Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
4-14-1995
Advo v Phila Newspapers Inc
Precedential or Non-Precedential:
Docket 94-1812
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 94-1812
___________
ADVO, INC.,
Appellant
v.
PHILADELPHIA NEWSPAPERS, INC.,
d/b/a PHILADELPHIA INQUIRER;
PHILADELPHIA DAILY NEWS
_________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(Civil Action No. 93-3253)
_______________
Argued February 13, 1995
BEFORE: STAPLETON, GREENBERG and COWEN, Circuit Judges,
(Filed: April 14, 1995)
______________
John DeQ. Briggs (argued)
Margaret M. Zwisler
Jerrold J. Ganzfried
Richard A. Ripley
Howrey & Simon
1299 Pennsylvania Ave., N.W.
Washington, DC 20004
David M. Steger
Advo, Inc.
One Univac Lane
Windsor, CT 06095
Attorneys for Appellant
Robert C. Heim (argued)
Richard C. Rizzo
Judy L. Leone
George G. Gordon
Dechert Price & Rhoads
1717 Arch St.
4000 Bell Atlantic Tower
Philadelphia, PA 19103
Attorneys for Appellee
Anne K. Bingaman
Assistant Attorney General
Diane P. Wood
Deputy Assistant Attorney
General
Catherine G. O'Sullivan
David Seidman
U.S. Department of Justice
10th & Pennsylvania Ave., N.W.
Washington, DC 20530
Attorneys for Amicus
Curiae United States of
America
OPINION OF THE COURT
GREENBERG, Circuit Judge.
Appellant Advo, Inc. sued appellee Philadelphia
Newspapers, Inc. ("PNI") charging that PNI attempted to
monopolize the market for delivering preprinted advertising
circulars in the greater Philadelphia area, in violation of
section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2. Advo
alleged that PNI has offered predatorily low prices to major
purchasers of services for delivering circular advertising, and
that, in light of specific features of the market, PNI's scheme
to force Advo from the market has a dangerous probability of
succeeding.
After extensive discovery, the district court entered
summary judgment in favor of PNI. Because we concur that PNI
could not have recouped the investment in predation it might have
made, and because Advo failed to present evidence that could
support a finding that PNI either priced below cost or had a
specific intent to monopolize, we will affirm.
I. Introduction
A. Factual Background
1. General Features of the Market for Retail
Advertising
Before presenting the specific facts of this case, we
find it useful to provide general information on the relevant
advertising markets. Until recent decades, grocery stores,
discount stores, hardware stores, and other large retailers
promoted their goods primarily through newspapers. They used two
kinds of advertisements. Those appearing directly on newspaper
editorial pages are called "run of press" ("ROP") advertising.
Separate pieces of paper included with the newspaper (e.g.
supermarket multi-page ads) are called "circulars" or
"preprints."
Retailers found newspaper advertising wanting in two
ways. First, it provides only limited "penetration" into an
area's households. For example, in Philadelphia the major daily
newspapers reach only 25.4% percent of the households and even
the Sunday paper reaches only 49.1%. Second, newspaper
advertising cannot focus on specific neighborhoods within a large
metropolitan area. To give a concrete example of both of these
shortcomings, a supermarket chain understandably wants its
advertisements to reach every household within close proximity to
its stores. Newspaper advertising, be it ROP or preprint, cannot
provide such targeted saturation coverage.
In response to these shortcomings, literally hundreds
of "marketing communications" services ("MC services") have
sprung up over the last 30-odd years. Taking advantage of
comprehensive computer databases containing the addresses of
every household in a region, they have been able to provide
almost complete penetration in delivering advertising materials,
be it in an entire metropolitan area or within, e.g., specific
zip code areas. These services, of course, deliver only
preprints since they do not publish any sort of newspaper. The
dispute in this case involves the delivery of print advertising
for retailers targeted at consumers within a metropolitan area.
MC services deliver either by United States mail or by
hiring delivery people to walk door-to-door and hang bags of
preprints on doorknobs. The former is often called "shared
mail"; the latter is known as "alternate delivery." Some costs
are common to both methods; e.g. computerized mailing lists, and
labor to stuff preprints into packets and sort the packets in
order of delivery. Alternate delivery involves other significant
fixed costs. In addition to hiring delivery persons and planning
their routes, management must employ a second tier of "verifiers"
to perform spot-checks and ensure that delivery employees simply
are not dumping their packets into the first available dumpster.
Because mail rates increase with the weight of the
advertising packets, alternate delivery becomes attractive,
despite these high fixed costs, as an MC service attracts more
customers. Once delivery and verification staff are in place,
the incremental costs of adding more advertising material to the
packet are minimal.
To cover the high fixed costs of alternate delivery, or
even the lower but still significant fixed costs incurred in mail
delivery, MC services need "base players" that distribute large
numbers of circulars on a routine basis. Supermarket chains,
which depend on multi-page weekly circulars to attract shoppers,
are one of the most important types of base players. Large
discount chains, such as K-Mart, also play this role. There are,
of course, only a small set of such base players in a given
metropolitan area.
2. Advo and the Philadelphia Market for Preprint
Advertising
Advo is a national MC services company and is the
largest full-service direct mail marketing company in the
country. It distributed at least three billion advertising
packages in 1992, generating nearly a billion dollars in revenue.
Advo began operating in the eight-county area that comprises the
Philadelphia market1 in the mid-1960s, and appears to have grown
1
. The parties stipulate that the relevant geographical market
in this suit consists of the following eight counties:
Philadelphia, Bucks, Montgomery, Chester, and Delaware counties
in Pennsylvania; Camden, Burlington, and Gloucester counties in
New Jersey. This is the same area as the Census Bureau's
Philadelphia Primary Metropolitan Statistical Area.
rapidly since obtaining the Acme supermarket chain as a base
advertiser for shared mailings in 1983.
Ironically, Advo faced a Sherman Act section 2 suit as
a result of capturing the Acme account and expanding its business
in Philadelphia. Cassidy Distrib. Serv. v. Advo-Sys., Inc., No.
84-3464 (E.D. Pa. 1984). A small competitor that previously had
serviced Acme sued Advo charging predatory conduct in furtherance
of a plan to monopolize the market for distributing advertising
circulars in the region. In the course of countering this
charge, Advo argued that there are few, if any, barriers to
entering the business of marketing communications, and thus there
is little, if any, chance that a predator could recoup the costs
of illegally obtaining a monopoly. See app. at 1772-1908, 2317-
2340, 2341-2348.
