Port Dock & Stone Corp. v. Oldcastle Northeast, Inc.

06-4908
Port Dock v. Oldcastle
UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term, 2006

(Argued: June 14, 2007 Decided: October 23, 2007)

Docket No. 06-4908-cv

---------------------------------------------x

PORT DOCK & STONE CORPORATION,
GOTHAM SAND & STONE CORP. and
PORT DOCK HOLDINGS CORP.,

Plaintiffs-Appellants,

-- v. --

OLDCASTLE NORTHEAST, INC., CRH GROUP,
PLC AND TILCON INC.,

Defendants-Appellees.

---------------------------------------------x

B e f o r e: LEVAL, CALABRESI, and JOHN R. GIBSON,* Circuit
Judges.

Appeal from a final judgment of the United States District

Court for the Eastern District of New York (Denis R. Hurley,

Judge), granting motion to dismiss the complaint for failure to

state a claim on which relief can be granted. We affirm.

WILLIAM G. KOPIT
JOHN R. SACHS, JR.,
Epstein Becker & Green, P.C., New York,
New York, for Plaintiffs-Appellants

*
The Honorable John R. Gibson, Circuit Judge, United States
Court of Appeals for the Eighth Circuit, sitting by designation.
 JOHN R. FORNACIARI, ESQ.
Sheppard, Mullin, Richter & Hampton,
LLP, Washington, D.C., for Defendants-
Appellees

JOHN R. GIBSON, Circuit Judge.

Port Dock Holdings Corp., and its two subsidiaries, Port

Dock & Stone Corp. and Gotham Sand & Stone Corp. (whom we will

refer to collectively as Port Dock), appeal from the district

court's dismissal of their antitrust claim against their

erstwhile suppliers CRH, PLC, Oldcastle Northeast, Inc., and

Tilcon, Inc. (known collectively as Tilcon).1 Port Dock & Stone

Corp. v. Oldcastle Northeast, Inc., No. 05 Civ. 4292 (DRH) (ARL),

2006 WL 2786882 (E.D.N.Y. Sept. 26, 2006). Port Dock alleged

that Tilcon monopolized the market for manufacturing crushed

stone, or "aggregate," by buying out its only significant

manufacturing competitor, Lone Star Industries. Before the Lone

Star buyout, Port Dock bought aggregate from Tilcon and

distributed it; after the buyout, Port Dock alleges that Tilcon

refused to sell aggregate to Port Dock, thus depriving Port Dock

of any source of supply and coercing it to sell its assets to

1
The complaint alleges that Tilcon is a subsidiary of
Oldcastle, which is a subsidiary of CRH. The defendants contend
that Oldcastle was never served with a complaint, has therefore
never made an appearance in this action, and is not a party to
this appeal. Oldcastle joined the motion to dismiss, and the
district court dismissed the complaint as to all defendants.
Oldcastle does not move to dismiss this appeal, and in view of
our affirmance of the dismissal, we need not belabor the point.

2
Tilcon at a sacrifice. The district court held that Port Dock

did not show that it had suffered an antitrust injury. We

affirm.

Because this case was decided on the pleadings, we take the

facts as stated in the complaint. Tilcon and its predecessor

owned quarries and were in the business of producing aggregate.

Port Dock acted as a distributor, buying its aggregate from

Tilcon and Tilcon's predecessor and reselling in Long Island and

the New York metropolitan area. According to the complaint, by

the 1980s, Tilcon produced about 85% of the supply of aggregate

in the market area, with only one significant competitor, New

York Trap Rock, which had about 10% of the market share. The

complaint alleged that in this two-supplier market, Tilcon

attempted to raise prices unilaterally in 1988, but was forced to

rescind when New York Trap Rock did not follow suit. Even though

Port Dock was Tilcon's largest customer, in the early 1990s

Tilcon sought to compete with Port Dock in the distribution

market by soliciting Port Dock's customers and selling them

aggregate at prices below Tilcon's actual cost. In 1997, Tilcon

acquired New York Trap Rock's parent company, Lone Star

Industries, and so captured Port Dock's only alternative source

of supply. In 1999, Tilcon announced that it would no longer

sell aggregate to Port Dock. Tilcon proposed to purchase Port

Dock's assets; because Port Dock had no alternative source of

3
supply, it had no choice but to sell on Tilcon's terms, at a

sacrifice price. Within weeks of closing the purchase of Port

Dock's assets, Tilcon raised prices to its customers. Port Dock

filed for bankruptcy in 2003.

