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From Antitrust Law Daily, April 29, 2016

Construction project information firm may proceed with monopolization claims

By Greg Hammond, J.D.

A company that sells construction project information to customers has adequately alleged that its competitors have attempted to monopolize the relevant market, the federal district court in Cincinnati has held. In denying the competitors’ motion to dismiss, the court determined that the plaintiff adequately alleged antitrust injury, specific intent to monopolize, anticompetitive conduct, and a dangerous probability of success (Dodge Data & Analytics LLC v. iSqFt, Inc., April 28, 2016, Black, T.).

Dodge Data & Analytics LLC provides Construction Project Information (CPI), selling its CPI product to customers through web-based programs accessed by customers who pay a subscription fee. Dodge claims that defendants iSqFt, Inc., Construction Market Data Group, LLC, Construction Data Corp., LLC, and BidClerk, Inc.—who have announced that they have merged or intend to merge—are attempting to monopolize the market for nationwide CPI in the United States and Canada, in order to consolidate into one entity with market power, drive Dodge Data from the market, and acquire a 100 percent market share so they can charge monopoly prices, reduce output, and stifle innovation to the detriment of consumers. The complaint asserts claims for attempt to monopolize, conspiracy to monopolize, conspiracy in restraint of trade, trademark infringement, among others. The defendants have moved to dismiss.

Antitrust injury. The court first concluded that Dodge adequately alleged antitrust injury and therefore had standing. Dodge claimed that competition between Dodge and the defendants over the years has necessitated that each company improve its product quality and increase innovation in order to keep up with its rival, and that if Dodge is forced from the market, defendants would raise prices to supracompetitive levels, causing innovation and product quality to suffer.

Attempted monopolization. Dodge also adequately alleged attempted monopolization by demonstrating a specific intent to monopolize, anticompetitive conduct, and a dangerous probability of success. In particular, Dodge pleaded specific intent to monopolize by claiming that the defendants (1) began predatory pricing after sales staff were instructed to do “whatever it takes to disrupt Dodge Data’s business”; (2) provided two leading sales people with a list of 50-70 Dodge customers and instructed the sales people to concentrate full-time on converting those customers; (3) provided those employees with special bonuses, depending on their success in converting Dodge’s customers; (4) directed its inside sales force to specifically target Dodge Data customers and to covert those customers no matter what the price; (5) had prices approved by top management that were below the defendants’ average total cost and average variable cost; and (6) sold to Dodge’s customers at a price that was well below the price necessary to actually win the account and below prices offered to defendants’ own customers.

Furthermore, the allegations of predatory pricing, use of stolen customer data, trademark infringement, and mergers and attempted mergers between the defendants amounted to numerous instances of anticompetitive conduct and specific intent to monopolize, the court concluded.

Lastly, the court determined that the alleged predatory scheme could plausibly result in a market where there is a dangerous probability that the defendants would have monopoly power, including the power to charge supra-competitive prices, reduce output, decrease innovation, and otherwise damage competition. Dodge claimed that the defendants have an approximate 50 percent share of the relevant market; that this is a highly concentrated two-competitor market; and that, having achieved monopoly power and the ability to charge supra-competitive prices, the defendants would be able to maintain those prices because there are significant barriers to entry in this market.

Conspiracy. The defendants also challenged the two conspiracy claims, arguing first that Dodge merely alleged unilateral conduct. The court rejected this argument, finding that Dodge claimed a multilateral conspiracy between the four defendants. In particular, Dodge alleged that the four defendants are attempting to jointly drive Dodge from the market and otherwise restrain trade by offering customers predatory pricing, by engaging in trademark infringement, and by using customer information stolen from Dodge to tortiously interfere with Dodge’s customers.

The court also rejected the defendants’ argument that commonly-held entities cannot conspire among themselves because, where the original purpose of a merger was to restrain trade or monopolize a market, the prohibition against intra-company conspiracies no longer applies. As of the date of the amended complaint, each of the defendants existed as a separate legal entity, maintained separate and distinct websites, and continued to appear as separate, competitive entities in the marketplace.

Trademark infringement. Finally, the court determined that Dodge sufficiently alleged that the trademarks in question are similar, that the goods are sold in the same market, and that a purchaser could mistake the marks for the wrong product, meeting the low standard to survive a motion to dismiss. The motion was therefore denied.

The case is No. 1:15-cv-698.

Attorneys: Aaron Mark Herzig (Taft Stettinius & Hollister LLP) and Jonathan Dwayne Daugherty (Friedman & Wittenstein, PC) for Dodge Data & Analytics LLC. Mark Christian Bissinger (Dinsmore & Shohl) and Charles E. Elder (Irell & Manella LLP) for iSqFt, Inc., Construction Data Corp., LLC, Construction Market Data Group, LLC, and BidClerk, Inc.

Companies: Dodge Data & Analytics LLC; iSqFt, Inc.; Construction Market Data Group, LLC; Construction Data Corp., LLC; BidClerk, Inc.

MainStory: TopStory Antitrust OhioNews

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