Maris Distributing Co. v. Anheuser-Busch, Inc., No. 00-16460.

• Decision Date: 19 August 2002
• Docket Number: No. 00-16460.,No. 01-13095.
• Citation: 302 F.3d 1207
• Parties: MARIS DISTRIBUTING COMPANY, a Florida corporation, Plaintiff-Appellant, v. ANHEUSER-BUSCH, INC., a Missouri Corporation, Anheuser-Busch Companies, Inc., a Delaware Corporation, et al., Defendants-Appellees. Maris Distributing Company, a Florida corporation, Plaintiff-Appellant, v. Anheuser-Busch, Inc., a Missouri Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

302 F.3d 1207

MARIS DISTRIBUTING COMPANY, a Florida corporation, Plaintiff-Appellant, v. ANHEUSER-BUSCH, INC., a Missouri Corporation, Anheuser-Busch Companies, Inc., a Delaware Corporation, et al., Defendants-Appellees.

Maris Distributing Company, a Florida corporation, Plaintiff-Appellant, v. Anheuser-Busch, Inc., a Missouri Corporation, Defendant-Appellee.

No. 00-16460.

No. 01-13095.

United States Court of Appeals, Eleventh Circuit.

August 19, 2002.

COPYRIGHT MATERIAL OMITTED

Bernard H. Dempsey, Jr., Dempsey & Sasso, Manuel Socias, Law Offices of Manuel Socias, Orlando, FL, Mark W. Gaffney, Larchmont, NY, for Plaintiff-Appellant.

Jerrold J. Ganzfried, Peter E. Moll, Carmine R. Zarlenga, Dianne S. Pickersgill, Brian A. Howie, Howrey, Simon, Arnold & White, LLP, Washington, DC, for Defendants-Appellees.

Appeals from the United States District Court for the Middle District of Florida.

Before ANDERSON, HULL and KENNEDY^*, Circuit Judges.

ANDERSON, Circuit Judge:

Plaintiff Maris Distributing Company (Maris) brought this antitrust action against Defendant Anheuser-Busch, Inc. (Anheuser-Busch), alleging in part that Anheuser-Busch violated § 1 of the Sherman Act by prohibiting its distributors from being owned, in whole or in part, by the public. Maris contended that this restriction, contained in Anheuser-Busch's distribution agreements, suppressed the price for equity ownership interests in beer distributorships, and in particular in the submarket of the purchase and sale of ownership interests in Anheuser-Busch beer distributorships. After hearing the evidence at trial, the district court directed a verdict in Anheuser-Busch's favor on the issue of whether Anheuser-Busch had market power, such that there was the potential for genuine anticompetitive effects on competition. However, the court allowed to go to the jury the issue of whether actual anticompetitive effects had been shown by the plaintiff. In response to special interrogatories, the jury then found that Maris had established both a relevant market (the purchase and sale of equity ownership interests in beer distributorships) and submarket (the purchase and sale of equity ownership interests in Anheuser-Busch beer distributorships). However, the jury found that Maris had failed to show actual anticompetitive effects as a result of the public ownership restriction. Maris appeals the district court's directed verdict on the issue of market power as well as several other issues related to the trial. For the reasons that follow, we conclude that the district court's actions were proper, and we affirm.

I. BACKGROUND

Anheuser-Busch distributes its brands of beer through a network of approximately 700 authorized wholesale distributors, each with an assigned territory. Maris was one of these distributors from 1968-1997 and was Anheuser-Busch's exclusive distributor for the territory covering Gainesville and Ocala, Florida. Maris paid nothing to Anheuser-Busch in exchange for this distributorship.

The relationship between Anheuser-Busch and each of its distributors is governed by a written contract referred to as the Equity Agreement. Upon becoming a distributor in 1968, Maris agreed as part of the Equity Agreement that Anheuser-Busch had the right to approve any change in Maris's ownership. Less than a year later, in 1969, the Equity Agreement was amended to include a provision that precluded any public ownership (either through sale to a publicly-owned company or via a public offering of stock) of distributorships. It is this provision that is the subject of the instant lawsuit. Maris did not object to the amendment when the provision was added in 1969, and it also signed two subsequent versions of the Equity Agreement — one in 1974 and one in 1982 — each of which contained similar prohibitions against public ownership.

The operative agreement between Maris and Anheuser-Busch at the time this lawsuit was filed was the 1982 Equity Agreement, paragraph 4(i) of which provided:

Under no circumstances shall Wholesaler or any owner of Wholesaler have the right to transfer any ownership interest in the business of Wholesaler if such transfer would result in Wholesaler being owned in whole or in part, directly or indirectly, by the public.

