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From Antitrust Law Daily, April 24, 2014

Failure to define relevant geographic market dooms auto equipment predatory pricing claims

By Jody Coultas, J.D.

Felder’s Collision Parts, Inc. failed to state claims for predatory pricing of automobile equipment parts against General Motors Company (GM) and parts sellers All Star Advertising Agency, Inc., All Star Chevrolet North, L.L.C., and All Star Chevrolet, Inc. (All Star) because it did not define a relevant geographic market, the federal district court Baton Rouge has held (Felder’s Collision Parts, Inc. v. General Motors Company, April 23, 2014, Brady, J.).

GM’s "Bump the Competition" program allowed distributors to sell GM’s original equipment manufacturer parts ("OEM parts") at a deep discount to consumers, and then apply to GM for a rebate to account for the lost cost and receive a lost profit. Felder’s alleged that the program was only available for OEM parts that have an aftermarket equivalent, and that the program was a predatory pricing scheme intended to drive aftermarket part dealers out of the market in an effort to obtain monopoly power.

The court previously ruled that Felder’s failed to allege facts to adequately define the proper geographic market, demonstrate All Star’s market power in the relevant market, and demonstrate that All Star participated in predatory below-cost pricing. That ruling set forth a "detailed roadmap" for Felder’s to cure the claims in an amended filing. All Star again sought dismissal of the claims.

Relevant market. Felder’s failed to sufficiently define the relevant market or show that All Star’s and GM’s detrimentally effected competition in that market, according to the court. A plaintiff must show where consumers currently purchase the product at issue and where alternative products or alternative sources of the product could be found if a competitor raised prices. Felder’s defined the relevant market as one for "automobile collision parts for which there is an aftermarket alternative and that are compatible with GM vehicles," and listed the counties in Louisiana and Mississippi in which both it and All Star compete. However, the proposed geographic market was too narrowly drawn and, therefore, insufficient.

Felder’s geographic market included a national seller of after-market parts as a competitor, which led to the plausible inference that the actual geographic scope of competition was larger than proposed. There was also a question of the existence of other national or regional sellers. Felder’s also alleged that a direct competitor operating in the proposed geographic market was forced out of the market by the alleged predatory pricing scheme. However, that competitor was located over 100 miles away from any of the counties included in the proposed geographic market. The court found that this plausibly inferred that the geographic market was larger than defined by Felder’s.

Predatory pricing. Felder’s requested that the court reconsider its previous ruling that the question of whether dealers engaged in below-cost pricing should be determined at the time that the dealers were reimbursed. However, Felder’s failed to present any substantial reason for reconsideration. Felder’s could not cite any case, law review article, advisory opinion, or any administrative guidance to support its position. Also, Felder’s failed to show below-cost pricing as required to show predatory pricing, according to the court.

LUTPA claim. Felder’s failure to sufficiently allege an antitrust violation prevented it from being able to sufficiently plead a violation of LUTPA, according to the court. The allegations were merely a recitation of the applicable law. Felder’s also failed to specifically allege that the All Star and GM committed fraud, misrepresentation, deception, or unethical conduct.

The case is No. 12-646-JJB-SCR.

Attorneys: James M. Garner (Sher, Garner, Cahil, Richter, Klein & Hilbert, LLC ) for Felder's Collision Parts, Inc. Michael W. McKay (Stone, Pigman, Walther, Wittmann, LLC ) for All Star Advertising Agency Inc., All Star Chevrolet North, LLC, and All Star Chevrolet, Inc. Tarak Anada (Jones, Walker) for General Motors, LLC.

Companies: Felder’s Collision Parts, Inc.; General Motors Company; All Star Advertising Agency, Inc.; All Star Chevrolet North, L.L.C.; and All Star Chevrolet, Inc.

MainStory: TopStory Antitrust StateUnfairTradePractices LouisianaNews

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