Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Supreme Court asked to consider standard of proof for establishing conspiracy, (Dec 19, 2013)

By Jeffrey May, J.D.

The U.S. Supreme Court has been asked to weigh in on an antitrust case involving “a market exclusion of a nascent competitor in the steel industry.” According to the petitioner—Gulf States Reorganization Group (GSRG)—its exclusion arose out of an agreement under which a near-monopolist—Nucor Corporation—secretly arranged, through a steel mill broker to acquire steel-production assets that CSRG attempted to acquire. CSRG filed its petition for certiorari, seeking review of a decision of the U.S. Court of Appeals in Atlanta, upholding summary judgment in favor of Nucor (Gulf States Reorganization Group, Inc. v. Nucor Corp., Dkt. 13-717, filed December 12, 2013).

In the latest decision (721 F3d 1281, 2013-2 Trade Cases ¶78,453) in this long-running case, the appellate court affirmed summary judgment based on a special master’s report and the district court’s order. However, it expanded on one of the issues relevant to GSRG’s attempted monopolization claim, “in order to explain why cross-elasticity of supply is critical to defining the relevant market in this case.” The appellate court concluded that GSRG failed to define a proper product market limited to black hot rolled coil steel to support its Sherman Act, Section 2 claims.

Earlier, the appellate court had vacated a dismissal order and remanded the matter to the district court for further proceedings. In that 2006 decision (466 F3d 961, 2006-2 Trade Cases ¶75,442), the appellate court did not reach the merits; however, it concluded that GSRG, as a losing bidder for the steel-production assets of a bankrupt firm, had sufficiently alleged injury to proceed with its antitrust claims.

In its petition, CSRG has asked specifically:

(1) where a market exclusion arises out of the performance of an express contract, in order to meet the “contract, combination … and conspiracy” element of Sec. 1 of the Sherman Act, whether the plaintiff (the excluded party) bears the burden of offering proof, in addition to the contract itself, that “tends to exclude the possibility” that the second party may have entered into the contract for a legitimate reason;

(2) whether a plaintiff may properly offer industry experts who are not economists to supplement the testimony of its economist for the purpose of addressing the nature of competition in an industry in light of the “commercial realities” of the industry at issue;

(3) whether it is proper to reject a proposed relevant product market as a matter of law on the basis of a theoretical supply substitution by a further processed version of the same product, where there is a total lack of evidence of demand substitution; and

(4) whether a theoretical possibility of an increase in out-of-region purchases in response to an in-region price increase is sufficient, as a matter of law, to defeat the existence of a regional relevant geographic market, particularly where there is substantial evidence of a lack of price competition between regions.

According to the petitioner, the compelling reason for the Supreme Court to grant the writ is the pressing need for clarification that the Matsushita/Monsanto “tends to exclude the possibility” burden of proof applies only to the threshold Sherman Act, Sec. 1 issue of the existence of a conspiracy, and that a defense based on a supposed “business justification” is not available in evaluating on summary judgment the underlying antitrust merits.

Attorneys: Philip Clark Jones (Greenburg Spence & Taylor, PC) for Gulf States Reorganization Group, Inc. Bert Walter Rein (Wiley Rein, LLP) for Nucor Corp.

Companies: Gulf States Reorganization Group, Inc.; Nucor Corp.

News: Antitrust