Southeast Missouri Hospital v. C.R. Bard, Inc.
642 F.3d 608
8th Cir.2011Background
- Saint Francis Medical Center is a Cape Girardeau hospital that is a member of the Novation GPO; GPOs negotiate standard contracts with suppliers for member hospitals.
- Bard is the leading U.S. supplier of Foley catheters and holds a large share of Foley and intermittent catheter markets.
- Hospitals may purchase outside GPO contracts (off-contract), and GPO contracts are typically 3–8 years with termination on notice.
- Saint Francis challenges Bard’s GPO contracts as anticompetitive: sole-source provisions, share-based discounts, and bundled discounts.
- The district court granted Bard summary judgment; this court affirmed in part as to the need to define a product market and assess market power and conduct.
- The court’s decision rests on Concord Boat-type analysis of whether share-based discounts and related terms create de facto exclusionary effects and whether a valid submarket exists.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What is the relevant product market? | Saint Francis asserts submarkets (Foley and intermittent catheters; GPO channel). | Bard argues no valid submarket; broader national Foley/intermittent catheter markets control. | Affirmed need for market definition; genuine issue as to submarket existence. |
| Do Bard’s discount terms violate antitrust standards? | Saint Francis contends sole-source, bundled, and tiered discounts are anticompetitive. | Bard contends discounts are voluntary, non-exclusive, and procompetitive; Concord Boat controls. | Issues of material fact remain on whether discounts were anticompetitive. |
| Did Bard have market power in the defined market? | Saint Francis asserts Bard’s high shares, especially in GPO channels, show power. | Market power not shown absent defined market and barriers to entry. | There is a genuine issue of fact as to Bard’s market power depending on market definition. |
| Did Saint Francis suffer antitrust injury and have standing? | Saint Francis intercepted higher prices due to Bard’s exclusionary conduct. | Defendant contends lack of proof of injury or causal link. | There is a factual dispute as to whether Saint Francis suffered antitrust injury. |
| Does Section 3 of the Clayton Act apply to Bard’s discounts? | Discounts impaired competition and restricted dealer choices. | Discount terms do not foreclose competition as a matter of law. | Summary judgment improper given context of discounts and market foreclosure evidence. |
Key Cases Cited
- Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039 (8th Cir. 2000) (discounts not exclusionary where voluntary and non-100% commitments)
- Henry v. Chloride, Inc., 809 F.2d 1334 (8th Cir. 1987) (submarket theory based on distinct customers and distribution attributes)
- Brown Shoe Co. v. United States, 370 U.S. 294 (1962) (product market defined by interchangeability and cross-elasticity; avoid price dichotomy)
- Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320 (1961) (relevant market requires analysis of substitutes and demand response)
- United States v. Cont’l Can Co., 378 U.S. 441 (1964) (price is not sole determinant of product market; cross-elasticity matters)
- Cascade Health Solutions v. Peace-Health, 515 F.3d 883 (9th Cir. 2008) (attribution test for anticompetitive bundles)