Western District Of Pennsylvania Dismisses Antitrust Action For Failure To Adequately Define A Product Market
07/13/2021On June 29, 2021, the United States District Court for the Western District of Pennsylvania dismissed Multiple Energy Technologies, LLC’s (“Plaintiff”) Second Amended Complaint against Under Armour, Inc. (“Defendant”) for failure to adequately plead a relevant product market and granted Plaintiff leave to amend its complaint. Multiple Energy Techs., LLC v. Under Armour, Inc., No. 2:20-CV-664-NR, 2021 WL 2661827 (W.D. Pa. June 29, 2021). The Court found that a sufficient product market definition requires pleading facts that allege: (1) high elasticity among all products within the alleged market; and (2) low elasticity between products within the alleged market and products outside the alleged market.
The Court granted Defendant’s initial motion to dismiss for failure to allege that Plaintiff was a direct competitor to Defendant and for failure to properly define a relevant product market. Plaintiff then filed an amended complaint defining a product market as “clothing containing recovery enhancing bioceramics” (“CCREB”) and added that the following products are among those that fall under CCREB: “activewear, tank tops, or sleeveless shirts, t-shirts, long sleeve shirts, shorts, pants, leggings, joggers, sweatpants, sleeves, pajamas[,] and sleepwear.” Plaintiff alleged that CCREB is a distinct market because it is bought and marketed for its muscle recovery and performance benefits. Plaintiff further alleged that CCREB is often priced higher than other articles of clothing that do not contain bioceramics and consumers who purchase CCREB products do not consider them interchangeable with traditional clothing options.
In dismissing Plaintiff’s amended complaint, the Court found that Plaintiff still failed to adequately define what products fall into a relevant product market and also failed to adequately plead that there is elasticity of demand between the products within a defined market.
To adequately describe a relevant product market, the Court noted that Plaintiff was required to define all products that fall under its proposed market definition and that it was insufficient to only provide a list of example products that fall within the alleged relevant market. The Court held that while Plaintiff did not need to provide “excessive detail” about the products, it did “need to say what products are in the market, with enough specificity to put [Defendant] on notice of at least the rough bounds of the market.”
To plead that there is high elasticity of demand between all products within a relevant market, the Court held that Plaintiff needed a factual basis to allege that the products in the relevant market are interchangeable. Merely pleading that consumers do not believe bioceramics products are interchangeable with non-bioceramics products is not, the Court found, sufficient to establish elasticity of demand as required to properly define a relevant market.
Finally, in granting Plaintiff leave to amend, the Court held that: (1) Plaintiff’s burden at this stage is not a high one; (2) it believed that Plaintiff’s failure to adequately state a claim was based on Plaintiff’s misunderstanding that the “cross-elasticity requirement is satisfied by allegations that consumers do not consider products within a market to be interchangeable with products outside that market;” and (3) that Plaintiff’s current allegations allude that they can possibly allege a sufficient product market definition.
This case serves as a reminder that although discovery is often needed to define the proper contours of a relevant product market, plaintiffs first need to provide sufficient factual allegations of the products implicated as well as plead a high elasticity among the products within the market.CATEGORY: Market Definition