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From Antitrust Law Daily, February 24, 2014

Supreme Court denies petition of “nascent competitor” alleging market exclusion

By Jeffrey May, J.D.

decision of the U.S. Court of Appeals in Atlanta, upholding summary judgment in favor of steel maker Nucor Corporation in an antitrust action brought by “nascent competitor” Gulf States Reorganization Group (GSRG), will not be disturbed by the U.S. Supreme Court. Today, the Court denied GSRG’s petition forcertiorari in an action against near-monopolist Nucor for secretly arranging, through a steel mill broker, the acquisition of steel-production assets that CSRG had attempted to acquire in order to enter the black hot rolled coil steel market. The complaining firm had contended that the arrangement was unlawful because the steel company could not have participated in the auction without violating federal antitrust law (Gulf States Reorganization Group, Inc. v. Nucor Corp., Dkt. 13-717).

In its petition, CSRG had asked specifically:

(1) where a market exclusion arises out of the performance of an express contract, in order to meet the “contract, combination … and conspiracy” element of Sec. 1 of the Sherman Act, whether the plaintiff (the excluded party) bears the burden of offering proof, in addition to the contract itself, that “tends to exclude the possibility” that the second party may have entered into the contract for a legitimate reason;

(2) whether a plaintiff may properly offer industry experts who are not economists to supplement the testimony of its economist for the purpose of addressing the nature of competition in an industry in light of the “commercial realities” of the industry at issue;

(3) whether it is proper to reject a proposed relevant product market as a matter of law on the basis of a theoretical supply substitution by a further processed version of the same product, where there is a total lack of evidence of demand substitution; and

(4) whether a theoretical possibility of an increase in out-of-region purchases in response to an in-region price increase is sufficient, as a matter of law, to defeat the existence of a regional relevant geographic market, particularly where there is substantial evidence of a lack of price competition between regions.

In this long-running case, the appellate court’s latest decision (721 F3d 1281, 2013-2 Trade Cases ¶78,453) affirmed summary judgment based on a special master’s report and the district court’s order. However, it expanded on one of the issues relevant to GSRG’s attempted monopolization claim, “in order to explain why cross-elasticity of supply is critical to defining the relevant market in this case.” The appellate court concluded that GSRG failed to define a proper product market limited to black hot rolled coil steel to support its Sherman Act, Section 2 claims.

Earlier, the appellate court had vacated a dismissal order and remanded the matter to the district court for further proceedings. In that 2006 decision (466 F3d 961, 2006-2 Trade Cases ¶75,442), the appellate court did not reach the merits; however, it concluded that GSRG, as a losing bidder for the steel-production assets of a bankrupt firm, had sufficiently alleged injury to proceed with its antitrust claims. At that time, a partial dissenting opinion suggested that the case was “ready for trial” because it was “evident on appeal that [the] allegations, if proven, [would] show a violation of the antitrust laws.”

Attorneys: Philip Clark Jones (Greenburg Spence & Taylor, PC) for Gulf States Reorganization Group, Inc. John Benedict (Wyss Wiley Rein, LLP) for Nucor Corp.

Companies: Gulf States Reorganization Group, Inc.; Nucor Corp.

MainStory: TopStory Antitrust

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