NicSand, Inc. v. 3M Co.

BOYCE F. MARTIN, JR., Circuit Judge,

dissenting,

joined by Judges DAUGHTREY, COLE, and CLAY.

In a recent dissent, Justice Stevens wrote nostalgically about times gone by, when most “highspeed driving took place on two-lane roads rather than on superhighways” and “when split-second judgments about the risk of passing a slowpoke in the face of oncoming traffic were routine.” Scott v. Harris, — U.S. -n. 1, 127 S.Ct. 1769, 1782 n. 1, 167 L.Ed.2d 686 (2007). There is a time I reflect upon nostalgically as well — a time when monopoly was an evil targeted by Congress and guarded against by the antitrust laws of the United States. See United States v. Von’s Grocery Co., 384 U.S. 270, 274, 86 S.Ct. 1478, 16 L.Ed.2d 555 (1966). Since their enactment, it has been the purpose of the federal antitrust laws to prevent the emergence of entrenched monopoly power and “to perpetuate and preserve, for its own sake and in spite of possible cost,” the existence of competition in industry. Id. at 275 n. 7, 86 S.Ct. 1478 (quoting United States v. Aluminum Co. of America, 148 F.2d 416, 429 (2d Cir.1945) (Hand, J.)). Today, however, the majority treats monopoly more as a board game than as an economic harm to the public. Because I cannot read the antitrust laws so narrowly, I respectfully dissent.

I.

As noted by the majority, our main concern in this case is whether NicSand has sufficiently alleged not only standing under Article III of the Constitution, but also standing under the antitrust laws. To be sure, this is a more onerous task than that faced by most civil plaintiffs. Yet this task, though challenging, should not be insurmountable. NicSand must allege more than mere economic injury, for the *460antitrust laws were enacted for “the protection of competition, not competitors.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962)). As the majority correctly notes, NicSand must show that the injury it suffered is “of the type the antitrust laws were intended to prevent and [ ] flows from that which makes defendants’ acts unlawful.” Id. at 489, 97 S.Ct. 690. That is, the injury “should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation.” Id. Despite what the majority holds today, NicSand has alleged that type of injury in this case.

“The Supreme Court has articulated certain factors to be analyzed in determining whether a plaintiff has established antitrust standing.” Indeck Energy Servs. v. Consumers Energy Co., 250 F.3d 972, 976 (6th Cir.2000) (citing Associated Gen. Contractors of Cal, Inc. v. California State Council of Carpenters, 459 U.S. 519, 537-45, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983)). Those factors include: Id. (citations omitted). Moreover, “[a]ll five factors must be balanced, ... with no one factor being determinative.” Id. (citing Peck v. General Motors Corp., 894 F.2d 844, 846 (6th Cir.1990)).

(1) the causal connection between the antitrust violation and harm to the plaintiff and whether that harm was intended to be caused; (2) the nature of the plaintiffs alleged injury including the status of the plaintiff as consumer or competitor in the relevant market; (3) the directness or indirectness of the injury, and the related inquiry of whether the damages are speculative; (4) the potential for duplicative recovery or complex apportionment of damages; and (5) the existence of more direct victims of the alleged antitrust violation.

This case comes before us on appeal from the district court’s grant of 3M’s motion to dismiss. The Supreme Court recently clarified the standard an antitrust plaintiff must satisfy at this stage, holding that an antitrust plaintiff need only provide “a short and plain statement of the claim showing that [he] is entitled to relief,” so that the defendant has “fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atl. Corp. v.

Twombly, — U.S. -, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (citations omitted).1 Although many commentators have intimated that Bell Atlantic represents a significant departure from prior law, the decision in fact makes simpler the task before us in this case.

In Bell Atlantic, the Court explained that “a plaintiffs obligation to provide the grounds of his ‘entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 1964-65 (internal quotation marks and citations omitted). Thus, the key distinction is between a bare-bones complaint asserting only the elements of a claim and a complaint asserting not only legal elements, but also facts to support those elements. Courts are well-suited to distinguish between the two. Indeed, we do so all the time when reviewing questions of fact, mixed questions of law and fact, and questions of law. It is not a controversial assertion that, while a plaintiff need not assert detailed facts, a plaintiff must as*461sert some facts. “Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim, but also ‘grounds’ on which the claim rests.” Id. at 1965 n. 3 (citing 5 Wright & Miller § 1202, at 94, 95 (Rule 8(a) “contemplates the statement of circumstances, occurrences, and events in support of the claim presented” and does not authorize a pleader’s “bare averment that he wants relief and is entitled to it”)). Thus, at the 12(b)(6) stage, “[f|actual allegations must be enough to raise a right to relief above the speculative level, ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 1965 (citations omitted).

