Boat opinion reads and feels more than a decade after its advent.

Second, we note that, for reasons we cannot fathom, the majority opinion cites and quotes the Horizontal Merger Guidelines from 1992 — despite the fact that the Department of Justice and Federal Trade Commission overhauled them last year!

Finally, Southeast Missouri reflects the courts' reluctance to treat "bundling" as anticompetitive. The Ninth Circuit last week upheld dismissal of a bundling case (on the ground that forcing cable and other TV-channel distributors to buy "must-have" and junk channels may have injured competitors and consumers but not "competition" itself). The Third Circuit in LePage's, Inc. v. 3M, 324 F.3d 141 (3d Cir. 2003) (en banc), cert. denied, 542 U.S. 953 (2004), upheld a verdict and judgment in a case involving discounts and rebates to customers that bought 3M products other than tape. Defendants argue that granting discounts ALWAYS aids competition and favors buyers, and courts find that siren call hard to resist.

Should they? Do bundles ALWAYS promote competition?