
This case revolved around delivery of newspaper
advertisements. For most of history, delivery of advertisements to
newspapers was handled physically by courier services. With technology’s
expansion, it became possible to effectively do the same work
electronically. AD/SAT began its electronic practices in 1986. AD/SAT
was the only corporation at the time to do so. Most of their work
involved a satellite network which was owned by the Associated Press
("AP"). AP is a voluntary association with over 1,500 members
who generally collect and distribute news and photographs. Ten years
after AD/SAT initiated its electronic filing system, AP launched its own
program (AdSEND) which attempted to accomplish the same results as
AD/SAT’s program. In the early 1990’s, AD/SAT had tried to re-invent
its product using digital technology, but market fluctuations and other
factors made their plans difficult to implement. AP, with a stronger
product, gave newspapers the necessary equipment free of charge with
which AP could compete using the digital technology. AD/SAT began the
suit in 1994, filing a plethora of complaints against various
organizations and newspapers. One by one, the district courts denied
them all. The Court of Appeals noted that the market share information
was one of the parts most fatal to AD/SAT’s claims, and that the
district court had decided the case correctly.
The first issue discussed by the Court was AD/SAT’s
alleged monopolization claim. The test to determine the validity of such
a claim was held to be: 1) predatory behavior; 2) intent to monopolize;
and, 3) dangerously close to success of monopolization. The proper
context of the three-prong test involves products and geographical
markets. After defining the market, the analysis involves a balancing
test, with such factors to as: barriers to entry in the market,
defendant’s share of the market, strength of competition, and along
with others. The parties stipulated to the fact that the United States
was the geographical area at issue. "Market" is defined by
"area of effective competition," and that the products, when
interchanged, are reasonably similar and accomplish the same goals, but
they do not have to be identical. AD/SAT contended that it’s
"three hour or less" delivery was a market separate and
distinct from all other advertisement-delivery services. The Court of
Appeals rejected this claim. AD/SAT’s own research showed that 80% of
all advertisement delivery was still accomplished physically by
overnight carriers, rather than electronically. Since the Court held
that the market was defined as "delivery of advertisements"
and not "electronic delivery of advertisements" (and not
"rush electronic delivery of advertisements"), there could be
no attempted monopoly because the market share was simply too small. The
Court stated that AP’s AdSEND was in no danger of anti-competitive
effects against the physical couriers
Plaintiff next claimed monopoly leveraging. The court
noted that such a claim doesn’t rest so much on market share as its
unfair effects on competition (not competitors) on a different market.
AP conceded that it does have a monopoly on wire services, its behavior
did not rise to the level necessary to meet a leveraging claim. It did
not condition its AdSEND on the use of any of its other services, nor
was there any other "tangible harm" to competition. The Court
of Appeals again affirmed the findings of the district court.
The third issue was an antitrust conspiracy claim. A
Sherman Act conspiracy claim involves: 1) an intended, deliberate,
concerted action to enter into a conspiracy; and, 2) an overt act in
furtherance of the conspiracy. The court also noted that AP had no
rational motive to enter into the conspiracy alleged by AD/SAT. AD/SAT
also accused the other member newspapers separately of entering into a conspiratorial
agreement. After a lengthy analysis, the court adduced
that there was insufficient evidence to support any claim against any of
the defendants, and affirmed the district court’s decision.
Summary
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