NicSand’s complaint establishes a right to relief above the speculative level. Notably, NicSand has provided detailed factual allegations regarding the payments made by 3M to retailers, the years in which exclusive contracts were entered, and the approximate duration of the contracts. In particular, with regard to the duration of the exclusive contracts, NicSand has alleged a reasonable basis for inferring that they will last a few years — to wit, that the retailers told NicSand that they could not even discuss the possibility of doing business with NicSand for at least a few years. These factual allegations must be taken as true. Potentially relevant information may be missing from the complaint, but it is exactly this additional information that, with the benefit of discovery, may entitle NicSand to relief. Yet following today’s decision, it is difficult to see how any antitrust plaintiff — short of those few omniscient plaintiffs that happen to know every relevant factual detail before the inception of litigation and without the benefit of discovery — will be able to overcome a motion to dismiss. See Freightliner of Knoxville, Inc. v. DaimlerChrysler Vans, LLC, 484 F.3d 865, 874 (6th Cir.2007) (“[Plaintiffl’s claims under the [Robinson-Patman Act] may well be highly speculative, and discovery may well reveal that they are futile, but we cannot — nor can the district court — make such a determination based on the pleadings alone.”).

II.

For a number of years, NicSand had a significant share of the market for do-it-yourself retail automotive coated abrasives. NicSand sold its products through a handful of retailers and 3M was its only competitor.2 Agreements between suppliers and retailers for these products lasted one year in the de facto sense because retailers did not want to change their inventories mid-year. According to Nic-Sand’s complaint, 3M pushed retailers into a series of multi-year exclusive dealing arrangements, excluding NicSand from the market. The terms of these exclusive agreements, and their harm to consumers by the creation of a monopoly, form the crux of this case.

The new agreements drastically changed the market and were more than simply a regurgitation of the old agreements with “slightly different terms.” Maj. Op. at 453. For one thing, 3M offered unprecedented substantial, up-front cash payments to retailers. For another, 3M contractually guaranteed multi-year exclusivity with retailers, cutting NicSand out of the market for an extended period of time. 3M pushed retailers, including NicSand’s clients, into the exclusive agreements.

*462First, let us focus on 3M’s up-front cash payments. Using figures provided in the complaint, we are presented with the following picture for each of the four relevant big retailers:

1. Kmart: In 1996, NicSand’s sales to Kmart were $475,000 per year and its profits were $180,000 per year. In 1997, 3M executed a contract with Kmart which provided for a payment “in excess of $300,000.” This payment is equal to approximately 63% of NicSand’s sales to Kmart and 167% of NicSand’s annual profits on sales to Kmart from the prior year.3

2. Advance Auto: In 1997, NicSand’s sales to Advance Auto were $550,000 and its profits were $272,000. In 1998, 3M' executed a contract with Advance Auto which provided for a payment of “over $285,000.” This payment is equal to approximately 52% of NicSand’s sales to Advance Auto and 105% of NicSand’s annual profits on sales to Advance Auto from the prior year.

3. CSK: In 1997, NicSand’s sales to CSK were $369,000 and its profits were $164,000. In 1998, 3M executed a contract with CSK which provided for a payment of “over $200,000.” This payment is equal to approximately 54% of NicSand’s sales to Kmart and 122% of Nic-Sand’s annual profits on sales to CSK from the prior year.

4. AutoZone: In 1999, NieSand’s sales to AutoZone were $2,200,000 and its profits were $865,000. In 2000 and 2001, 3M executed a contract with AutoZone which provided for a payments totaling “over $1,000,000.” The annual value of these payments ($500,000) is equal to approximately 23% of NicSand’s sales to AutoZone and 58% of NicSand’s annual profits on sales to AutoZone from the prior year.

Complaint ¶¶ 21, 30, 32, 35.