Port Dock filed this antitrust complaint in September 2005,

alleging (1) that Tilcon had attempted to monopolize the

"relevant market" in violation of section 2 of the Sherman Act2;

(2) that Tilcon had in fact monopolized the market; and (3) that

Tilcon had unlawfully acquired businesses with the effect of

substantially limiting competition and tending to create a

monopoly in violation of section 7 of the Clayton Act.3 Port

2
Section 2 of the Sherman Act, 15 U.S.C. § 2, provides:

Every person who shall monopolize, or attempt to
monopolize, or combine or conspire with any other
person or persons, to monopolize any part of the trade
or commerce among the several States, or with foreign
nations, shall be deemed guilty of a felony, and, on
conviction thereof, shall be punished by fine not
exceeding $100,000,000 if a corporation, or, if any
other person, $1,000,000, or by imprisonment not
exceeding 10 years, or by both said punishments, in the
discretion of the court.
3
Section 7 of the Clayton Act, 15 U.S.C. § 18, provides:

No person engaged in commerce or in any activity
affecting commerce shall acquire, directly or
indirectly, the whole or any part of the stock or other
share capital and no person subject to the jurisdiction
of the Federal Trade Commission shall acquire the whole
or any part of the assets of another person engaged
also in commerce or in any activity affecting commerce,
where in any line of commerce or in any activity
affecting commerce in any section of the country, the
effect of such acquisition may be substantially to

4
Dock also alleged state law claims for tortious interference with

business relations and unfair competition. Port Dock defines the

relevant product market as the market for aggregate for use in

the construction, paving, and concrete manufacturing industries,

and the relevant geographic market as Long Island and the New

York City metropolitan area, as well as counties in northern New

Jersey.4

Tilcon moved to dismiss for failure to state a claim. The

district court held that Port Dock had not pleaded an antitrust

injury because its injury resulted from Tilcon's vertical

integration into the distribution market, rather than from

Tilcon's acquisition of its competitor in the manufacturing

lessen competition, or to tend to create a monopoly.

No person shall acquire, directly or indirectly, the
whole or any part of the stock or other share capital
and no person subject to the jurisdiction of the
Federal Trade Commission shall acquire the whole or any
part of the assets of one or more persons engaged in
commerce or in any activity affecting commerce, where
in any line of commerce or in any activity affecting
commerce in any section of the country, the effect of
such acquisition, of such stocks or assets, or of the
use of such stock by the voting or granting of proxies
or otherwise, may be substantially to lessen
competition, or to tend to create a monopoly.

4
Although both in its complaint and in its brief before this
Court Port Dock describes the relevant product market as the
"market for the distribution of aggregate," its factual
allegations extend to monopolization of the market for production
of aggregate as well.

5
market. Port Dock & Stone Corp., 2006 WL 2786882, at *9. The

court also held that Port Dock was not an efficient enforcer of

the antitrust laws because Port Dock was not a participant in the

market allegedly monopolized. Id. at *10. Having dismissed the

federal claims, the court declined to exercise supplemental

jurisdiction over the state law claims and so dismissed those as

well. Id.

We review the district court's dismissal of a complaint

under Fed. R. Civ. P. 12(b)(6) de novo, taking as true the

factual allegations of the complaint, but giving no effect to

legal conclusions couched as factual allegations. Bell Atl.

Corp. v. Twombly, 127 S. Ct. 1955, 1964-65 (2007). The

plaintiff's factual allegations must be enough to give the

defendant fair notice of what the claim is and the grounds upon

which it rests. Id. In last term's Twombly decision, itself an

antitrust case, the Supreme Court held that a complaint must

allege facts that are not merely consistent with the conclusion

that the defendant violated the law, but which actively and

plausibly suggest that conclusion. Id. at 1966; see Iqbal v.