The market for circular advertising distribution
appears to have become more competitive in recent years. When
Advo changed its delivery schedule in 1989 to accommodate Acme,
other major customers became dissatisfied and invited CBA, a MC
services company from outside the area, to enter the Philadelphia
market. Despite start-up costs of over $3,000,000, CBA turned a
profit within 14 months. In a move admittedly taken to avert a
"price war," Advo acquired CBA's Philadelphia preprint
distribution operations in 1992. This acquisition apparently
encountered no antitrust scrutiny.
3. The Effect of Marketing Communications Services on
Major Philadelphia Newspapers, and Their Response
Much of Advo's growth has come at the expense of PNI,
publisher of the Philadelphia market's major daily newspapers,
The Philadelphia Daily News and The Philadelphia Inquirer. PNI
estimates that it has lost at least $4,000,000 per year in ROP
and circular advertising to Advo and similar competitors.
To counter Advo's advantages in market penetration and
the ability to target specific neighborhoods, PNI in 1991 began
working on a "total market coverage" ("TMC") program to
supplement ROP advertising with alternate delivery to non-
subscriber households. PNI started implementing the program in
small stages by 1992. Although it faced substantial start-up
costs, PNI claims that it hoped to turn a profit on its TMC
program by 1995.
Facing the same cost structure as Advo, PNI needed a
base player to help cover the high fixed costs of delivering
preprinted advertising packets door-to-door. In September 1992,
and again in January of 1993, PNI offered to distribute circulars
for the Super Fresh supermarket chain, a major Advo customer, for
about $30 per thousand circulars. As part of its proposal, PNI
offered discounts on ROP advertising tied to the total volume of
advertising that Super Fresh purchased. Advo retained the
account by cutting its rate by about 37%, from $58 to $36 per
thousand circulars. Thus, Super Fresh retained Advo despite its
base rate exceeding that in PNI's proposal by about 20%.
Although the expert opinion testimony is conflicting, there
appears to be no factual basis to Advo's claim that PNI's
proposed prices were below its costs. There is also no support
for Advo's claim that PNI tendered Super Fresh prices below those
offered to comparable advertisers.
PNI made similar efforts to wrest the accounts of Acme
and Fleming Foods supermarkets, Bradlees department stores, and
Circuit City consumer electronics stores from Advo; in each case
Advo retained the accounts after cutting its rates substantially.
In fact no major account has switched from Advo. Thus, it is
clear that to date PNI's activities have been pro-competitive, as
they have resulted in lower prices.
B. Procedural History
Advo filed its complaint against PNI on June 17, 1993,
alleging that PNI was engaged in a predatory pricing scheme
designed to achieve a monopoly over the Philadelphia market for
circular and ROP advertising in violation of section 2 of the
Sherman Act, 15 U.S.C. § 2. Advo requested damages, 15 U.S.C.
§ 15, and injunctive relief, 15 U.S.C. § 26. The district court
exercised subject matter jurisdiction over Advo's antitrust
claims under 28 U.S.C. § 1331 (federal question jurisdiction) and
28 U.S.C. § 1337 (interstate commerce jurisdiction).
The parties undertook extensive discovery, including
deposing at least 30 of each other's corporate officials as well
as other industry experts. Each side presented expert economic
analysis. In addition, the eight-volume appendix, running to
over 2300 pages, includes relevant documents such as business
plans, annual reports, and internal memoranda.
After reviewing this voluminous record, receiving
extensive briefs, and hearing oral argument, the district court
on June 13, 1994, granted PNI's motion for summary judgment on
the antitrust claims. Advo, Inc. v. Philadelphia Newspapers,
Inc., 854 F. Supp. 367 (E.D. Pa. 1994). The court found that
even if it accepted, arguendo, that PNI had engaged in predatory
conduct with specific intent to monopolize, there was no
dangerous probability that PNI could achieve a monopoly and
maintain it long enough to recoup the costs of predation. The
court reaffirmed its decision in response to Advo's motion under
Fed. R. Civ. P. 59(e) for reconsideration on July 15, 1994.2
On August 11, 1994, Advo timely appealed from the
district court's order of summary judgment and from the order
denying the motion for reconsideration. We have jurisdiction
under 28 U.S.C. § 1291.
II. Discussion
A. The Standard for Summary Judgment
1. Predatory Pricing Suits in Particular
For its case to survive PNI's motion for summary
judgment, Advo had to show that there is a "genuine issue as to
2
. Because these rulings disposed of all federal questions in
Advo's complaint, the court exercised its discretion and
dismissed without prejudice a supplemental state law tort claim
for tortious interference with prospective contractual relations.
[a] material fact" that, if decided in its favor, would legally
entitle it to prevail on its attempted monopolization claim.
Fed. R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S.
317, 322-26, 106 S.Ct. 2548, 2552-54 (1986). The Supreme Court's
decision in Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 106 S.Ct. 1348 (1986), led some to believe that
there was a special summary judgment standard for antitrust cases
in general, or for predatory pricing cases in particular. In
Matsushita, the Court reversed this court and held that we erred
in reversing a summary judgment which the district court granted
to the defendants in a predatory pricing suit. Expressing
skepticism about the rationality of predatory pricing schemes,
the Supreme Court reasoned that "if the factual context renders
[an antitrust plaintiff's] claim implausible-if the claim is one
that simply makes no economic sense-[the plaintiff] must come
forward with more persuasive evidence to support [its] claim than
would otherwise be necessary." Id. at 587, 106 S.Ct. at 1356
(citations omitted).
Other language in the opinion, however, demonstrated
that the Court grounded its reasoning in the general standard for
summary judgment under Rule 56. "Where the record taken as a
whole could not lead a rational trier of fact to find for the
non-moving party, there is no genuine issue for trial," id
(internal quotations omitted). See also Petruzzi's IGA
Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230-
32 (3d Cir.), cert. denied, 114 S.Ct. 554 (1993). If there was
any doubt about the matter, the Court settled it in Eastman Kodak
Co. v. Image Technical Serv., Inc., 112 S.Ct. 2072, 2083 (1992):
The Court's requirement in Matsushita that
the plaintiffs' claim make economic sense did
not introduce a special burden on plaintiffs
facing summary judgment in an antitrust case
. . . . Matsushita demands only that the
nonmoving party's inferences be reasonable in
order to reach the jury, a requirement that
was not invented, but merely articulated in
that decision. If the plaintiff's theory is
economically senseless, no reasonable jury
could find in its favor, and summary judgment
should be granted.
