E.I. Du Pont De Nemours & Co. v. Kolon Industries, Inc.
637 F.3d 435
| 4th Cir. | 2011Background
- Kolon alleged DuPont monopolized the US para-aramid fiber market and used exclusive multi-year contracts to foreclose competition.
- DuPont moved to dismiss Kolon's counterclaim under Rule 12(b)(6) arguing Kolon failed to plead a plausible relevant geographic market.
- The district court accepted that Tampa Electric required including supplier headquarter locations in the market, and dismissed Kolon's claims.
- Kolon pled the United States as the relevant geographic market with reasons for limiting to the US (barriers to entry, market dynamics, and exclusive contracts).
- The Fourth Circuit reversed, holding Kolon plausibly pled a US market and that the district court erred in requiring headquarter-based inclusion and in considering extraneous facts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper geographic market under Tampa Electric | Kolon argues US market is plausible and Tampa Electric does not require headquarter inclusion. | DuPont contends Tampa Electric requires broader supplier locations to be included. | Geographic market defined by where buyers can turn for supplies; US market plausibly defined. |
| Pleading of a plausible geographic market | Kolon pled US market with barriers and DuPont dominance supporting plausibility. | DuPont argues Kolon failed to plead a proper market boundaries. | Kolon plausibly pled a distinct US market; dismissal was error. |
| Adequacy of alleged anticompetitive conduct | Exclusive contracts and meet-or-release clauses foreclose competition in meaningful share. | Contracts are not shown to foreclose a substantial market share. | Allegations support potential monopolization and attempted monopolization; sufficient at pleadings stage. |
| Courts' consideration of extraneous materials at 12(b)(6) | Kolon should be assessed on the Counterclaim alone with reasonable inferences. | District court can rely on record evidence including DuPont's statements about contracts. | District court erred in relying on statements beyond the Counterclaim; not harmlessly so. |
| Berry Amendment and foreign supply considerations | Berry Amendment concerns are not determinative at pleading stage and are properly limited to commercial purchasers here. | Berry Amendment analysis may affect market power attribution. | Berry Amendment not dispositive at Rule 12(b)(6); dismissal improper. |
Key Cases Cited
- Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320 (Supreme Court 1961) (geographic market defined by where sellers operate and purchasers turn for supplies)
- Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451 (Supreme Court 1992) (monopoly power and maintenance; market definition as fact-intensive)
- Grinnell Corp., 384 U.S. 563 (Supreme Court 1966) (exclusive dealing as potential anticompetitive conduct)
- Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (exclusive contracts can support Sherman Act §2 violation depending on foreclosure)
- Brown Shoe Co. v. United States, 370 U.S. 294 (Supreme Court 1962) (geographic market scope may be national or narrower)
- Pabst Brewing Co. v. Wisconsin, 384 U.S. 546 (Supreme Court 1966) (geographic market limited to Wisconsin or tri-state area despite broader distribution)
- Dentsply Int'l, Inc., 399 F.3d 181 (3d Cir. 2005) (artificial teeth market; closed geographic market despite foreign suppliers)
- RCM Supply Co., Inc. v. Hunter Douglas, Inc., 686 F.2d 1074 (4th Cir. 1982) (paraphrasing Tampa Electric; market definition based on practical supply sources)
- Consul, Ltd. v. Transco Energy Co., 805 F.2d 490 (4th Cir. 1986) (market definition mechanics in antitrust cases)
- Am. Football League v. Nat'l Football League, 323 F.2d 124 (4th Cir. 1963) (illustrates market boundaries in antitrust context)