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Daniel Crane, May 03, 2007
On March 20, 2007, a panel of the Ninth Circuit took the unusual step of issuing an open invitation for amicus curiae briefing on the liability rules governing bundled discounts. The Court’s order, in Cascade Health Solutions v. PeaceHealth, reads:
The court invites supplemental briefs by any amicus curiae addressing the following issue raised in this appeal: Whether a plaintiff who seeks to establish the predatory or anticompetitive conduct element of an attempted monopolization claim under 2 of the Sherman Act by showing that the defendant offered bundled discounts to the defendant’s customers must prove that the defendant’s prices were below an appropriate measure of the defendant’s costs. If so, what is the appropriate measure of costs and how should the trial court instruct the jury on the matter of costs? If not, what standard should the trial court instruct the jury to use to determine whether the bundled discounts are predatory or anticompetitive?
Eight groups of amici filed briefs in response. Seven wrote in favor of some cost-based test for bundled discount claims. One wrote against cost-based tests. I wrote a brief on behalf of a group of law professors supporting reversal. Our brief argued: (1) that the court should a adopt a discount reallocation screen that requires the dismissal of any challenge to bundled discounts in which the plaintiff cannot show that the price of the competitive product in the bundle was priced below cost after rellocation of discounts from the monopoly product; and (2) that the court should adopt average variable cost as the appropriate measure of cost.