Hasty, 490 F.3d 143, 155-58 (2d Cir. 2007) (intepreting Twombly

as instituting a "plausibility standard," requiring amplification

of facts in certain contexts).

On appeal, Port Dock contends that it had antitrust standing

because it was both a customer and competitor in the relevant

6
geographic market for aggregate. Port Dock argues it was

Tilcon's customer at the production level and Tilcon's competitor

at the distribution level. Port Dock argues that by acquiring

Lone Star Industries, Tilcon achieved a monopoly at the

production level, then expanded vertically into the distribution

level and refused to deal with Port Dock. The loss of the only

alternative supplier at the production level rendered Port Dock

utterly dependent on Tilcon, which then cut off Port Dock's

supply of aggregate.

Although Port Dock's substantive claims arise under section

2 of the Sherman Act and section 7 of the Clayton Act, the

private right of action is provided by section 4 of the Clayton

Act, 15 U.S.C. § 15. Section 4 confers standing on private

plaintiffs in sweeping language: "[A]ny person who shall be

injured in his business or property by reason of anything

forbidden in the antitrust laws may sue therefor . . . and shall

recover threefold the damages by him sustained . . . ." Despite

the broad language of the statute, courts have carefully parsed

antitrust standing in order to avoid counter-productive use of

antitrust laws in ways that could harm competition rather than

protecting it. See Serpa Corp. v. McWane, Inc., 199 F.3d 6, 10

(1st Cir. 1999).

Antitrust standing is distinct from constitutional standing,

in which a mere showing of harm in fact will establish the

7
necessary injury. Associated Gen. Contractors of Cal., Inc. v.

Cal. State Council of Carpenters, 459 U.S. 519, 535 n.31 (1983).

In addition to injury in fact to the plaintiff's business or

property caused by the antitrust violation, 15 U.S.C. § 15,

antitrust standing for a private plaintiff requires a showing of

a special kind of "antitrust injury," as well as a showing that

the plaintiff is an "efficient enforcer" to assert a private

antitrust claim. See Associated Gen Contractors, 459 U.S. at

537-45; Paycom Billing Servs., Inc. v. Mastercard Int'l, Inc.,

467 F.3d 283, 290-91 (2d Cir. 2006) (suitability of plaintiff

evaluated by efficient enforcer factors: (1) whether the

violation was a direct or remote cause of the injury; (2) whether

there is an identifiable class of other persons whose self-

interest would normally lead them to sue for the violation; (3)

whether the injury was speculative; and (4) whether there is a

risk that other plaintiffs would be entitled to recover

duplicative damages or that damages would be difficult to

apportion among possible victims of antitrust injury); see

generally 2 Phillip E. Areeda et al., Antitrust Law, ¶ 335 (2d

ed. 2000).

The necessary "antitrust injury" is an injury attributable

to the anticompetitive aspect of the practice under scrutiny.

See Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334

(1990). Showing such an injury requires identifying the practice

8
complained of and the reasons such a practice is or might be

anticompetitive. For instance, in Atlantic Richfield, even where

a retail competitor was actually injured due to the effects of an

illegal vertical agreement among an oil company and its retailers

setting a maximum price for gasoline, the Supreme Court held the

competitor had no antitrust injury. The Court said the reason

vertical maximum price fixing was illegal5 was that it would

restrain non-price competition by the dealers subject to

artificial price caps, preventing the dealers from offering the

kind of service they might otherwise choose to provide and

depriving customers of such superior service. Id. at 336-37.