In its most recent predatory pricing case, the Court
indicated that summary judgment will be appropriate in a host of
specific contexts. "In certain situationsfor example, where
the market is highly diffuse and competitive or where new entry
is easy, or the defendant lacks adequate excess capacity to
absorb the market share of his rivals and cannot quickly create
or purchase new capacitysummary disposition of the case is
appropriate." Brooke Group Ltd. v. Brown & Williamson Tobacco
Corp., 113 S.Ct. 2578, 2589 (1993).3
3
. While the plaintiff in Brooke Group alleged "primary line"
price discrimination under the Clayton Act, as amended by the
Robinson-Patman Act, 15 U.S.C. § 13(a), the Court made clear that
such price discrimination was factually identical to predatory
pricing and thus that the analysis in the opinion applies as well
to predatory pricing suits under section 2 of the Sherman Act.
[P]rimary-line competitive injury under the
Robinson-Patman Act is of the same general
character as the injury inflicted by
predatory pricing schemes actionable under
§ 2 of the Sherman Act . . . [T]he essence of
the claim under either statute is the same: A
business rival has priced its products in an
Matsushita caused some confusion because it in effect
created a legal presumption, based on economic logic, that
predatory pricing is unlikely to threaten competition. The
Court, citing a long list of scholarly works, found that "there
is a consensus among commentators that predatory pricing schemes
are rarely tried, and even more rarely successful." Matsushita,
475 U.S. at 589, 106 S.Ct. at 1357; see also Brooke Group, 113
S.Ct. at 2589 (citing this passage from Matsushita). In a
nutshell, economic analyses stress that (1) predatory pricing,
unlike collusion or merger, involves an expensive "investment in
predation," since presumably the predator will have to price
below costs; (2) this investment must be more than offset by
discounted future monopoly profits; and (3) the ability to
(..continued)
unfair manner with an object to eliminate or
retard competition and thereby gain and
exercise control over prices in the relevant
market.
Accordingly, whether the claim alleges
predatory pricing under § 2 of the Sherman
Act or primary-line price discrimination
under the Robinson-Patman Act, two
prerequisites to recovery remain the same.
[1.] [prices] below an appropriate measure of
a rival's costs . . .
[2.] a demonstration that the competitor had
a reasonable prospect, or, under § 2 of the
Sherman Act, a dangerous probability, of
recouping its investment in below-cost
prices.
Brooke Group, 113 S.Ct. at 2587-88.
Advo could not make a claim under the Robinson-Patman
Act, since the Act applies only to commodities and not services
like advertising.
maintain a monopoly for long enough to recoup an investment in
predation is uncertain, since supracompetitive prices will
attract new entrants (or returning competitors).4
Empirical studies support these theoretical insights.
While it once was believed widely that turn-of-the-century
"robber barons" commonly practiced predatory pricing to eliminate
competitors, research over the last few decades has exposed this
4
. Some recent work has demonstrated that predatory pricing may
be viable in a limited number of special situations. See, e.g.,
Jonathan Baker, Predatory Pricing After Brooke Group: An Economic
Perspective, 62 Antitrust L.J. 585 (1994).
Baker provides a typical situation where predatory
pricing might work:
Suppose a chain store faces a non-chain rival
in each of a large number of towns. The
chain cuts its prices drastically in a few
towns. When the chain's rivals in those
towns either exit or begin to compete less
aggressively with the chain, the price war
ends and high prices are restored. In
addition, the chain store's rivals in all the
other towns, in which the chain did not cut
prices, also respond by avoiding aggressive
competition with the chain. As a result
prices also increase in the towns in which
predation did not occur.
Id. at 590. Predation makes economic sense in such cases because
the predator needs to make a relatively small investment (below-
cost prices in only a few markets) in order to reap a large
reward (supracompetitive prices in many markets).
Advo, however, has made no argument that PNI's
predation is anything like this special case where price
predation is economically sensible. This is probably because the
facts of this case do not fit under such a theory. PNI competes
in only one market, and Advo presents no evidence that PNI's
parent, Knight-Ridder Corporation, is using Advo as an example
for competitors it faces in other markets.
belief as a myth. For instance, a seminal article demonstrated
that John D. Rockefeller invariably used mergers, and not
predatory pricing, to lessen competition in the oil industry.5
Based on this combination of economic logic and
empirical verification, the Court has concluded that "economic
realities tend to make predatory pricing conspiracies self-
deterring: unlike most other conduct that violates the antitrust
laws, failed predatory pricing schemes are costly to the
conspirators." Matsushita, 475 U.S. at 595, 106 S.Ct. at 1360.
"[I]f [the alleged predators] had no rational economic motive to
conspire, and if their conduct is consistent with other, equally
plausible explanations, the conduct does not give rise to an
inference of conspiracy." Id. at 596-97, 106 S.Ct. at 1361.6
Erroneous jury verdicts for plaintiffs in predatory
pricing cases pose a unique threat. "[C]utting prices in order
to increase business often is the very essence of competition.
5
. John S. McGee, Predatory Price Cutting: The Standard Oil
(N.J.) Case, 1 J. Law & Econ. 137, 168-69 (1958). See also
Morris Adelman, A&P: A Study in Price-Cost Behavior and Public
Policy (1966) (showing that national supermarket chain did not
engage in predatory pricing to eliminate local rivals); Kenneth
G. Elzinga, Predatory Pricing: The Case of the Gunpowder Trust,
13 J. Law & Econ. 223, 240 (1970) (showing that gunpowder
manufacturers did not use predatory pricing to achieve monopoly
power). The Supreme Court has cited approvingly the empirical
work of McGee and others, Matsushita, 106 S.Ct. at 1357.
6
. Matsushita involved alleged predatory pricing conspiracies
among a group of oligopolistic defendants. Nevertheless, the
Court in Matsushita expressed equal skepticism about the
plausibility of predatory pricing by a single defendant. "These
observations apply even to predatory pricing by a single firm
seeking monopoly power." Matsushita, 475 U.S. at 590, 106 S.Ct.
at 1357 (emphasis in original).