As these numbers demonstrate, 3M’s cash payments exceeded NicSand’s profits from the prior year for three of the retailers. In other words, from 1997 through 2000, 3M signed agreements with three retailers, the terms of which NicSand could not possibly match on an individual basis without selling below cost — an action that may have given SM a cause of action under the Sherman Act. See Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., — U.S. -, 127 S.Ct. 1069, 1074, 166 L.Ed.2d 911 (2007).

If sales coupled with substantial up-front cash payments to those retailers would have resulted in a loss for NicSand, then it is a reasonable inference that they may have been below cost for 3M as well. However, it is obvious that without discovery NicSand would have had no way of knowing with certainty 3M’s production or other overhead costs. It is telling that, in its memorandum in support of its motion to dismiss, 3M noted that NicSand had made “no allegation regarding how [Nic-Sand] purports to measure 3M’s costs.” JA 83. This is the very purpose of discovery in a civil case. It simply cannot be that a business must know everything *463about its competitors before bringing suit in an antitrust case. After all, a business that knows everything about its competitors is likely to dominate them, rather than fall prey to them, as NicSand did here.

The majority is quick to point out that “NicSand concedes that 3M did not engage in any form of predatory pricing.” Maj. Op. at 452 (citing JA 132 and Reply Br. 6). This assertion is misleading. In saying that its complaint is not based on “predatory pricing,” NicSand is simply stating that 3M’s conduct is not premised on the type of conduct typically referred to as “predatory pricing,” that is, the pricing of an individual item below the cost of its production. Cf. Black’s Law Dictionary 1215 8th ed.2004 (defining “predatory pricing” as “[ujnlawful below-cost pricing intended to eliminate specific competitors and reduce overall competition.”). In other words, NicSand’s allegations do not pertain to the price terms offered by 3M but rather to the unprecedented and unusually large up-front cash payments used by 3M to secure exclusive-dealing agreements. JA 132-134 & n. 10. While NicSand did not use the magic words “predatory pricing” in its complaint, the allegations that 3M charged competitive prices and offered substantial, up-front payments, negating any possible profits, amounts to the same thing. Thus, the conduct alleged by Nic-Sand, a form of predatory pricing, is still predatory conduct that hurts, and in this case eliminated, competition. See id. at 133 n. 10. As NicSand aptly notes in its response to 3M’s motion to dismiss, “[t]he point is not that 3M’s supracompetitive payments crossed the predatory pricing line, but that they were part and parcel of a different, but equally insidious, form of predatory, anticompetitive, conduct.” Id.

In fact, the majority, when defending the multi-year terms of 3M’s agreements, seems to acknowledge that 3M effectively sold below cost. The majority explains that it would be easier for a supplier such as 3M to gain a foothold in the market “when it is given several years, rather than just one, to recoup this investment.” Maj. Op. at 453. The “investment” that 3M would “recoup” is the loss it took by offering substantial, up-front payments. Those payments, upon further discovery, might be revealed to have effectively amounted to below-cost pricing. Cf. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 589, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (“The success of any predatory scheme depends on maintaining monopoly power for long enough both to recoup the predator’s losses and to harvest some additional gain.”).

Perhaps recognizing that NicSand would have lost money had it offered matching lump-sum payments to three out of the four retailers, 3M asks this court to compare NicSand’s aggregate profits from four individual retailers in four individual years (Kmart in 1996, Advance Auto in 1997, CSK in 1997, and AutoZone in 1999) to the aggregate of 3M’s payments over a later four-year period (1997-2000). By aggregating in this manner, 3M attempts to gloss over the fact that NicSand would have had to have sold below cost to three out of the four retailers. This approach asks us to read NicSand’s complaint in the light most favorable to 3M. Nevertheless, even under that improper approach, there is a small margin for error. According to 3M, the aggregate data for NicSand would yield a profit margin of merely five percent — a meager profit indeed.4