Competitors who were not bound by the resale price arrangement

were not injured by the anticompetitive aspect of vertical

maximum price fixing, since they could offer superior service if

they liked. Nevertheless, those competitors might in fact be

hurt by the price fixing in another way–they might make less

money because they had to charge lower prices to compete with an

artificially capped price. Id. at 338. Despite their actual

injury from price competition, the competitors would not have

antitrust injury, for it is axiomatic that the antitrust laws do

5
Since Atlantic Richfield, the Supreme Court has abrogated
the per se rule against vertical maximum price fixing, State Oil
Co. v. Khan, 522 U.S. 3, 18 (1997), and later, the per se rule
against vertical minimum price fixing, Leegin Creative Leather
Prods., Inc. v. PSKS, Inc., 127 S. Ct. 2705, 2710 (2007). Such
arrangements are now tested under the rule of reason. Khan, 522
U.S. at 22; Leegin, 127 S. Ct. at 2720.

9
not protect a competitor against competition. Id.; see also

Brunswick Corp. v. Pueblo Bowl-o-Mat, Inc., 429 U.S. 477, 488

(1977).

Port Dock argues that it was a customer and a competitor in

the market for aggregate and therefore should have antitrust

standing. However, Port Dock's argument that competitors and

customers have antitrust standing is oversimplified, as we see

from Atlantic Richfield and other cases in which competitors

lacked standing. 495 U.S. at 338; accord Cargill, Inc. v.

Montfort of Colo., Inc., 479 U.S. 104, 122 (1986); Pueblo Bowl-o-

Mat, 429 U.S. at 488; see also Novell, Inc. v. Microsoft Corp.,

— F.3d — , 2007 WL 2984372, at *6-8 (4th Cir. Oct. 15, 2007)

(declining to adopt bright line rule that only consumers or

competitors have antitrust standing). We can ascertain antitrust

injury only by identifying the anticipated anticompetitive effect

of the specific practice at issue and comparing it to the actual

injury the plaintiff alleges.

In this case, Tilcon's alleged anticompetitive practices are

(1) acquisition of its only major competitor, resulting in a

monopoly in the production of aggregate in 1997, followed by (2)

vertical integration into the distribution level and refusal to

deal with Port Dock in 1999, leading to a second Tilcon monopoly

at the distribution level.

First, we must examine the danger to competition to be

10
expected from Tilcon's acquisition of Lone Star for the alleged

purpose of monopolizing production of aggregate and compare it to

Port Dock’s alleged injury. The danger to customers from

monopolization of the production level is the danger that the

monopolist will raise prices and restrict output. "[T]he

rationale for condemning a merger lies in its potential for

supracompetitive pricing, not in its potential for cost savings

and other efficiencies." Fla. Seed Co. v. Monsanto Co., 105 F.3d

1372, 1375 n.3 (11th Cir. 1997) (quoting Phillip Areeda & Herbert

Hovencamp, Antitrust Law ¶ 381 (rev. ed. 1995)). Port Dock,

although it had formerly been a customer of Tilcon's, did not

suffer an injury from increased prices. Indeed, Port Dock's

counsel conceded at oral argument that after the acquisition of

Lone Star, Tilcon did not raise prices to Port Dock.6 Instead,

Port Dock's grievance is that Tilcon refused to sell to it at

all. In other words, Port Dock is a former customer.

6
In fact, counsel asserted at oral argument that the
opposite was true–that Tilcon had cut prices to customers (other
than Port Dock) to below cost. However, examination of the
complaint shows that the one episode of below-cost pricing was
alleged to have occurred in connection with a 1991 dispute
between Tilcon and Port Dock, rather than to have occurred after
Tilcon acquired its production monopoly. After acquiring its
monopoly, Tilcon is alleged to have increased prices to its
remaining customers (but not Port Dock), as one would expect it
to do.
To the extent that Port Dock relies on predatory pricing
alleged to have happened in 1991, it appears on the face of the
complaint that any possible claim would be barred by the four-
year statute of limitations. 15 U.S.C. § 15b.