Thus, mistaken inferences in cases such as this one are
especially costly, because they chill the very conduct the
antitrust laws are designed to protect." Matsushita, 475 U.S. at
594, 106 S.Ct. at 1360. "[C]ourts should not permit factfinders
to infer conspiracies when such inferences are implausible,
because the effect of such practices is often to deter
procompetitive conduct." Id. at 593, 106 S.Ct. at 1359. We
cannot ignore the danger of chilling competition in this case,
since PNI's acts clearly have benefited consumers, in the short
run at least, with lower prices. There are antitrust problems
only if PNI has the intent and the power to harm these consumers
in the long run.
2. Burden on Advo in General
The United States, in its amicus brief, claims that we
stated in Big Apple BMW, Inc. v. BMW of North America, Inc., 974
F.2d 1358, 1363 (3d Cir. 1992), cert. denied, 113 S.Ct. 1262
(1993), that summary judgment is inappropriate where plaintiffs
have "advanced even a 'mere scintilla' of evidence" in support of
their theory of recoupment. Br. at 12. This statement perplexes
us as it misstates the holding in Big Apple. The relevant
passage in Big Apple explicitly requires more: "if the opponent
[to a summary judgment motion] has exceeded the 'mere scintilla'
threshold and has offered a genuine issue of material fact, then
the court cannot credit the movant's version of events against
the opponent, even if the quantity of the movant's evidence far
outweighs that of its opponent." 974 F.2d at 1363 (emphasis
added). See also Petruzzi's IGA, 998 F.2d at 1230. In keeping
with Rule 56(c) and Celotex, we clearly stated in Big Apple that
a plaintiff cannot survive summary judgment unless it can produce
more than a "scintilla" of factual support for their theory of
legal recovery.
To summarize, then, in order to establish a "genuine
issue" that entitles it to reach trial on its attempted
monopolization claim premised on predatory pricing, Advo must
present more than a scintilla of evidence that the alleged
predatory conduct makes economic sense. In this appeal, the main
hurdle for Advo is to show that PNI reasonably could expect to
recoup an investment in the predatory pricing of distribution of
circular advertising.
B. Elements of Predation
"[I]t is generally required that to demonstrate
attempted monopolization a plaintiff must prove (1) that the
defendant has engaged in predatory or anticompetitive conduct
with (2) a specific intent to monopolize and (3) a dangerous
probability of achieving monopoly power." Spectrum Sports, Inc.
v. McQuillan, 113 S.Ct. 884, 890-91 (1993). See also Barr Labs.
Inc. v. Abbott Lab., 978 F.2d 98, 112 (3d Cir. 1992). The
district court assumed arguendo that Advo had demonstrated that
there were genuine issues of material fact surrounding the first
two elements of its attempted monopolization case: predatory
conduct, in the form of predatory, below-cost pricing; and
specific intent to monopolize. It nonetheless found no dangerous
probability that PNI could achieve monopoly power.
While we concur with the district court's conclusion,
see § II.B.3 infra, we first examine Advo's evidence on predatory
conduct and specific intent. We find that Advo failed to produce
evidence sufficient to survive summary judgment on any of the
three elements of its attempted monopolization claim against PNI.
1. Below-Cost Pricing
"[P]redatory pricing means pricing below some
appropriate measure of cost." Matsushita, 475 U.S. at 584 n.8,
106 S.Ct. at 1355 n.8 (internal quotation marks omitted). Yet
"[t]here is a good deal of debate, both in the cases and in the
law reviews, about what 'cost' is relevant in such cases," id.,
and "[n]o consensus has yet been reached on the proper definition
of predatory pricing in the antitrust context . . . ." Cargill,
Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 117 n.12, 107
S.Ct. 484, 493 n.12 (1986). The Supreme Court, however, recently
reaffirmed that "the reasoning in both [Matsushita and Cargill]
suggests that only below-cost prices should suffice, and [that it
has] rejected elsewhere the notion that above-cost prices that
are below general market levels or the costs of a firm's
competitors inflict injury to competition cognizable under the
antitrust laws." Brooke Group, 113 S.Ct. at 2588. In Brooke
Group, the Court accepted for the purposes of the case the
parties' agreement to use average variable cost, but "again
decline[d] to resolve the conflict among the lower courts over
the appropriate measure of cost." Id. at 2587 n.1.
Under microeconomic theory, the most important measure
is marginal cost - the cost of producing each incremental unit
of output. As long as a firm's prices exceeds its marginal cost,
each additional sale decreases losses or increases profits. Such
pricing is presumably not predatory.
Like many economic abstractions, marginal cost is
difficult to measure. The most widely cited approach to dealing
with this problem, Phillip Areeda & Donald F. Turner, Predatory
Pricing and Related Practices Under Section 2 of the Sherman Act,
88 Harv. L. Rev. 697, 716-18 (1975), divides costs into two
categories: fixed costs that do not vary with the level of output
(e.g. interest on borrowings, insurance premiums), and variable
costs that do vary with the level of output (e.g. overtime wages,
electricity bills, material costs). Because it is practically
impossible to calculate the portion of variable costs
attributable to each additional unit of output, Areeda and Turner
argue that courts should use average variable cost as a proxy for
marginal cost.
Regardless of the measure of a defendant's costs on
which a plaintiff premises a predatory pricing claim, a plaintiff
cannot anchor its case on theoretical speculation that a
defendant is pricing below that measure. Indeed, "[a]s a
practical matter, it may be that only direct evidence of below-
cost pricing is sufficient to overcome the strong inference that
rational businesses would not enter into conspiracies such as
this one." Matsushita, 475 U.S. at 584 n.8, 106 S.Ct. at 1355
n.8 (emphasis added).7
Despite extensive discovery, Advo apparently is unable
to produce any direct evidence that PNI offered to distribute
circulars at prices below any relevant measure of cost. As a key
step of his analysis, Advo's economic expert states that
"[a]verage variable costs for [PNI's TMC program] were
estimated." App. at 1630 (emphasis added). The basis for these
estimates is weak. For instance, with no more foundation than a
statement by PNI's publisher that inserting circulars involves
"extensive costs," the expert concluded that PNI "potentially
vastly understated" this variable cost. Other components of the
expert's cost estimates similarly lack a factual basis.