*464The poor quality of the data at issue makes this potential five percent profit margin hinge on several levels of assumptions, which could be — or could not be— confirmed through discovery. To be sure, on this record, we have little choice but to compare profit data for NicSand’s last year with a particular retailer to the amount of 3M’s up-front payment to that retailer in the subsequent year. That is the best we can do because NicSand was eliminated from the market, and therefore was not around long enough to develop its own profit data in the later years. But when we aggregate this data, we are forced to use 3M’s assumptions about how well NicSand might have performed in the market with respect to individual retailers in years after 3M secured contracts with them, and to compare those assumptions with the actual payments made by 3M. Moreover, the data fails to account either for inflation or for any line of credit Nic-Sand may have had, such that the estimated profit margin may contain significant inaccuracy. And, the data also fails to account for the fact that these agreements were made in secret, thereby depriving NicSand of an opportunity to compete by offering comparable deals. In order to avoid elimination from the market, Nic-Sand not only would have had to match 3M’s payments, but also presumably would have had to pay the cost of inducing a retailer to breach its exclusive contract with 3M. In contrast, 3M did not have to bear that cost because the exclusivity of the prior agreements was merely de fac-to — retailers could switch at any time without penalty.

Given the multiple levels of uncertainty incorporated into 3M’s analysis, it is impossible to tell how accurate or solid that predicted profit margin is, or whether, indeed, NicSand would have lost money in the aggregate. That realization is more troubling in light of the obviously sequential conduct that took place in this case. 3M acquired three retailers over a series of years, each time employing allegedly anticompetitive agreements. Only in the final year, when NicSand was already on its last legs, was 3M able to recoup its losses on its deals with the other three retailers by securing a more favorable agreement with AutoZone. Given our duty to read the facts in the light most favorable to NicSand in this case, it is simply impossible to conclude that these agreements were not anticompetitive.5

In addition to downplaying the importance of 3M’s substantial up-front payments, the majority is also untroubled by the exclusivity of the agreements or the agreements’ multi-year terms. The majority claims that the type of exclusivity demanded by 3M is the same type of exclusivity that retailers demanded prior to 3M’s market dominance. But according to NicSand’s complaint, under the retailers’ pre-1997 rules, exclusivity lasted no longer *465than the completion of one purchase order. Retailers were free to switch suppliers from one purchase order to the next. See Complaint ¶ 25 (“[R]etailers would typically not change suppliers other than at the time of their annual line review.” (Emphasis added)). A retailer carrying 3M’s products was free to suddenly solicit Nic-Sand’s line of products. Or alternatively, a retailer was free to do what Pep Boys did — carry both suppliers’ lines simultaneously. Although it appears that in reality, retailers opted to stick with one supplier for a full year, these agreements were, at most, “de facto” exclusive in the sense that once a retailer decided to receive its inventory from one supplier, it was unlikely to switch suppliers for one year. Thus, while an individual retailer perhaps wisely chose to keep one supplier’s product on its shelves for a period of one year, that retailer was simply not contractually bound to do so. There were no actual “exclusive dealing agreements” prior to 1997. Rather, there were four retailers choosing an economically reasonable course of business, and two suppliers competing fairly for that business And even so, agreements with suppliers were reconsidered every year during annual line reviews.6 Under this system, although NicSand may have been the more successful competitor in the market for a time, it alleges its success was owed to its “superior marketing, superior packing, innovation, and superior value,” id. ¶ 11, not to anticompetitive practices.

Contrary to the majority’s averments, NicSand should not have sought multi-year arrangements with retailers like 3M did. It is not the appropriate response under the law to answer anticompetitive conduct with more anticompetitive conduct. Moreover, in a battle for a monopoly between NicSand and 3M, it is hard to imagine how NicSand could have prevailed. Given the choice between a certain amount of money in one up-front payment or in installments over several years, any reasonable retailer would have chosen the former. That is simply time-value-of-money economics. 3M is a manufacturing powerhouse that obviously had the ability to subsidize its operations in the do-it-yourself-retail-automotive-coated-abrasives market with revenues from other sectors.7 NicSand, in contrast, may not have had the capital to match 3M’s substantial up-front payments and may not have been able to do so without selling below cost. The majority opinion lacks a certain real-world understanding of the relative positions of the two companies at issue in this case.

In sum, under a plausible reading of NicSand’s complaint, 3M did the following. First, it offered retailers unprecedented and substantial up-front payments — payments that may have, in effect, been a form of below-cost pricing. 3M executed contracts with retailers that gave 3M exclusivity for several years in order to guarantee 3M time to recoup any losses. This multi-year exclusivity, when paired with its agreements with other retailers, also gave 3M a large enough share of the market such that its sole competitor, NicSand, would no longer be able to stay afloat. *466These agreements guaranteed 3M a monopoly in the do-it-yourself-retail-automotive-coated-abrasives market. NicSand’s allegations of 3M’s anticompetitive conduct are further bolstered by the fact that Nic-Sand was forced into bankruptcy, id. ¶ 43, 3M now controls almost 100% of the market share, id. ¶ 67, and prices for these products have risen by 70% since NicSand left the market, id. ¶ 63. As discussed below, with this monopoly now established, 3M no longer has to worry about keeping a superior and diverse product line or keeping its prices low.