11
 Where a defendant is alleged to have acquired other firms in

order to achieve monopoly power at the manufacturing level of a

product market, dealers or distributors terminated in the

aftermath do not have standing to assert claims under section 2

of the Sherman Act or section 7 of the Clayton Act for

monopolization at the manufacturing level. See G.K.A. Beverage

Corp. v. Honickman, 55 F.3d 762, 766-67 (2d Cir. 1995) (§ 2); see

also Norris v. Hearst Trust, —F.3d—, 2007 WL 2702941, at *9 (5th

Cir. Sept. 18, 2007)(§ 2); Serpa Corp., 199 F.3d at 11-12 (§ 2

and § 7); Fla. Seed Co., 105 F.3d at 1375 n. 3 (§ 2); John Lenore

& Co. v. Olympia Brewing Co., 550 F.2d 495, 500 (9th Cir. 1977)

(§ 7); A.G.S. Elecs., Ltd. v. B.S.R., Ltd., 460 F. Supp. 707,

710-711 (S.D.N.Y.) (§ 7), aff'd, 591 F.2d 1329 (2d Cir. 1978).

Dealers in this situation lack standing because their particular

injury was not caused by an exercise of the defendant’s newly

acquired power to raise prices. See generally Eastman Kodak Co.

v. Image Technical Servs., Inc., 504 U.S. 451, 464 (1992)

(defining market power as the ability of a single seller to raise

price and restrict output); AD/SAT v. Associated Press, 181 F.3d

216, 227 (2d Cir. 1999) (defining monopoly power as ability to

sustain price substantially above competitive level for

significant time). Instead, the dealer's injury was caused by

the manufacturer’s decision to terminate their relationship,

something the manufacturer could have just as well done without

12
having monopoly power. G.K.A. Beverage, 55 F.3d at 767

(reasoning that acquired bottler could have terminated

distributors before acquisition); Serpa Corp., 199 F.3d at 12

("This loss [of a distributorship] is neither connected with, nor

resulted from, defendant's market power . . . ."); John Lenore &

Co., 550 F.2d at 500 ("The [post-acquisition] terminations [of

distributors] were an incidental matter which the merger may have

made possible, but certainly did not cause."). Those who would

suffer from the defendant’s exercise of monopoly power would be

the dealers or consumers who were forced to buy at higher prices

(or inferior quality) because the defendant had acquired the

market power to charge monopoly prices. See Precision Surgical,

Inc. v. Tyco Int’l Ltd., 111 F. Supp. 2d 586, 590 & n.9 (E.D. Pa.

2000) (“Here, there is no overcharge issue [regarding terminated

distributor] because the distributors no longer deal in

defendants’ products. The only potential down-stream victim of a

monopoly overcharge would be hospitals and doctors purchasing

directly from the manufacturer.”) Therefore, Port Dock did not

plead an antitrust injury from Tilcon's alleged monopolization of

the production level.

Next, Port Dock alleges that Tilcon monopolized the

distribution level of the aggregate market by expanding

vertically into the distribution level and later refusing to deal

with Port Dock. Vertical expansion by a monopolist, without

13
more, does not violate section 2 of the Sherman Act. Belfiore v.

N.Y. Times Co., 826 F.2d 177, 181 (2d Cir. 1987).

Here, in addition to vertical expansion by a monopolist,

Port Dock alleges the monopolist refused to deal with a former

distributor. A refusal to deal is generally not unlawful unless

it is done for the purpose of monopolization. United States v.

Colgate & Co., 250 U.S. 300, 307 (1919); Trans Sport, Inc. v.

Starter Sportswear, Inc., 964 F.2d 186, 189 (2d Cir. 1992). The

absence of a legitimate business purpose for the defendant's

refusal to deal has been seen as circumstantial evidence of

improper intent. See Aspen Skiing Co. v. Aspen Highlands Skiing

Corp., 472 U.S. 585, 608 (1985); Otter Tail Power Co. v. United

States, 410 U.S. 366, 378 (1973); Eastman Kodak Co. v. So. Photo

Materials Co., 273 U.S. 359, 375 (1927); Morris Commc'ns Corp. v.

PGA Tour, Inc., 364 F.3d 1288, 1295 (11th Cir. 2004)

(anticompetitive conduct is "conduct without a legitimate

business purpose that makes sense only because it eliminates

competition") (internal quotation marks omitted).

Our cases establish that when a monopolist has acquired its

monopoly at one level of a product market, its vertical expansion

into another level of the same product market will ordinarily be

for the purpose of increasing its efficiency, which is a

prototypical valid business purpose. In G.K.A. Beverage Corp. v.

