E.I. Du Pont De Nemours & Co. v. Kolon Industries, Inc.

Relevant-market definition is a tool for assessing monopoly power. The proper geographic market is the area in which affected customers can practicably turn to alternative sources of supply if the defendant raises prices or limits output. The inquiry turns on commercial realities, including where sellers market their goods, transportation and distribution conditions, regulatory barriers, product characteristics, and the places where customers realistically can buy the product.

Tampa Electric, as understood through Fourth Circuit precedent, requires consideration of both where sellers operate and where purchasers can reasonably turn for supplies. It does not establish a categorical rule that a foreign producer's home country must be part of the market merely because that producer sells some goods to U.S. customers. The district court improperly treated supplier location as dispositive without asking whether U.S. purchasers could predictably obtain diverted supplies there.

Kolon alleged a distinct U.S. market and supplied plausible factual support for that allegation. It alleged high technical and legal barriers to entering the U.S. market, difficulty for American buyers in accessing foreign supply, separate U.S. prices, low U.S. supply despite high prices, and the absence of U.S. sales by certain foreign producers. It also alleged that Teijin's available U.S. supply was uncertain and that Kolon's own U.S. sales were de minimis.

Market definition is ordinarily a fact-intensive issue that should not be resolved on the pleadings absent a glaring deficiency. Kolon's allegations did not define the market implausibly, vaguely, or inconsistently. Whether discovery would ultimately prove that the United States was the correct market remained open, but Kolon's allegations were enough to survive dismissal.

DuPont's alternative arguments did not justify dismissal. The possible effect of the Berry Amendment could not be resolved from the pleadings, particularly because Kolon limited its proposed market to commercial purchasers. And Kolon's allegations that U.S. customers paid higher prices amid constrained supply sufficiently suggested price discrimination or market power; it did not need to use the specific phrase "price discrimination."

At the Rule 12(b)(6) stage, a court must accept well-pleaded factual allegations as true and draw reasonable inferences for the nonmovant. It may consider the pleading and documents attached to or incorporated in it, but it cannot resolve factual disputes using new factual assertions made by counsel during oral argument.

The district court repeatedly relied on DuPont's statement that it had disclosed all relevant agreements. It used that assertion to treat four agreements involving four of DuPont's twelve largest customers as the entire universe of challenged contracts, calculate foreclosure at less than 25 percent, and conclude that substantial foreclosure was implausible.

Kolon never alleged that it possessed every relevant DuPont agreement and specifically protested that the contracts had been self-selected and had not been tested through discovery. Reliance on DuPont's representation therefore went beyond the counterclaim. Treating the motion as one for summary judgment would also have been improper because the parties had not had a reasonable opportunity for discovery.

The error was not harmless because the counterclaim, assessed on its own allegations and with favorable inferences, plausibly alleged exclusionary conduct. The court therefore independently evaluated the monopolization and attempted-monopolization claims on the face of Kolon's pleading.

A Section 2 monopolization claim requires monopoly power in a relevant market and willful acquisition or maintenance of that power rather than success attributable to superior products or historical accident. Kolon adequately alleged monopoly power by asserting that DuPont held more than 70 percent of the U.S. market, had long dominated it, and was protected by substantial barriers to entry and constrained supply.

Exclusive dealing is not automatically unlawful, but it can be exclusionary conduct when it forecloses competition in a substantial share of the affected market. The key question is whether the arrangements significantly limit competitors' opportunities to enter or remain in the market. A monopolist's exclusive contracts may violate Section 2 even where the precise foreclosure percentage is below the rough 40-to-50-percent range sometimes associated with substantial foreclosure.

Kolon alleged that DuPont secured multiyear, essentially exclusive commitments from the highest-volume customers in the most important sustainable commercial para-aramid categories, including important optic-fiber and tire producers. It alleged that these contracts denied competitors the customers necessary to establish a viable competitive foothold, restricted available supply, increased prices, and preserved or expanded DuPont's dominant position.

The terms described in the produced agreements did not defeat the claim. Requiring buyers to obtain somewhat less than all of their requirements from DuPont could still be effectively exclusive for a specialized and integrated product. Likewise, meet-or-release provisions could burden rather than facilitate entry because a competitor would have to make a speculative price offer, beat DuPont's price by the required margin, and hope DuPont declined to match it. The duration of all relevant agreements also could not be resolved from four contracts when Kolon alleged multiyear arrangements more broadly.

Kolon was not required at the pre-discovery stage to plead an exact foreclosure percentage, particularly where the relevant contracting information was largely in DuPont's possession. Its detailed allegations of dominant share and targeted exclusionary arrangements were sufficient to state a plausible monopolization claim.

Attempted monopolization requires anticompetitive conduct, specific intent to monopolize, and a dangerous probability that monopolization will occur. Kolon's plausible allegations of essentially exclusive agreements with critical high-volume purchasers adequately established the first element at the pleading stage.

Specific intent may be inferred from anticompetitive practices. Kolon also alleged that DuPont had pursued a series of actions to preserve its dominant position, including efforts to block imports, trade disputes against rivals, and opposition to revocation of antidumping duties. Taken with the alleged exclusive agreements, those allegations supported a plausible inference of specific monopolizing intent.

A dangerous probability of success depends on the relevant market and the defendant's capacity to lessen or destroy competition in that market. Because Kolon plausibly alleged that DuPont already possessed monopoly power in the adequately pleaded U.S. market and used exclusionary practices to preserve it, Kolon necessarily alleged a dangerous probability of successful monopolization.