III.

In Indeck, we explained that in a case where a competitor sues another competitor for an alleged antitrust violation, the plaintiff “must at least allege that [its] exclusion ... from the marketplace results in the elimination of a superior product or a lower-cost alternative.” 250 F.3d at 977.8 Since this case comes before us at the 12(b)(6) stage, we must focus on Nic-Sand’s particular allegations of harm to the market. To do so, we need look only to NicSand’s complaint, which alleges, in pertinent part:

11. [The growth in NicSand’s market share] between 1987 and 2000 in DIY retail automotive coated abrasives was fueled primarily by NicSand’s superior marketing, superior packaging, innovation, and superior value. NicSand acquired and retained its share of that market by offering better value than its competitors, providing on-time delivery, instituting innovative programs designed to assist DIY retailers in increasing their volume and profitability in the DIY retail automotive coated abrasives market, offering more products in less space, offering flexible payment terms, packaging each of its products in a manner consistent with that product’s market orientation, and, creating new specialty products at the request of customers.
63. As a result of 3M’s attempted monopolization and/or monopolization of the market for DIY retail automotive coated abrasives, consumer prices for DIY retail automotive coated abrasives have risen significantly, in some cases, as much as 70%.
64. As a result of 3M’s attempted monopolization and/or monopolization of the market for DIY retail automotive coated abrasives, the number of available DIY retail automotive coated abrasives products available for purchase by consumers has dropped by as much as half, from approximately eighty to approximately forty.
69. Consumers have suffered as a result of 3M’s unlawful monopolization of the DIY retail automotive coated abrasives market, as prices have increased and selection has decreased substantially since 3M established its monopoly.

Under a fair reading of the quoted paragraphs, NicSand has met Indeck’s requirements. First, it has alleged that its products were superior to 3M’s products. Given that “superior” is a comparative term and that 3M was NicSand’s only *467competitor during the relevant period, see Complaint ¶ 12 (“NicSand’s only competitor in the DIY retail automotive coated abrasives market during the period 1987 to 2000 was 3M.”), NicSand’s complaint could only have been alleging that its products were superior to 3M’s. NicSand claimed superiority in several senses: “superior marketing, superior packing, innovation, and superior value.” Id. ¶ 11; see also id. ¶ 58 (“3M did not offer a superi- or product, superior pricing, or superior service.”).

The majority complains, however, that what NicSand offers us is simply “an une-laborated claim that it provides better service than its competitors.” Maj. Op. at 456. Neither 12(b)(6) nor Indeck requires much, if any, further elaboration. Nevertheless, NicSand does in fact explain what it means, noting that it provided better value, on-time delivery, and “innovative programs designed to assist DIY retailers in increasing their volume and profitability in the DIY retail automotive coated abrasives market, offering more products in less space.” Complaint ¶ 11. NicSand also touts its flexible payment terms, packaging, and perhaps most importantly, its “creation of] new specialty products at the request of customers.” Id. In addition to the allegation of superior products and service, NicSand also alleges that since 3M established its monopoly, the selection of products has decreased substantially. Id. ¶ 64, 69. Thus, NicSand has alleged a decrease not only in product quality, but also in market diversity. While NicSand certainly could have alleged that its sandpaper had a better coefficient of friction than 3M’s, or something else to similar effect, NicSand does not need to supply such detailed factual information at the pleading stage, without the benefit of discovery.

NicSand has also alleged that since its departure from the market, “consumer prices for DIY retail automotive coated abrasives have risen significantly, in some cases, as much as 70%.” Id. ¶ 63; see also id. ¶ 69 (“[P]rices have increased ... since 3M established its monopoly.”). Nic-Sand has sufficiently alleged that its exclusion has “resulted] in the elimination of ... a lower-cost alternative,” which in turn “indicat[es] that competition itself was harmed by” 3M’s conduct. Indeck, 250 F.3d at 977 (emphasis in original). In other words, as a result of 3M eliminating its only competitor through a series of exclusive dealing contracts, competition was lessened, and prices increased as a result. And indeed, price increases of this magnitude certainly injure consumers. This type of problem goes to the heart of what the antitrust laws were designed to prevent. Cf. Reiter v. Sonotone Corp., 442 U.S. 330, 342, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979) (“The essence of the antitrust laws is to ensure fair price competition in an open market.”).