Honickman, 55 F.3d 762 (2d Cir. 1995), soft-drink distributors

14
alleged that a bottler, Honickman, had monopolized the upstream

market by acquiring its principal competitor and had then

expanded that monopoly into the distribution level. This Court

held that there was no anticompetitive effect from this second-

level monopolization. Id. at 767. We affirmed dismissal of the

G.K.A. Beverage complaint for failure to state a claim. Id. at

768. The rationale for our ruling was that a monopolist can only

extract one monopoly profit on a product; once it enjoys a

monopoly at one level of the product's market, there is no

further monopoly profit to be had from its expansion vertically.

Accordingly, once Honickman had achieved an upstream monopoly, it

had no incentive to behave anticompetitively at the distribution

level: "Once having achieved the alleged bottling monopoly,

therefore, [the bottler's] sole incentive is to select the

cheapest method of distribution." Id. at 767. Since Honickman

had no anticompetitive incentive to create a downstream monopoly,

the allegations of the complaint made it more likely that

Honickman chose to eliminate the distributors to increase

efficiency, rather than for the purpose of monopolization. Id.

Therefore, a complaint pleading that a defendant expanded

vertically and as a result, decided to discontinue doing business

with its erstwhile trading partners at the next level down, does

not plead an actionable refusal to deal. Such allegations are

equally consistent with the idea that the monopolist expected to

15
perform the second level service more efficiently than the old

trading partners and thus undertook the vertical integration for

a valid business reason, rather than for an anticompetitive one.

The same reasoning, but slightly different facts, underlay

this Court's decision in E&L Consulting Ltd. v. Doman Indus.,

Ltd., 472 F.3d 23 (2d Cir. 2006), cert. denied, No. 06-1549, 2007

WL 1494779 (U.S. Oct. 1, 2007), where a lumber production

monopolist allegedly cut off a distributor and created a

distribution-level monopoly in another dealer. We affirmed

dismissal of the complaint, holding that there was no

anticompetitive incentive for the lumber producer to create a

monopoly in retail distribution of its product. Id. at 30. The

facts pleaded suggested that the producer acted for the purpose

of increasing efficiency in some way: "Like any seller of a

product, a monopolist would prefer multiple competing buyers

unless an exclusive distributorship arrangement provides other

benefits in the way of, for example, product promotion or

distribution." Id. Following this reasoning, the allegations of

an exclusive distribution agreement between the monopolist and

the new dealer did not state a cause of action under section 2 of

the Sherman Act. Id. at 31.

In light of G.K.A. Beverage and E&L Consulting, the facts

alleged by Port Dock do not establish that the vertical expansion

and the accompanying refusal to deal with Port Dock were

16
anticompetitive or, therefore, that they stated a claim for

violation of section 2 of the Sherman Act at the distribution

level of the aggregate market.

There may be special circumstances in which a monopolist's

vertical expansion could be anticompetitive, such as where the

monopolist uses the vertical integration to facilitate price

discrimination, to avoid government regulation of price at one

level, or to preserve its production monopoly by putting up entry

barriers to new competitors seeking to enter at the production

level. See Trans Sport, Inc. v. Starter Sportswear, Inc., 964

F.2d 186, 191 (2d Cir. 1992); Paschall v. Kansas City Star Co.,

727 F.2d 692, 702 (8th Cir. 1984) (en banc); Byars v. Bluff City

News Co., 609 F.2d 843, 861-62 (6th Cir. 1980); see generally

Note, Refusals to Deal by Vertically Integrated Monopolists, 87

Harv. L. Rev. 1720, 1727-28 (1974). Port Dock has not alleged any

such circumstance that would make Tilcon's vertical integration

and refusal to deal with it anticompetitive. The complaint

pleads no facts that would show that Tilcon's vertical expansion

was for an anticompetitive purpose rather than for the purpose of

improving efficiency. Since it is established law that mere

vertical expansion by a monopolist plus refusal to deal with a

former distributor, without more, does not establish

anticompetitive monopolization, it was incumbent on Port Dock to

plead further facts "plausibly suggesting" an anticompetitive

17
aspect to the refusal to deal. See Twombly, 127 S. Ct. at 1966

(since it is established that consciously parallel conduct of

competitors is not sufficient to establish conspiracy, plaintiff

must plead further facts plausibly suggesting conspiracy).

