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Re: Hey Terekhov: Wallace lost. Who'd guess.... ;)

From: Alexander Terekhov
Subject: Re: Hey Terekhov: Wallace lost. Who'd guess.... ;)
Date: Tue, 20 Jun 2006 15:44:06 +0200

And in the mean time, in the other Circuits...

The Sixth Circuit agreed with the district court's determination 
that "'because [plaintiff] is a competitor and its complaint is 
about pricing practices, . . . [plaintiff] must allege that 
[defendant] engaged in predatory pricing in order to demonstrate 
antitrust injury.'"

Plaintiff contended that "it did not need to allege predatory 
pricing to satisfy the antitrust injury requirement, since 
[defendant's] conduct independently violated Michigan's liquor 
distribution laws." The Sixth Circuit rejected plaintiff's 
contention explaining that "[w]hen a private plaintiff complains 
about a defendant's prices, 'only predatory pricing has the 
requisite anticompetitive effect' to establish antitrust injury." 
This is because "[l]ow prices benefit consumers regardless of how 
those prices are set, and so long as they are above predatory 
levels, they do not threaten competition." Plaintiff's claim 
"alleges nothing more than an inability to compete with the low 
prices offered by [defendant] to dual suppliers through the 
rebates and sharing of cost savings." Accordingly, plaintiff's 
failure to "allege that [defendant's] prices were set at 
anticompetitive levels" requires dismissal "even under the 
Ninth Circuit's somewhat unique theory of above-cost predatory 
pricing" for situations in which a competitor charges prices 
that are above its costs yet below the rates established by a 
price or tariff schedule. N.W.S. Michigan, Inc. v. General Wine 
& Liquor Co., Inc., 2003 WL 264731 (6th Cir. Feb. 6, 2003).

11th Circuit (Covad Communications Co. v. Bellsouth Corp., 374 
F.3d 1044 (11th Cir. 2004):

... allegations suggest that BellSouth is compensating for 
deliberately reduced profits on the retail end of its 
operations with correspondingly greater profits on the wholesale 
side, in order to stifle competition from firms such as Covad 
that are both wholesale customers and retail rivals. We find that 
these allegations are sufficient to allege "a dangerous 
probability" that BellSouth will "recoup[ ] its investment in 
below-cost prices." Brooke Group, 509 U.S. at 224. Whether the 
facts contained in Covad's complaint and in the record will bear 
out the recoupment allegation against BellSouth is also a matter 
for the district court to determine at a later stage, not on the 
basis of a motion to dismiss for failure to state a claim. Taken 
together, Covad's price predation allegations meet the 
"exceedingly low" threshold of sufficiency that a complaint
must meet to survive a 12(b)(6) motion. Quality Foods, 711 F.2d 
at 944–95 (finding that "we must accept the facts pleaded as true 
and construe them in a light favorable to plaintiffs").


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