Although the majority dispenses with these factual allegations by concluding that NicSand has not alleged that 3M raised its prices, Maj. Op. at 452, it is a reasonable inference that at least some portion of the 70% price increase could be due to 3M’s monopoly. The idea that the retailers might be passing on some additional cost from 3M should not be controversial. Cf. Northwest Airlines v. County of Kent, 510 U.S. 355, 376, 114 S.Ct. 855, 127 L.Ed.2d 183 (1994) (Thomas, J., dissenting) (“Any cost an airline bears is in some sense an ‘indirect’ charge ‘on persons traveling in air commerce,’ because the airline ultimately will pass that cost on to consumers in the form of higher ticket prices.”); Acadia Motors v. Ford Motor Co., 44 F.3d 1050, 1056 (1st Cir.1995) (“[I]t is quite commonplace for manufacturers and other regulated entities to pass on to retailers *468and consumers their costs of complying with regulatory statutes.”)- Yet the majority believes this is not good enough, taking aim at NieSand for not specifying that the apparent increase in prices was due to actions by 3M and not by retailers. To dismiss this case on the pleadings on that basis defeats the whole point of notice pleading. When retailers raise prices, they do not include on their price tags a footnote outlining their reasons. At this point, before discovery, all NieSand can go by is what it sees in stores, and its allegations based on those observations raise a reasonable inference that 3M has used its monopoly power to increase prices. Nothing more should be required.

The majority apparently believes that NieSand has merely alleged that 3M’s conduct caused the market to become less diversified, and argues that Indeck stands for the proposition that less diversity in the marketplace, standing alone, is insufficient to establish antitrust standing. Maj. Op. at 449. As discussed above, that is not all NieSand alleged in its complaint. However, assuming arguendo that all NieSand has alleged is that the market has become less diverse, I would part ways with the majority on its result because this “less diverse” market is now clearly a monopoly and the facts, as alleged by NieSand, show that the special dangers inherent in monopoly power may exist in this case. Von’s Grocery, 384 U.S. at 275, 277 & n. 7, 86 S.Ct. 1478.

Antitrust cases focus on exclusion from the relevant market, and the relevant market usually has characteristics that pertain to the case at hand. Diversity is valuable in any marketplace, but more so in some than in others. In Indeck, the relevant market was one for the commodity of electric power. The relevant question about the diversity of the market was whether the exclusion of thermal power from the market, in and of itself, was enough to establish antitrust standing. The Indeck court apparently believed that it was not. However, the electric power market is entirely different from the market at issue in this case. In most markets for electric power, it is not uncommon — given the substantial start-up, maintenance, and regulatory costs of operating a power plant — for there to exist long-term exclusive agreements with one producer. Cf. Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 334, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961) (upholding a 20-year requirements contract between a public utility and a coal mining company, and noting that “at least in the case of public utilities the assurance of a steady and ample supply of fuel is necessary in the public interest.”). But long-term, exclusive contracts are obviously less essential in a retail-based market that supplies a product to consumers that is hardly a necessary commodity, the production of which does not require as substantial an investment of start-up capital as does a power plant, and that, as the majority quips, “does not take any ingenuity to make.” Maj. Op. at 452. And, since prices of electricity are usually regulated in some fashion by a governmental body, there is less risk of price gouging in those markets. Cf. Hallie v. Eau Claire, 471 U.S. 34, 47, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985) (“[TJhere is little or no danger that [a city] is involved in a private price-fixing arrangement.”). Moreover, Indeck focused on diversity in the source of electric power. To the end user — that is, the consumer — a difference in source is not terribly significant. Most consumers merely want reliable and affordable energy.