Port Dock relies on cases in which refusals to deal were

found to be anticompetitive, but those cases are distinguishable

because in each of them, the plaintiff plausibly suggested that

the defendant had an economic incentive to exclude the

competitor. Tilcon, in contrast, had no such incentive because

it already enjoyed a monopoly at the production level. Port Dock

relies on PrimeTime 24 Joint Venture v. NBC, 219 F.3d 92 (2d Cir.

2000), in which this Court held that a plaintiff stated antitrust

injury from a concerted refusal to deal. There, the major

television networks and their affiliated stations were alleged to

have conspired to refuse to license copyrighted programs to the

plaintiff satellite company, which wanted to buy the programs to

package with alternative programming to transmit to consumers or

to distributors. This Court held that the conspiracy's alleged

object in refusing to sell programming was to deprive the

satellite company of the tools it needed to compete with the

networks, and the alleged anticompetitive effect was that the

networks could maintain higher prices on their programming

without the competition from alternative programming. Id. at

103-04. Thus, the plaintiff was competing with a number of

18
vertically integrated defendants, and the defendants had an

economic incentive to exclude it from the market. The incentive

to behave anticompetitively distinguishes PrimeTime 24 from this

case, in which Tilcon was alleged to have successfully

monopolized the market at one level of production, and thus had

already vouchsafed its monopoly profit and had nothing to gain

from excluding Port Dock from the distribution market.

Port Dock also cites Aspen Skiing Co. v. Aspen Highlands

Skiing Corp., 472 U.S. 585 (1985), in which a company that owned

three ski mountains refused to deal with its rival that owned

only one mountain. After years of voluntary cooperation in a

joint venture in which the companies offered a package with

access to all four mountains, the defendant changed course and

refused to cooperate or even to allow the plaintiff to purchase

ski passes at defendant's retail price in order to put together

its own package. The evidence at trial showed that consumers

preferred the four mountain package, but when deprived of the

package, would bypass the plaintiff's mountain altogether. Id.

at 605-08. As in PrimeTime 24, by refusing to deal with its

rival, the defendant was able to eliminate competition from its

rival and thereby gain market power. Moreover, the Supreme Court

emphasized that there was no legitimate reason for the defendant

to refuse to sell tickets to the plaintiff at the defendant's

retail price, id. at 608-09, especially since the defendant had

19
found it commercially desirable to cooperate in offering packages

with the plaintiff in the past, id. at 603. The absence of a

legitimate business reason for the refusal to deal suggested that

the reason for the defendant's action was intent to monopolize.

Here, in contrast, our vertical integration cases show that

Tilcon's expansion into distribution was most likely in pursuit

of increased efficiency, and Port Dock has not alleged any facts

that would plausibly suggest that Tilcon's purpose was

anticompetitive. There was thus an apparent legitimate business

reason for Tilcon's refusal to deal.

Port Dock also relies on Eastman Kodak Co. v. Image

Technical Servs. Inc., 504 U.S. 451 (1992), which involved a

claim of leveraging monopoly power over one product market into a

distinct product market, id. at 483, rather than vertical

integration in one product market, and so is not on point.

In sum, Port Dock lacks antitrust standing to assert a claim

for monopolization of the aggregate market at the manufacturing

level, and it has failed to allege a plausible claim of

anticompetitive conduct at the distribution level. Therefore,

the district court correctly found that it had failed to state a

claim.

Port Dock asks that we remand with leave to replead, but it

has not offered any pleading that would cure the deficiencies in

the extant complaint. Without such a showing, we can only

20
conclude that repleading would be futile. See Cuoco v.

Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000) (request to replead

should be denied where repleading would be futile).

We affirm the district court's order dismissing the

complaint.

21