Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: FMC dismissal motion fails to weed-out Rightline generic sulfentrazone monopolization claims, (Jun 2, 2025)

By Justin Marcus Smith, J.D.

The court held the rule-of-reason test applied to the distribution exclusive dealing case involving a customer rebate program because it plausibly pleaded anticompetitive behavior, not merely competitive pricing.

Rightline, LLC (Rightline), a manufacturer of generic sulfentrazone herbicide, alleged viable Sherman Act and Clayton Act claims against FMC Corp. (FMC), the expired patent-holder, held the federal district court in Philadelphia. The court held the rule-of-reason, rather than the “price-cost” test, applied because Rightline challenged more than FMC’s pricing practices with respect to a single product. Rightline alleged exclusion from the main distribution channel for sulfentrazone -only products and mixtures of sulfentrazone with other active ingredients. The court denied FMC’s motion to dismiss for failure to state a claim because Rightline alleged a broad relevant market; substantial foreclosure from the primary distribution channel that allegedly accounted for about 80% of sulfentrazone sales; and, anticompetitive harm to Rightline and the market as a whole in the form of lost sales and supracompetitive pricing, respectively (Rightline, LLC v. FMC Corp., No. 2:24-cv-02726-CH (E.D. Pa. May. 30, 2025)).

Background. Rightline, a manufacturer of generic sulfentrazone, an herbicide that FMC developed for golf courses, alleged that FMC used rebates to create exclusive dealing arrangements with distributors. Rightline said the FMC rebate loyalty program blocked generic suppliers from the marketplace and caused consumers to pay excessive prices.

The relevant broad market Rightline defined consisted of the sale of sulfentrazone and sulfentrazone-containing products to the large turf and ornamental market. Rightline said Eight large national distributors and two independent distributor turf -buying groups accounted for over 85% of sulfentrazone sales in the United States. Rightline said FMC implemented exclusive dealing arrangements, after the FMC patent expired, by rebating primary distributors as long as they bought all of their sulfentrazone from FMC. Rightline said FMC later reduced the buying requirement to 90%, but also began paying end-users rebates that were more than the price the distributors paid to FMC for the same product. The latter move allegedly caused many end-users to buy multiple years’ worth of sulfentrazone from FMC, thereby depriving competitors of future sales opportunities.

Rightline said FMC violated Sections 1 and 2 of the Sherman Act for unreasonably restraining and unlawfully monopolizing trade and violated Section 3 of the Clayton Act for unlawful conditioning of payments.

FMC filed a motion to dismiss for failure to state a claim. FMC argued, first, that the “price-cost” test applied and precluded all Rightline claims because FMC’s prices were not below its costs. Second, FMC argued that even if the “price-cost” test did not apply, Rightline failed to allege substantial foreclosure of the market or any anticompetitive effects to satisfy the rule-of-reason. Rightline asserted the rule-of-reason applied to its allegations, not the price-cost test, and that it properly alleged an antitrust violation. The court deemed the Rightline complaint adequate and denied the FMC motion to dismiss.

Rule-of-reason. The court held the rule-of-reason test should apply because Rightline’s complaint plausibly pleaded anticompetitive behavior, not merely competitive pricing. FMC argued the “price-cost” test applied because the Rightline allegations were entirely centered on a loyalty rebate program to national distributors for a single product, and Rightline did not allege that FMC was selling below cost. Rightline responded that it was not solely challenging FMC pricing practices. It said it alleged FMC exclusive dealing and exclusion of generics to maintain high pricing and to foreclose rivals, like Rightline, from the primary sulfentrazone distribution channel, hence the rule-of-reason ought to apply.

The court acknowledged that the Third Circuit has held that the price-cost test should only be used when price is the clearly predominant method of exclusion. Even so, the court saw that Rightline pleaded that the impact of the FMC single product loyalty discount program went, in the words of the complaint, “beyond blocking the sales of sulfentrazone-only products.” The complaint mentioned blended products and leveraging of the same loyalty program to help FMC maintain distributor purchases of other active ingredients. Accordingly, Rightline alleged more than a single-product rebate program. In addition, another paragraph of the complaint showed that Rightline alleged that FMC blocked Rightline access to 95% of the major distributors. That amounted to a denial of the opportunity to compete than went beyond price competition. It amounted to total exclusion from the market. The court held these allegations called for application of the rule-of-reason.

Substantial foreclosure. The court found the Rightline complaint properly pleaded antitrust conduct with substantial foreclosure from the market. Rightline defined the relevant market as the sale of sulfentrazone and sulfentrazone-containing products to the turf and ornamental market involving golf courses and landscape professionals. Within that market, Rightline pleaded a primary distribution channel accounting for about 80% of sulfentrazone sales in the U.S. That was enough to plead a relevant market.

As to foreclosure from that market, the court rejected FMC’s argument that Rightline failed to allege any degree of foreclosure harming competition. The court noted that there was no fixed percentage at which foreclosure becomes “substantial,” but total foreclosure is not required for exclusive dealing to be unlawful. Challenged practices must substantially lessen competition.

The court disagreed with FMC that Rightline’s complaint contained inconsistent facts or percentages about FMC market share. The court noted here, again, that Rightline alleged FMC had an 80-85% market share for sulfentrazone in golf course and turf markets, an overall broad market, and over 95% market share in the primary distribution channel. The court found Rightline “plainly and consistently alleged FMC’s market share in its complaint.”

The court also disagreed with FMC’s contention that Rightline only alleged that it was unable to compete successfully. On the contrary, the court saw that the Rightline complaint stated that FMC exclusive dealing blocked Rightline and other generic suppliers from selling their products through the distribution channel that allegedly accounted for about 85% of sales in the relevant market. Whether such allegations were true or not was an improper merits question at the pleading stage.

Anticompetitive effects. The court also found that Rightline pleaded anticompetitive effects. The court said the Rightline complaint alleged that (1) FMC used the sulfentrazone loyalty program to block generic suppliers from selling to the large national distributors, thereby limiting access and raising prices; (2) Rightline lost millions of dollars in sales and profits due to market foreclosure; and (3) the loyalty program enabled FMC to sell sulfentrazone at a premium relative to generics and caused supracompetitive pricing. The court concluded these allegations all “clearly allege[d] plausible anticompetitive effects, and FMC’s argument to the contrary must fail.”

The Case is No. 2:24-cv-02726-CH.

Judge: Henry, C.

Attorneys: Richard A. Barkasy (Santoro Law Group, LLC) for RightLine LLC. Carsten Reichel (DLA Piper LLP) for FMC Corp.

Companies: RightLine LLC; FMC Corp.

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