January 31, 2025
On January 21, a Northern District of California Court denied Plaintiff Tevra Brands LLC’s (“Tevra’s”) Motion for a New Trial, after a Jury found that Defendant Bayer Healthcare LLC (“Bayer”) did not monopolize the relevant antitrust market for topical flea, tick, and heartworm medication.1 The verdict hinged on the relevant product market definition provided by Bayer’s expert, Celeste Saravia.2 Tevra moved for a New Trial on the basis that the court’s admission of Dr. Saravia’s market studies and analysis methodology prejudiced them.3 However, the Court disagreed and denied Tevra’s motion.4
Tevra produces a generic versions of Bayer’s topical flea and tick medications for cats and dogs. Bayer’s medications, sold as “Advantage” and “Advantix,” contain imidacloprid as their active pharmaceutical ingredient. Tevra filed a series of complaints alleging that Bayer monopolized the imidacloprid flea and tick medication market.5
Tevra alleged monopolization under Section 2 of the Sherman Act and exclusive dealing under both Section 1 of the Sherman Act and the Clayton Act. Tevra alleged that Bayer entered into anticompetitive agreements with bog box retailers such as Petco, Petsmart, and Chewy to monopolize the “topical flea and tick medication” market.6 Bayer allegedly entered into agreements with retailers providing them a 2% discount if they sold Bayer’s imidacloprid products exclusively.7 Tevra asserted they lost out on millions of dollars in sales as a result of Bayer’s exclusive agreements, and that such agreements made it more difficult for generics to compete in topical flea and tick medication.8
A key issue at trial was whether “topical imidacloprid flea and tick products for dogs and cats” comprised a separate relevant product market, or whether such products compete in a broader market.9 The Jury returned a verdict for Bayer, finding that Tevra did not prove, by a preponderance of the evidence, that the relevant antirust market is topical imidacloprid flea and tick products for dogs and cats in the United States.10
Following the verdict, Tevra moved for a new trial on the basis that the testimony of Bayer’s expert economist, Dr. Saravia, should have been excluded under Daubert.11
Dr. Saravia’s analysis examined dog owners’ switching patterns between flea and tick medications. She opined that the market for flea and tick medication was not merely limited to imidacloprid, but also encompassed flea and tick medications containing other active pharmaceutical ingredients such as fipronil.12 Tevra argued that the Court erred when it failed to exclude Dr. Saravia’s analysis because she did not properly conduct a “Small but Significant and Non-transitory Increase in the Price” (“SSNIP”) test.13 Tevra claimed the Court erred by conflating the broader Hypothetical Monopolist Test with the SSNIP test, the latter of which juries typically consider when evaluating the scope of a relevant market.14 Tevra argued that Dr. Saravia’s opinion should not be used to challenge Tevra’s expert economist, Paul Wong, because Dr. Wong’s analysis did rely on the SSNIP test, in contrast to Dr. Saravia’s analysis.15 Tevra argued that Dr. Saravia only conducted a qualitative analysis about switching behavior, which was irrelevant to the SSNIP question at a wholesale level.16
The Court found Tevra’s argument to be unpersuasive, holding that they did not commit any error when they fully considered and rejected such exclusion during motions in limine.17 The Court evaluated Dr. Saravia’s analysis in light of the evidence, and found that Tevra failed to identify any error “so facially wrong” as to warrant exclusion.18 The Court also found that Tevra’s arguments were properly directed to cross examination, and that nothing in Dr. Saravia’s trial testimony warranted exclusion.19
This case highlights the importance of proving the scope of a relevant product market in an antitrust case, particularly in a monopolization case. Here, the jury did not even reach the question of whether Bayer’s conduct (agreements) constituted monopolization or unlawful exclusive dealing. Before the jury could consider whether Bayer engaged in wrongdoing, it determined that the relevant market was broader than just imidacloprid products. The verdict and the Judge’s subsequent decision to deny a new trial reinforces that failing to properly define a relevant product market could be fatal, and that, for antitrust defendants, defeating a relevant product market is a path to victory.
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