However, in the retail market, a 50% reduction in the variety of products is undoubtedly meaningful. Different consumers desire different products for different needs. In a sense, diversity of products in *469the market for retail goods is a proxy for preserving the ability of consumers to choose products that they deem superior or that cost less. In other words, to say that a reduction in diversity does not reflect a reduction in the superiority of products or in the number of lower-cost alternatives is to ignore the impact of consumers’ preferences. Those consumers who relied on the forty products that have since disappeared from shelves may no longer have products that meet their goals for the cost they are willing to pay (especially given the 70% increase in price since NicSand was forced out of the market). This court, in essence, has decided on its own, without the benefit of discovery, that consumers should not be able to choose what may be a “superior product.” This court cannot make that decision, at least not at the motion-to-dismiss stage.9

The majority’s contention that there is no collective action problem in this case is also problematical. It is quite unlikely that in this market, retailers are going to sue over a line of sandpaper products, rather than simply pass the cost to consumers. It is a plausible inference from NicSand’s complaint that this is what the retailers have done in this case, since retail prices allegedly have risen seventy percent since NicSand’s exclusion from the market. Further, NicSand has suffered substantial injury in this case, whereas the retailers, given the small size of the relevant market, have suffered only marginal injury relative to their entire sales portfolios. Thus, they have less motivation to bring suit against 3M, given litigation costs and the risk of hurting their relationships with 3M, a company with substantial market presence across numerous product lines. As the panel majority aptly noted:

*470the magnitude of the discounts (measured as a percentage of NicSand’s sales) declined as 3M locked up a progressively larger share of the distribution market. That is, as 3M seemed more likely to attain a monopoly position, the downstream distributors demanded progressively smaller discounts — perhaps because they expected NicSand to exit the market and hoped to assure themselves of some discount (and not be the only one of the distributors not to have done so) before none was available.

NicSand, Inc. v. 3M Co., 457 F.3d 534, 546 n. 8 (6th Cir.2006), vacated by 2006 U.S.App. LEXIS 32342 (6th Cir. Nov. 22, 2006) (en banc). In essence, a collective action problem arose in this case because each retailer’s choice to get on 3M’s bandwagon was profitable to that retailer in the short-term and did not account for the potential long-term cost of a monopoly in the relevant market.

TV.

The majority seeks to characterize this case as one in which one company that had long prospered in a particular niche market became lazy and fell victim to a more vigorous competitor that simply played the game of business more effectively. While NicSand may have once been the dominant competitor, that former status can neither legalize 3M’s anticompetitive business practices nor make 3M immune from antitrust suit. Yes, NicSand was 3M’s competitor, and yes, it obviously fell prey to 3M’s tactics. However, 3M now holds a monopoly over the market, products have been eliminated and prices have correspondingly risen by seventy percent. The question here is whether the tactics 3M employed to attain that status were legal and whether NicSand is an adequate representative of the market’s interests in this suit. Contrary to the majority’s contentions, at this stage of the case, it is impossible to conclude that NicSand has failed to meet its burden. The dangers of monopoly are well-recognized in our law, see Von’s Grocery Co., 384 U.S. at 274-75, 86 S.Ct. 1478, and I believe the majority has improperly turned a blind eye to them in this case.

Accordingly, I respectfully dissent.

. The Court made clear that Rule 8(a)’s liberal notice pleading standard applied to antitrust actions, Bell Atl., 127 S.Ct. at 1964, and not Rule 9's " 'heightened' pleading standard,” id. at 1973 n. 14.

. The majority characterizes 3M as a "market entrant.” Maj. Op. at 453. Given that 3M, as NicSand’s only competitor, had approximately 33% of the market in 1995, 3M is hardly a "market entrant.” See Complaint ¶ 8 ("In 1995, NicSand had approximately 67% of the DIY [do-it-yourself] retail automotive coated abrasives market.”).

. According to NicSand's complaint, in addition to providing this up-front payment, 3M also agreed to pay the cost of buying out Kmart’s stock of NicSand do-it-yourself retail automotive coated abrasives, thus increasing the amount that 3M paid to secure Kmart’s exclusive business. Complaint ¶ 27. Although buying out a competitor's stock was the traditional practice during annual line reviews, it is unclear from the complaint whether 3M also bought out NicSand’s remaining stock from the other three big-box retailers when it obtained its multi-year exclusive dealing agreements with them.