As Brooke Group makes clear, expert testimony without
such a factual foundation cannot defeat a motion for summary
judgment. "When an expert opinion is not supported by sufficient
facts to validate it in the eyes of the law, or when indisputable
record facts contradict or otherwise render the opinion
unreasonable, it cannot support a jury's verdict . . . . Expert
testimony is useful as a guide to interpreting market facts, but
it is not a substitute for them." Brooke Group, 113 S.Ct. at
2598. Advo failed to present facts establishing a genuine issue
over whether PNI priced circular advertising distribution
7
. As we explain in note 6 supra, the Court's use of the word
"conspiracy" here in no way limits the application of this
language to Sherman Act section 1 cases.
services below some measure of costs. This omission provided
sufficient grounds for granting summary judgment.
2. Specific Intent to Monopolize by Predation
In addition to demonstrating predation, plaintiffs
alleging monopolization under section 2 must produce intent
evidence. Courts sometimes infer specific intent directly from
proof of below-cost pricing. Inasmuch as Advo failed to create a
genuine issue over pricing, however, it needed to prove specific
intent by other means. Its two attempts, based on (1) statements
in internal PNI documents, and (2) PNI's alleged targeting of
Advo's key customers, are not sufficient to withstand PNI's
motion for summary judgment.
Antitrust plaintiffs often establish specific intent
with "smoking gun" documents that articulate antitrust scienter
in no uncertain terms. Advo found no such documents; instead, it
attempted to cut and paste unrelated and innocent clauses
together to produce guilty declarations. To take one example,
Advo misrepresents that PNI's TMC Business Plan states that:
[T]he 'ultimate benefit' of the TMC program
was that PNI would be the 'one-stop buy,'
i.e. the only competitor left, in the eight
county Philadelphia market when rates would
become 'upwardly adjustable.'
Appellant's Br. at 24. The phrases "ultimate benefit" and "one-
stop buy" do occur in the same sentence in the plan, app. at 738,
and correctly portray PNI's overall objective. The phrase
"upwardly adjustable," however, comes eight paragraphs later,
app. at 739, as the discussion progresses from an overview of the
plan to the nuts and bolts of various hypothetical business
scenarios. PNI used the phrase "upwardly adjustable" in a
scenario in which it assumed that prices "are deemed to be very
competitively set . . . ." This is a far cry from an admission
that it was charging predatory prices to start with, or that it
planned to charge monopolistic prices in the future.
Advo officials themselves have used aggressive-sounding
language. Its CEO, Robert Kamerschen, once directed his managers
"to seize the OPPORTUNITY inherent in the stumbling PROBLEMS of
the newspaper industry," and quoted McDonald's founder Ray Kroc
for the advice that "[w]hen [you] see the competition drowning,
. . . stick a water hose down their throats." App. at 459.
The antitrust statutes do not condemn, without more,
such colorful, vigorous hyperbole; there is nothing to gain by
using the law to mandate "commercially correct" speech within
corporate memoranda and business plans. Isolated and unrelated
snippets of such language "provide no help in deciding whether a
defendant has crossed the elusive line separating aggressive
competition from unfair competition." Morgan v. Ponder, 892 F.2d
1355, 1359 (8th Cir. 1989). We thus conclude that nothing quoted
from PNI's internal documents displays PNI's specific intent to
monopolize the market for distribution of circular advertising.
Advo's claim that PNI's "targeting" of its key accounts
demonstrates such specific intent is similarly unavailing. As we
discussed supra § I.A.1, circular advertising distributors need
"base players," that advertise frequently and on a large scale,
to cover their high fixed costs. Inasmuch as there are
relatively few base players in the Philadelphia market, any firm
competing in the market for distribution of circular advertising
necessarily would try, as a first step, to wrest one or more of
these large accounts away from Advo. PNI's proposals to Advo's
largest customers are exactly what we would expect from a
legitimate competitor. That such behavior also might be
consistent with predation does not mean that Advo can survive
PNI's motion for summary judgment. "If [seemingly predatory]
conduct is consistent with other, equally plausible explanations,
the conduct does not give rise to an inference of conspiracy."
Matsushita, 475 U.S. at 596-97, 106 S.Ct. at 1361.
3. Dangerous Probability of Recoupment
Finally, we concur with the district court's
determination that Advo failed to establish a genuine issue of
material fact about PNI's ability to recoup any investment made
in predation (§ II.B.3.a infra). The Supreme Court instructs
that "[i]f market circumstances or deficiencies in proof would
bar a reasonable jury from finding that the scheme alleged would
likely result in sustained supracompetitive pricing, the
plaintiff's case has failed." Brooke Group, 113 S.Ct. at 2589.
The district court found, in effect, that "[t]he evidence is
inadequate to show that in pursuing this scheme, [PNI] had a
reasonable prospect of recovering its losses from below-cost
pricing," id. at 2592. We agree.
In addition, we reject Advo's theories that PNI can
scare away potential entrants by "strategic deterrence"
(§ II.B.3.b infra), or can "leverage" its monopoly over ROP
advertising to gain a monopoly over the distribution of circular
advertising (§ II.B.3.c infra). Finally, we find no support for
Advo's theories for how PNI could recoup an investment in
predation via either price discrimination (§ II.B.3.d infra) or
long-term contracts (§ II.B.3.e infra).
a. Low barriers to entry
For the purposes of this section, we accept the
contention that PNI is pricing below cost, with specific intent
to obtain a monopoly in the distribution of advertising
circulars. We further assume, arguendo, that it will be able to
complete successfully the first stage of its plans by eliminating
Advo and all other competitors from the Philadelphia market.
But, as we discussed supra § II.A, in order to defeat the motion
for summary judgment Advo must demonstrate that PNI has a
dangerous chance to recoup the losses it necessarily would incur
in pricing below cost.
If it is easy to enter the circular distribution
business, PNI's scheme is doomed to failure: any attempt to
recoup by charging supracompetitive prices after it has gained a
monopoly simply will attract new (or old) distributors who will
undercut PNI and force prices back down to competitive levels.
Predatory pricing schemes that fail at the recoupment stage may
injure specific competitors like Advo, but do not injure
competition (i.e. they do not injure consumers) and so produce no
antitrust injury. See Brunswick Corp. v. Pueblo Bowl-O-Mat,
Inc., 429 U.S. 477, 487-90, 97 S.Ct. 690, 697 (1977). Such
futile below-cost pricing effectively bestows a gift on
consumers, and the Sherman Act does not condemn such inadvertent
charity.
