AAI Asks the Eighth Circuit to Preserve a Meaningful Per Se Rule for Market Allocation Agreements (D&G Inc. v. SuperValu Inc., No. 13-1297)

The AAI has asked the Eighth Circuit to disavow the District of Minnesota’s statement and application of the law in In re Grocery Products Antitrust Litigation, No. 09-MD-2090-ADM-AJB, 2013 U.S. Dist. LEXIS 4584 (D. Minn. Jan. 13, 2013). On a motion for summary judgment concerning the proper liability standard for plaintiffs’ market allocation claims, the district court concluded that the per se rule is reserved for “exclusive” allocation of “entire” markets rather than non-exclusive allocation of only certain customers. The court proceeded to apply the rule of reason to plaintiffs’ customer allocation claims without determining that the restraint was vertical or ancillary. Writing in support of neither party because facts bearing upon the ancillarity determination are sealed under a protective order, the AAI asked the court to clarify (1) that naked, horizontal customer allocation remains in the per se category of Sherman Act offenses, and (2) any form of horizontal market allocation (whether it involves markets, submarkets, or customers) must be found ancillary to a legitimate and competitive business association before the rule of reason will be substituted for the per se rule. The AAI also emphasized that policy considerations strongly support application of the per se rule to naked, horizontal market allocation, which can go further than horizontal price fixing by eliminating non-price competition in addition to price competition, leading to diminished quality and reduced innovation in addition to higher prices. The AAI also cautioned that applying the rule of reason to naked, horizontal market allocation agreements would badly under-deter an overwhelmingly anticompetitive practice.

The brief was written by AAI Senior Counsel Randy Stutz and AAI Special Counsel Sandeep Vaheesan, with assistance from AAI Advisory Board member Dan Gustafson.