Crossover grading

[benjulmag]

Originally Posted by Peter_Spaeth

Corey consider this example. A small pharma company with one drug loses much of its market share when Merck develops a blockbuster drug for the same indication. Small co. goes to Merck and says, I need to license your drug and become an authorized seller to stay in business. Merck says no. Lawful refusal to deal.

Change the facts. Merck says yes, but then breaches the bargain and never delivers the product. Small co. might have a breach of contract claim now, but it still doesn't have an antitrust claim; the economic effect is the same whether the refusal is straightforward or sleazy. Put another way, every wrongful act by a monopolist does not thereby become an antitrust violation.

Two responses.

1. One of the points I was making is that company A could very well have a legal claim for damages from company B that is not predicated on antitrust violation.

2. In my fact pattern company B's practices results it having a (near) 100% market share. So let's change your example a bit. Let's say that Merck has a business model in which it always breaches its license agreements with small companies. Merck as a result gains a 100% market share, the result being there are no companies spending R&D dollars to develop new drugs out of a belief they will be eventually put out of business by Merck. Are you saying that does not have antitrust implications?