In deciding that low barriers to entry would defeat any
attempt by PNI to recoup an investment in predation by raising
prices, the district court properly analyzed the specific
features of the Philadelphia market for circular advertising.
"In order to determine whether there is a dangerous probability
of monopolization, courts have found it necessary to consider the
relevant market and the defendant's ability to lessen or destroy
competition in that market." Spectrum Sports, 113 S.Ct. at 891.
We do not see the difficulty of entering the business
of assembling and distributing bags of advertising circulars,
whether by mail or door-to-door. The inputs required are readily
available: a small cadre of experienced managers; a sales force;
computerized address lists available from a variety of vendors;
and a large number of low-skill employees to stuff circulars into
packets, and then either to stuff them into newspapers or hang
them on doorknobs.
Nobody has a monopoly over any of these commonly-
available goods and services. Managers with experience in the
circular advertising distribution business are probably the
scarcest of the requirements, but if Advo exited the Philadelphia
market, a new entrant might be able to hire its local management
team. The Supreme Court has observed that driving a competitor
out of business may do no more than allow a new entrant to buy up
the idled physical and human capital at bargain prices. See
Cargill, 479 U.S. at 119 n.15, 107 S.Ct. at 494-95 n.15. In any
event, the business involved here hardly is of a highly
sophisticated nature.
High capital requirements also pose no barrier to
entry. The total start-up investment, based on CBA's successful
entry into the Philadelphia market, is a couple of million
dollars. While this sum is not trivial, it is not so high that
it would prevent new competitors from jumping in if PNI tried to
charge supracompetitive prices.8
Advo itself made substantially all of these points in
defending against a similar claim ten years ago, Cassidy Distrib.
Serv., supra § I.A.2. According to Advo's expert in that case,
"[e]ntry into the market [for distribution of circular
advertising] is comparatively easy. Little initial capital is
required relative to many other businesses. Mailing lists and
operational expertise are available from many sources." Revised
Preliminary Report of Dr. Almarin Phillips, app. at 2345.9 In
8
. It is also noteworthy that Advo may have deeper pockets than
PNI. Although it is difficult to extract financial information
for PNI from the annual report of its parent corporation Knight-
Ridder, we can ascertain that Advo's revenues in 1992,
$910,000,000, were more than double those of PNI, $422,000,000.
While it is true that Knight-Ridder's 1992 revenues,
$2,300,000,000, were in turn more than twice those of Advo,
Advo's theory of recovery focuses exclusively on the PNI
subsidiary.
9
. Advo has not objected to PNI's reliance on Phillip's report
on the possible ground that the report was not admissible
addition, Advo's expert in the Cassidy case noted two other
sources of competition. First, advertisers, individually or as a
group, could form their own circular distribution ventures if a
monopolistic vendor raised prices significantly. Second,
unconventional shared mail vendors, such as utilities and credit
card companies that send out bills every month, would become more
attractive if conventional sellers overprice their services.
Advo tries to distance itself from its position in
Cassidy by arguing that conditions in the Philadelphia market
have changed in the intervening years. While Advo arguably shows
that CBA might be unable to repeat its 1989 entry today due to
increased competition and PNI's altered delivery schedule, it
fails to undermine any of the observations it made in Cassidy:
the business is simple, capital requirements are not excessive,
and there are a variety of ways to compete in the market for
distributing circulars.
Although Advo did not mention "know-how" or credibility
in the Cassidy case, it now claims that these factors present
significant barriers to entering the circular distribution
business. We agree with the district court that these arguments
are unconvincing. In the words of Advo's economic expert, the
know-how barrier stems from "the substantial efforts that must be
undertaken to obtain the necessary business . . . the experience
required for ensuring the delivery of preprinted advertising to
(..continued)
evidence on the motion for summary judgment and thus we do not
address that question.
over 2,300,000 households on a weekly basis (on a given day of
the week), and coordinating the logistics associated with
ensuring quality control and customer satisfaction." App. at
1615.
Oddly, Advo claims that the complexity of PNI's TMC
Plan proves that know-how is a significant barrier to entry. To
the contrary, the fact that PNI was able to plan and implement
(according to Advo's pleadings) an effective plan in less than a
year shows that entry into the circular distribution business
does not require extraordinary know-how. Beyond the bald
assertions of its expert, that are without factual significance,
Brooke Group, 113 S.Ct. at 2598, Advo presents no evidence that
its business requires know-how any different from other
businesses. Indeed, the record indicates that circular
distribution is relatively simple. Tellingly, Advo cites only
two dated district court decisions arguing that know-how can be a
significant barrier to entry.10 In any event, the value of
precedent on this point is limited, as the importance of know-how
can be determined only in the context of a particular business.
Advo also emphasizes the need for a reputation for
providing reliable service as a barrier to entering its business.
This approach, however, proves too much. New entrants and
customers in virtually any market emphasize the importance of a
10
. Marnell v. United Parcel Svc., Inc., 1971 Trade Cas. (CCH)
¶ 73,761 (N.D. Cal. 1971); Kennecott Copper Corp. v. Curtiss-
Wright Corp., 449 F. Supp. 951, 965 (S.D.N.Y), aff'd in part,
rev'd in part on other grounds, 584 F.2d 1195 (2d Cir. 1978).
reputation for delivering a quality good or service. Federal
Express had to establish a strong reputation for on-time delivery
in order to create an entire new industry; because of its
reputation McDonald's has flourished despite having numerous
competitors. The number of examples is extensive.
Advo's argument, without some limiting principle (that
it fails to supply), implies that there are barriers to entry,
significant in an antitrust sense, in all markets. We find this
proposition implausible and, moreover, precluded by Supreme Court
precedent. See Brooke Group, 113 S.Ct. at 2589 (suggesting
summary judgment is appropriate in predatory price suits "where
new entry is easy," implying that there are easy-entry markets);
see also Matsushita, 475 U.S. at 591 n.15, 106 S.Ct. at 1358 n.15
("Respondents offer no reason to suppose that entry into the
relevant market is especially difficult . . . ."). While we do
not question the judgment of other courts of appeals that in
other market contexts reputation is a significant barrier to
entry,11 Advo has failed to create a genuine issue over the
existence of barriers to entry in this case.