The Equity Agreement provides, however, that distributors may sell distributorships, including the right to distribute Anheuser-Busch products, to any non-public entities, provided that they seek and obtain Anheuser-Busch's approval. Another provision required the distributor to provide Anheuser-Busch with notice of its intent to sell and to allow Anheuser-Busch to have an exclusive right to negotiate for the purchase of the distributorship for 45 days.

On August 25, 1996, following a meeting with Anheuser-Busch, Maris submitted a "Notice of Intent to Sell," pursuant to the terms of the Equity Agreement. During the subsequent negotiations, Anheuser-Busch made two offers to purchase Maris — one for $20.4 million and one for $21.5 million. Maris did not accept these offers and made no counter-offer.

After the required 45-day negotiation period with Anheuser-Busch, Maris indicated that it would seek to sell the business to a third-party. Maris had discussions with at least six potential buyers, but never submitted a proposed purchaser to Anheuser-Busch. According to Anheuser-Busch, Maris's lack of success in finding a buyer was in part because Maris demanded an unreasonably high price — $60 million — and because it acted unreasonably in its negotiations with potential buyers. Anheuser-Busch also attributes some of Maris's difficulties to the fact that it employed a broker, Irvin Philpot, who Anheuser-Busch says was a convicted felon and an otherwise unsavory character.

Maris filed this lawsuit on January 22, 1997, challenging the Equity Agreement's public ownership provision. On March 20, 1997, Anheuser-Busch terminated the Equity Agreement with Maris. Anheuser-Busch ceased selling its products to Maris, and assigned Maris's territories to two other distributors. Maris asserted a Sherman Act § 1 antitrust claim,¹ alleging that the public ownership provision effected an unreasonable restraint in trade (in the form of a non-price, vertical restraint) by suppressing prices in the relevant market for the purchase and sale of equity ownership interests in beer distributorships, and in the relevant submarket for the purchase and sale of equity ownership interests in Anheuser-Busch beer distributorships.²

Maris's only claim that went to trial in this case was a rule of reason claim under Sherman Act § 1, and the parties agree that in order to prevail on its claim, Maris had to prove, inter alia, either that (1) Anheuser-Busch had market power in the relevant market or submarket such that the restraint had potential anticompetitive effects, or (2) the restraint resulted in actual anticompetitive effects on the relevant market or submarket. See Levine v. Central Florida Medical Affiliates, Inc., 72 F.3d 1538, 1551 (11th Cir.1996).

On the issue of market power, the evidence showed that Anheuser-Busch only owned all or part of 20 out of approximately 700 Anheuser-Busch distributorships³ and 2700 distributorships of all brands of beer. This indicates that Anheuser-Busch's market share in the alleged relevant market was less than 1%, and that its share of the Anheuser-Busch submarket was still only 2.9%. Nonetheless, Maris argued that it could show market power based on the fact that Anheuser-Busch had a 48% market share in the manufacture of beer.

Despite Anheuser-Busch's small market share in the relevant market and submarket Maris's experts testified that in the case of vertical restraints, a defendant's market share in manufacturing can result in market power in the relevant market for the purchase and sale of ownership interests in distributorships. These experts stated that when Anheuser-Busch's market share in the manufacture of beer is taken together with its contractual influence over the valuations and sales of distributors, and the contractual exclusion of all publicly-owned buyers, then it could be shown that Anheuser-Busch had market power over distributors.

Anheuser-Busch disagreed and argued that Anheuser-Busch's small market share in the relevant market precluded as a matter of a law a finding of market power. The district court agreed with Anheuser-Busch and excluded Maris's expert testimony concerning market power, finding as a matter of law that market share could not be imputed to the alleged relevant market for the purchase and sale of equity ownership interests of beer distributorships from the separate market of the manufacture and sale of beer. The district court also agreed with Anheuser-Busch that market power could not be shown by evidence of Anheuser-Busch's influence over entry and exit to the market because, the court found, such evidence only showed contract power and not market power. Therefore, the court also excluded that evidence. After excluding this evidence, and in light of Anheuser-Busch's small market share in the relevant market and submarket, the district court entered a directed verdict in favor of Anheuser-Busch on the issue of market power.

Although the district court directed a verdict on the market power issue, the court allowed to go to the jury the issue of whether Maris nonetheless had proven actual anticompetitive effects as a result of the public ownership restriction. Maris attempted to prove several actual anticompetitive effects, including: 1) the suppression of the price at which beer distributorships are sold, 2) a reduction in output (sales of distributorships) as a result of suppressed price, 3) the creation of barriers to entry into the market, 4) the creation of a barrier to exit the market, and 5) harm to consumers in the form of higher beer prices as a result of decreased competition among distributors.

In its special verdict, the jury found in favor of...