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SCIENCE PRODUCTS CO., INC., v. CHEVRON CHEM. CO.

November 19, 1974

SCIENCE PRODUCTS COMPANY, INC., A CORPORATION, PLAINTIFF,
v.
CHEVRON CHEMICAL COMPANY, INC., A CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Robson, Chief Judge.

MEMORANDUM AND ORDER

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
  `Household Program.'"

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 insecticides."

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.

4. Applicators.

5. Specialty products. These products have a wide variety of specialized applications to plant and insects.

I. The Standards

The leading case discussing the relevant product market is the Cellophane case. United States v. E.I. Du Pont De Nemours & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). There, the issue was whether the product market would consist of all flexible packaging materials or merely cellophane. Initially, the Court noted that the Sherman Act did not require products to be either fungible or physically identical to be included within the same product market. 351 U.S. at 394, 76 S.Ct. 994. What is required is an appraisal of the "cross-elasticity of demand" between the products sought to be included in the putative market as well as consideration of whether those products are "reasonably interchangeable."

"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 materials.

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 ...


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