We also point out that the reputation may be of only
marginal significance where there are only a limited number of
11
. See Thompson v. Metropolitan Multi-List, Inc., 934 F.2d
1566, 1577 (11th Cir. 1191) (finding "goodwill," a partial
synonym for reputation, could be barrier to entry in real estate
listings market), cert. denied, 113 S.Ct. 295 (1992); U.S.
Philips Corp. v. Windmere Corp., 861 F.2d 695, 703 (Fed. Cir.
1988) (finding that "the need to have a well-known brand with
wide consumer acceptance" amounted to a barrier to entering the
market for rotary electric shavers), cert. denied, 490 U.S. 1068,
109 S.Ct. 2070 (1989).
consumers for a service as is the case here. After all, a new
entrant need only convince a few businesses to use its services
for it to be successful in the circular distribution business.
Thus, this case differs from a situation in which the competitors
seek their customers in a large retail market.
Assessing barriers to entry is not an easy task. In
the ideal world of neoclassical economics, the implicit
assumption is that there are no such barriers. Of course in real
world markets this assumption never holds and new entrants face a
variety of hurdles. The question is, how far from the economic
ideal do the special features of a given market take us? We
agree with the district court that neither know-how nor
reputation make entry into the market for distributing circular
advertising so difficult that PNI could charge supracompetitive
prices for a significant period of time. Thus competition would
prevent PNI from recouping the cost of predation. In the next
four subsections, we explain that "strategic entry deterrence,"
PNI's monopoly power in the ROP market, its ability to engage in
price discrimination, and its use of supposedly long-term
contracts do not alter this conclusion.
b. Strategic entry deterrence
The idea behind "strategic entry deterrence" is that a
monopolist who pursues predatory pricing with sufficient zeal and
frequency will earn a reputation formidable enough to scare off
all potential entrants indefinitely. The firm then can charge
monopolistic prices long enough to recoup its investment in
predation. Like Advo's arguments that know-how and reputation
create barriers to entry, its strategic entry deterrence theory
sweeps too broadly. Without some limiting principle, it would
bar summary judgment in every predatory pricing case, a result at
odds with Matsushita and Brooke Group.
As a matter of economics, ease of entry makes the
threat implicit in strategic entry deterrence non-credible.
Potential competitors will realize that at some point the
predatory firm will be unable or unwilling to charge below-cost
prices and absorb further losses, since nobody's pockets are
bottomless. High prices will attract a stream of competitors who
eventually will sap the predator's bank account.
c. Leveraging ROP market power
PNI alone distributes newspapers across the entire
Philadelphia market, and we assume that it has a monopoly over
ROP advertising in the metropolitan area taken as a whole. Advo
claims that PNI offered discounted ROP rates to customers placing
circulars in its TMC program. Advo argues that such "leveraging"
of existing monopoly power in an attempt to gain monopoly power
over a related market amounts to anticompetitive conduct in
violation of the Sherman Act.
While such leveraging arguments have long been a staple
of antitrust suits, they have come under increasing attack as
economically groundless.12 They appear to be based on analysis
12
. Robert H. Bork, The Antitrust Paradox 372-73 (2d ed. 1993);
Richard A. Posner, Economic Analysis of Law § 10.10 (4th ed.
akin to the myth that a monopolist can charge any price it wants.
That, of course, is not true; an exclusive seller will raise
prices only to the point where the higher price is not more than
offset by a decrease in quantity demanded. The shape of the
demand curve constrains the behavior of all sellers, even
monopolists.
Similarly, leveraging arguments like Advo's imply that
a monopolist somehow magically can multiply monopoly power in one
market into monopoly power in two markets. This makes no sense.
PNI's monopoly in the Philadelphia market for ROP is worth so
much a year, say $X. The simplest way for PNI to exploit this
monopoly is to set ROP price and output levels so that its
supracompetitive profits on ROP advertising are $X. Advo alleges
that instead, PNI is lowering the price of ROP advertising (and
thus raising quantity) in an attempt to gain circular advertising
business. In the extreme, it is possible that PNI could charge
competitive prices for (and produce a competitive quantity of)
ROP advertising, and use the entire value of its ROP monopoly to
increase its circular market share.
The question is, what would PNI accomplish by such a
strategy? Even if it successfully monopolizes the circular
distribution advertising market by investing the proceeds from
its ROP monopoly in predation, it will be unable to recoup those
profits as long as there are low barriers to entering the
(..continued)
1992); Richard Markovitz, Tie-ins, Leverage, and the American
Antitrust Laws, 80 Yale L.J. 195 (1970).
circular distribution market. Any attempt to earn back the
foregone profits by charging monopoly prices on distribution of
circular advertising, as we discussed supra § II.B.3.a, merely
will lead to a wave of new entrants who will drive prices down to
competitive levels.
The Supreme Court has recognized this point. In
Matsushita, the plaintiff American producers claimed that their
Japanese competitors had a monopoly over the Japanese domestic
television market and were using the profits derived in Japan to
fund a predatory pricing scheme in America. The Supreme Court,
taking these propositions as true, found no antitrust problem
since the defendants were unlikely to recoup their foregone
profits:
Nor does the possibility that petitioners
have obtained supracompetitive profits in the
Japanese market change this calculation.
Whether or not petitioners have the means to
sustain substantial losses in this country
over a long period of time, they have no
motive to sustain such losses absent some
strong likelihood that the alleged conspiracy
in this country will eventually pay off.
Matsushita, 475 U.S. at 593, 106 S.Ct. at 1359 (emphasis in
original).
Even if we agreed that PNI somehow could multiply its
monopoly power in the ROP market because of some unusual
interdependency with the circular distribution market, there is
little, if any, evidence that it attempted to use leverage. The
record shows that PNI simply offered discounts based on the total
amount of advertising purchased by a customer. PNI did not
threaten to deny ROP service to customers that refused to place
their circular distribution business with it, nor did PNI grant
extraordinary discounts for customers of its TMC program. PNI's
discounts, based on the total amount of dollars spent by a
customer, offend no antitrust principles.13 Such "total
quantity" discounts distinguish this case from SmithKline Corp.
v. Eli Lilly & Co., 575 F.2d 1056 (3d Cir.), cert. denied, 439
U.S. 838, 99 S.Ct. 123 (1978), where we found that discounts tied
to the purchase of specific items might amount to unlawful
leveraging of monopoly power.
d. Price discrimination
Advo claims that PNI can recoup its investment in
predation by charging high prices to small accounts, while
retaining base players with lower, competitive prices. It
asserts that PNI's ability to retain base players with low (but
above cost) prices will deter new entrants.