. 3M arrives at this profit margin by first adding NicSand’s annual sales and profits from each of the four retailers in the four individual years, which amounts to $3,594,000 in sales and $1,481,000 in profits. 3M then takes the total annual value of its *464four lump-sum payments made in the individual years to be $1,285,000 (3M divides its payment to AutoZone in half). 3M then subtracts $1,285,000 from $1,481,000 to arrive at a total profit of $196,000, which, when divided by sales of $3,594,000, yields a profit margin of approximately 5%. Appellee Supp. Br. at 8-9 n. 4.

. 3M also asks us to make another profits calculation by spreading each of the four payments and profits over two years, which would yield a higher profit margin of 16%. Appellee Supp. Br. at 8-9 n. 4. The majority goes even farther, claiming that under another unspecified methodology, NicSand still could have had profit margins of 17%-39%. Maj. Op. at 453. For the reasons already stated above, I believe that in light of the flaws already inherent in the methodology discussed above, any such calculations would be excessively speculative at best and would require us to misconstrue NicSand's complaint in 3M's favor.

. Nor does the complaint state that the retailers were contemplating multi-year contracts or enacting any change in the market. All changes in the market were a direct result of 3M's conduct.

. Any good lawyer knows the value of Post-It Notes and Tabs. See, e.g., LePage's, Inc. v. 3M, 324 F.3d 141, 157 (3d Cir.2003)(finding am-pie evidence that 3M used exclusive agreements to entrench its monopoly over transparent tape); see also N.J. Wood Finishing Co. v. Minn. Mining & Mfg. Co., 332 F.2d 346, 348 (3d Cir.1964) ("3M [is] a highly diversified company, manufacturing and selling a number of product lines and segments.”)

. One commentator has noted that the continuing validity of Indeck as a correct application of the Supreme Court's five-factor test has been called into question by later cases. See Ronald W. Davis, Standing on Shaky Ground: The Strangely Elusive Doctrine of Antitrust Injury, 70 Antitrust L.J. 697, 748 n. 184 (2002-2003) ("In ... Conwood [Co. v. United States Tobacco Co., 290 F.3d 768 (6th Cir.2002)], the court alluded to no requirement that the plaintiffs snuff had to taste better, or cost less, than the defendant monopolist’s snuff.”); see also id. at 737-43, 747-48 (criticizing the Sixth Circuit's precedent on the question of what a competitor must establish to show antitrust injury).

. Neither the Indeck panel nor the majority in this case addressed our precedent’s “necessary predicate” test for antitrust standing. I therefore will not address it in detail. I pause to note only that I believe the test is satisfied in this case. The "necessary predicate” test was most recently examined by this court in In re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir.2003). There, plaintiffs, purchasers of a particular heart medication, sued the manufacturer of the brand-name version of the drug and a manufacturer of a generic version of the drug, alleging that the former agreed to pay the latter $40 million per year to delay introduction of its generic version. Defendants made an argument similar to the one that 3M makes here: that plaintiffs failed to satisfy the necessary predicate test because even in the absence of the contract, the generic manufacturer could have legally and unilaterally delayed introduction of the drug into the market. Id. at 912. The In re Cardizem court rejected this logic, explaining that in the prior cases, “complaints were dismissed for failure to allege antitrust injury because each of the defendants had taken an action that it was lawfully entitled to take, independent of the alleged antitrust violation, which was the actual, indisputable, and sole cause of the plaintiff's injury.” Id. at 914. The court stated that "[t]he fact that [defendant] could have unilaterally, and legally, decided not to bring its generic product to a manifestly profitable market ha[d] no relevance in assessing whether the plaintiffs adequately alleged that the antitrust violation was the necessary predicate for their injury.” Id. at 915. The court further observed:

[Djefendants' position, if adopted, risks undermining a basic premise of antitrust law[:] ... [that] in many instances, an otherwise legal action — e.g. setting a price— becomes illegal if it is pursuant to an agreement with a competitor. Under the defendants’ view, such an action would never cause antitrust injury because a defendant could have unilaterally and legally set the same price.

Id. at 915 n. 19.

The only issue in this case is whether the exclusive agreements at issue were anticom-petitive and whether they injured the market under the relevant precedent. Because they were and they did, there is nothing else at issue in this case that suggests that 3M took any legal actions that were "the actual, indisputable, and sole cause of [NicSand]'s injury.” Id. at 914. Accordingly, the "necessary predicate” test is satisfied here.