The opinion of the court was delivered by: Robson, Chief Judge.
Plaintiff, Science Products Company, Inc. ("Science"), has
brought a three count complaint against Chevron Chemical
Company, Inc. ("Chevron"), for trademark infringement, unfair
competition, and violations of the Sherman Act, 15 U.S.C. § 1
et seq. Count III alleges two offenses in violation of
Section 2 of the Sherman Act: that Chevron has monopolized or
attempted to monopolize the relevant market for garden
chemicals in the United States.
This matter is now before the court for a preliminary
determination of the relevant market. There is no dispute with
regard to the geographic market being national. The difference
comes with regard to the product market. The burden of this
issue is upon the plaintiff. It must establish by a
preponderance of the evidence that the alleged market is
cognizable under the Sherman Act.
Science contends that the relevant market for purposes of
its antitrust charges is defined as follows:
"The national market for small package garden
chemicals used in the home garden. The products
in the market include products similar to those
listed in Chevron's 1970 `Garden and Lawn
Chemicals Distributor Price List' but excluding
those products listed therein under the heading
Science specifically excludes products which it categorizes as
"dry fertilizers" and "household insecticides." Chevron has
defined the market as "the market for all products which
affect plant or insect life in and around the home" and
specifically includes both "dry fertilizers" and "household
Pursuant to this court's order of July 2, 1974, the parties
submitted to the court briefs, affidavits and various exhibits
supporting their respective definitions of the relevant
product market as an element of Science's antitrust claims.
This memorandum opinion represents the court's preliminary
findings with regard to the relevant market issue and, unless
significant new evidence is introduced at trial, will
constitute the court's final findings of fact and conclusions
of law as to this issue.
After a careful review of the evidence and the law, the
court is of the opinion that Science has failed to demonstrate
by a preponderance of the evidence that the market alleged in
the complaint constitutes a relevant market for purposes of
the Sherman Act and that the market must be redefined to
include all products which affect plant or insect life in and
around the home. Specifically, the relevant product market
consists of the following categories of products:
1. Fertilizers, liquid and dry.
2. Pesticides. These include herbicides, fungicides and
insecticides used both inside and outside the home.
3. Combination products. These products combine fertilizers
with herbicides, insecticides and fungicides.
5. Specialty products. These products have a wide variety of
specialized applications to plant and insects.
"Cross-elasticity of demand" between products is measured by
"the responsiveness of the sales of one product to price
changes of the other." The court then added: "If a slight
decrease in the price of cellophane causes a considerable
number of customers of other flexible wrappings to switch to
cellophane, it would be an indication that a high
cross-elasticity of demand exists between them; that the
products compete in the same market." 351 U.S. at 400, 76
S.Ct. at 1010.
By contrast, products are "reasonably interchangeable" when
use and physical characteristics are found to be comparable.
In explaining this factor, the Court cautioned that:
"The varying circumstances of each case determine
the result. In considering what is the relevant
market for determining the control of price and
competition, no more definite rule can be
declared than that commodities reasonably
interchangeable by consumers for the same
purposes make up that `part of the trade or
commerce,' monopolization of which may be
illegal." 351 U.S. at 395, 76 S.Ct. at 1007
(footnotes and citations omitted).
Based on these considerations, the Court found that the
relevant market was the market for flexible packaging
The standard of "reasonable interchangeability" was
reaffirmed in Brown Shoe Co., Inc. v. United States,
370 U.S. 294, 325, 82 S.Ct. 1502, 1523, 8 L.Ed.2d 510 (1962), where the
Court also noted ...