What Advo wishes to characterize as price
discrimination is, again, nothing more than quantity discounting.
A host of Advo assertions to the contrary are without foundation.
Advo claims that "PNI does not afford non-base players such
benefits," Br. at 22, but cites no record support. It buttresses
its assertion that "PNI further discriminates between base
13
. Tellingly, Advo offers precisely the same kinds of
discounts; e.g. customers who buy enough shared mail receive
discounts on all other services purchased from Advo.
players and non base players by giving the base players large
discounts off the published price," Br. at 22, with no less than
four cites to the appendix, but none of the cited material
provides any real support. Finally, Advo contends that "PNI
offered the special ROP discounts only to Advo base players."
Br. at 23 (emphasis added). Although it gives three cites to the
appendix, none remotely support this crucial assertion. The
record indicates that PNI offered quantity discounts to all
customers on an equal basis. Such common commercial practice
does not offend the Sherman Act.
In addition, our ease of entry analysis, supra
§ II.B.3.a, applies to small buyers as well as base players. If
PNI tried to charge supracompetitive prices to smaller accounts,
we see no economic reason why new entrants could not successfully
gain this business by charging lower prices. Indeed, suburban
newspapers are an existing source of competition for many local
retailers, and most of these local publications have implemented
programs to reach non-subscribing households. We previously
rejected Advo's theory of predation in Barr Labs., 978 F.2d at
108. The plaintiff in Barr claimed the defendant was selling at
low prices to big drug store chains, but charging more to smaller
retail pharmacies. We questioned the economic logic of this
claim, noting that "competitors would step in with lower prices
[to small retailers] to defeat Abbott's strategy."
e. Long-term contracts
We also find no merit in Advo's claim that PNI plans to
monopolize the circular advertising market by signing long-term
(two-year) contracts with base players. We begin by noting that
contracts to purchase are never per se violations of the
antitrust laws, even in their most restrictive forms. Tampa
Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 333, 81 S.Ct. 623,
631 (1961). The proposed two-year contracts were not highly
restrictive; they were neither requirements contracts compelling
buyers to purchase all of their circular advertising from PNI,
nor did the offers contain exclusionary clauses barring
advertisers from dealing with other vendors.
Moreover, there is clear evidence in the record that
one- and two-year contracts are standard in the industry. App.
at 1616. CBA, now owned by Advo, had a two-year contract with
Super Fresh. App. at 1965-66. Indeed, in its brief, Advo flatly
states that "[b]ase players typically purchase preprint
distribution through long-term contracts of twelve months or
more." Br. at 22. Since PNI's proposed contract length, two
years, did not depart from standard industry practice, Advo in
effect must be claiming that all distributors of circular
advertising engage in exclusionary behavior by using long-term
contracts. It provides no support for this improbable
conclusion.
We note also that base players are not small,
unsophisticated entities likely to sign contracts of adhesion in
favor of PNI. They are major regional and national retailers who
presumably do not enter into agreements unless the terms are in
their interests. These retailers have proved to be keenly aware
of supracompetitive pricing for distribution of circular
advertising, and explicitly have invited competitors to enter the
market when they felt prices were excessive. It is unlikely that
they would agree to a deal that permitted PNI to sock it to them
down the road.
While it is true that PNI internal documents discuss a
desire to "lock up" base players with "multi-year" contracts,
app. at 1137-38, this is merely another example of harmless
commercial rhetoric that we discussed supra § II.B.2. It is of
no antitrust significance.
III. Conclusion
We close with the following observation. There can be
little doubt but that PNI's adoption of the TMC program has
resulted in lower prices for distributing advertising circulars
in the Philadelphia market. Yet Advo would have us condemn PNI
because of what Advo contends, without basis, will be the long-
range consequence of PNI's actions. We reject Advo's argument.
This case is a text-book example of a situation in which a
plaintiff is, in the words of Matsushita, using the antitrust
laws in an attempt to chill the very conduct the laws were
designed to protect.
Accordingly, because the district court correctly
determined that PNI had no reasonable prospect of recouping any
investment made to obtain predatorily a monopoly in the market
for distributing circular advertising, we will affirm its order
of June 13, 1994, granting summary judgment against Advo and its
order denying reconsideration on July 15, 1994. As additional
ground for affirming, we find that Advo failed to establish a
genuine issue of material fact to support its case on the other
two elements of its Sherman Act section 2 claims, predatory
conduct and specific intent to monopolize. Finally, we note that
the district court did not abuse its discretion in dismissing the
state-law tortious interference with contractual relations claim
once it had resolved all substantial federal questions in the
case.
ADVO, INC. v. PHILADELPHIA NEWSPAPERS, INC.,
No. 94-1812
STAPLETON, Circuit Judge, concurring:
I agree with the court's conclusion regarding one of
the case dispositive issues presented in this appeal. Advo
failed to establish a genuine issue of material fact as to
whether there was a dangerous probability that PNI would recoup
its alleged investment in predation. I write separately because
my reasons for reaching that result differ somewhat from those
offered by the court.
Advo bore the burden of establishing a genuine issue of
material fact on the recoupment issue. To meet this burden, Advo
attempted to show that various impediments to market entry or
reentry would tend to keep potential competitors out of the
market long enough for PNI to recoup its investment in predation
through the charging of supracompetitive prices. Advo's task of
presenting a record that would permit a rational factfinder to so
conclude was made substantially more difficult by PNI's evidence
establishing that CBA, as recently as 1989, had successfully
entered the market in well under a year during a period when no
one was charging supracompetitive prices. Advo attempted to meet
the challenge presented by CBA's entry by pointing to evidence
which tended to show that there are barriers in the market today
which were not present when CBA entered the market.
Advo no doubt has presented facts from which a rational
jury could infer that various market factors would tend to impede
market entry or reentry. Showing that various factors might
impede market entry is not enough, however. Summary judgment is
appropriate here because Advo has failed to provide a rational
basis for an inference that the various market-entry impediments
are substantial enough to deter entry for a period sufficient to
permit recoupment through the charging of supracompetitive
prices.
Having concluded that Advo failed to meet its burden on
the recoupment issue, I would not reach the issues of whether
Advo met its burdens on the predatory-pricing or specific-intent-
to-monopolize elements of its § 2 claim.