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CHAPTER II
BASIC ANTITRUST CONCEPTS
AND PRINCIPLES
A. Interstate Commerce
The federal antitrust statutes, by their terms, apply only to “trade or
commerce among the several States, or with foreign nations.”1 In addition,
because the antitrust laws were enacted pursuant to the congressional
constitutional power over interstate and foreign commerce, a federal court
lacks subject matter jurisdiction over antitrust cases absent the requisite
effect on interstate or foreign commerce. The interstate commerce
requirement may be satisfied by showing that the challenged conduct
directly interferes with the flow of goods or services in interstate
commerce or that the parties’ activities substantially affect interstate
commerce.2
In Summit Health v. Pinhas,3 the Supreme Court established a low
threshold for satisfying the interstate commerce requirement in the
healthcare context. In that case, the Court focused on the possible effect
of an alleged conspiracy to prevent the plaintiff physician from practicing
at one hospital. The Court held that the plaintiff sufficiently alleged that
the conspiracy would reduce the amount of services provided in that
market, that the services were delivered to out-of-state patients and
generated revenue from out-of-state sources, and thus that the alleged
1. See 15 U.S.C. §§ 1, 2. For a discussion of the interstate commerce
requirement, see ABA ANTITRUST LAW SECTION, ANTITRUST LAW
DEVELOPMENTS, ch. 1.B.2 (8th ed. 2017) [hereinafter ALD VIII].
43 (1980) (noting that interstate commerce jurisdiction over Sherman Act
claims extends “beyond activities actually in interstate commerce to reach
other activities that, while wholly local in nature, nevertheless substantially
affect interstate commerce”).
3. 500 U.S. 322, 328 (1991).
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conspiracy sufficiently affected interstate commerce.4 The plaintiff need
not quantify the adverse effect of the challenged conduct.5 Prior to the
Pinhas decision, courts frequently dismissed healthcare antitrust cases
pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to allege
a sufficient effect on interstate commerce.6 Since the Pinhas decision,
however, courts have rarely dismissed federal antitrust claims based on
lack of a sufficient connection with interstate commerce.7
B. Relevant Markets
A relevant antitrust market is the market in which the alleged adverse
effect on competition resulting from the challenged conduct is examined.8
4. Id. at 329-30.
5. See, e.g., McLain, 444 U.S. at 243; Carpet Grp. Int’l v. Oriental Rug Imps.
Ass’n, 227 F.3d 62, 75 (3d Cir. 2000) (explaining that “plaintiffs need not
quantify the actual effect defendants’ conduct had on interstate commerce
to support federal jurisdiction”) (overturned on other grounds).
Cir. 1983); Crane v. Intermountain Health Care, 637 F.2d 715, 723-24
(10th Cir. 1980); Cordova & Simonpietri Ins. Agency v. Chase Manhattan
Bank N.A., 649 F.2d 36, 46 (1st Cir. 1981); Stone v. William Beaumont
Hosp., 782 F.2d 609, 614 (6th Cir. 1986).
7. See, e.g., Carpet Grp. Int’l, 227 F.3d at 75 (explaining that “a plaintiff’ s
burden of establishing effects on commerce sufficient to confer jurisdiction
under the Sherman Act is not great”); Brader v. Allegheny Gen. Hosp., 64
F.3d 869, 873-74 (3d Cir. 1995) (finding the interstate commerce
requirement satisfied where physician alleged that hospital unlawfully
terminated his staff privileges and thus limited his ability to serve patients
in the relevant market); BCB Anesthesia Care v. Passavant Mem’l Area
Hosp. Ass’n, 36 F.3d 664, 666 (7th Cir. 1994) (reversing dismissal of
antitrust claims on interstate commerce grounds, and finding sufficient
connection with interstate commerce based on allegation that hospital’s
termination of contract with nurse anesthetists increased costs to out-of-
state patients and payors). But see Wahi v. Charlesto n Area Med. Ctr., No.
2:04-cv-0019, 2004 WL 2418316, at *6 (S.D. W. Va. 2004) (granting
defendant’s motion to dismiss plaintiff’s antitrust claims because “plaintiff
does not mention the words ‘interstate commerce’ in his Complaint, nor
does he describe any nexus between the defendants’ alleged antitrust
violations and interstate commerce”).
8. For a general overview, see Jonathan B. Baker, Market Definition: An
Analytical Overview, 74 ANTITRUST L.J. 129 (2007).
Basic Antitrust Concepts and Principles
29
Defining the relevant antitrust market is integral to analyzing many
antitrust claims because, as the Supreme Court has explained, “[w]ithout
a definition of [the relevant] market there is no way to measure [a party’s]
ability to lessen or destroy competition.”9 Market definition is usually the
first step in determining whether a firm or firms have market power,10 and
absent market power, a firm, or firms acting jointly, cannot adversely
affect competition. Thus, defining the relevant market is necessary in
assessing most rule of reason claims under Section 1 of the Sherman Act,11
claims of monopolization and attempted monopolization under Section 2
of the Sherman Act,12 and claims under Section 7 of the Clayton Act
challenging mergers and acquisitions.13 However, for certain conduct that
9. Walker Process Equip. v. Food Mach. & Chem. Co., 382 U.S. 172, 177
(1965); see also Little Rock Cardiology Clinic v. Baptist Health, 591 F.3d
591, 596 (8th Cir. 2009).
10. See, e.g., Geneva Pharm. Tech. Corp. v. Barr Labs., 386 F.3d 485, 496 (2d
Cir. 2004) (noting that “[e]valuating market power begins with defining
the relevant market”).
Cir. 2007) (explaining that plaintiff’s “burden [of proving the
unreasonableness of the restraint] begins with the task of properly defining
the relevant market”); E. Food Servs. v. Pontifical Catholic Univ. Servs.
Ass’n, 357 F.3d 1, 5 (1st Cir. 2004) (“[T]he identification of market power
is ordinarily the first step in any rule of reason claim under section 1. This
. . . requires the identification of some economic market in which power
can be measured and the consequences of the act or transaction assessed.”)
(internal citations omitted); Doctor’s Hosp. of Jefferson v. Se. Med. All.,
123 F.3d 301, 310 (5th Cir. 1997); Oksanen v. Page Mem’l Hosp., 945 F.2d
696, 709 (4th Cir. 1991) (en banc).
Cir. 2006) (explaining that “a plaintiff claiming monopolization is
obligated to establish the relevant market because the power to control
prices or exclude competition only makes sense with reference to a
particular market”); Levine v. Cent. Fla. Med. Affiliates, 72 F.3d 1538,
1556 (11th Cir. 1996); M & M Med. Supplies & Serv. v. Pleasant Valley
Hosp., 981 F.2d 160, 164 (4th Cir. 1992).
(“Determination of the relevant product and geographic markets is ‘a
necessary predicate’ to deciding whether a merger contravenes the Clayton
Act.”); FTC v. Advocate Health Care Network, 841 F.3d 460, 467 (7th Cir.
2016) (“To show a Section 7 violation, the Commission must identify the
