Church & Dwight Co., Inc. v. Mayer Laboratories, Inc. (868 F. Supp. 2d 876, 2012)

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

EDWARD M. CHEN, District Judge.

Plaintiff/Counterdefendant Church & Dwight, Inc. (“C & D”), the maker of Trojan brand condoms, moves for summary judgment on Defendant/Counter-claimant Mayer Labs, Inc.’s (“Mayer’s”) counterclaims. Docket No. 187, 198 (redacted version). Mayer is the maker of Kimono brand condoms. The parties’ primary dispute surrounds C & D’s use of planogram agreements with condom retailers, whereby C & D offers a percentage rebate off its wholesale price in exchange for a retailer’s commitment to devote a certain percentage of the condom shelf space to C & D products. Mayer alleges that C & D’s planogram rebate (“POG”) program operates to foreclose competition from vital retail display space and hence sales. Mayer also alleges that C & D has engaged in other anticompetitive conduct, including abusing its position as category captain for certain retailers to exclude its rivals from, or at least disadvantage them in, the condom retail market. Based on this and other alleged conduct, Mayer brought twelve counterclaims against C & D for purported violations §§ 1 and 2 of the Sherman Act, the Cartwright Act, the Lanham Act, and California unfair competition laws, as well as tort claims for tortious interference with contract and economic relations.

The parties have engaged in over three years of hotly contested litigation. This Court previously denied C & D’s motion to dismiss Mayer’s counterclaims finding that Mayer’s complaint raised viable claims of anticompetitive conduct potentially violative of the Sherman Act. See Docket No. 105; Church & Dwight Co., Inc. v. Mayer Laboratories, Inc., C-10-4029 EMC, 2011 WL 1225912 (N.D.Cal. Apr. 1, 2011). The parties have conducted extensive discovery of over 15 million pages of documents and dozens of depositions. Reply at 1. Documents submitted in conjunction with the parties’ summary judgment briefing total over four thousand pages.

Despite this voluminous record, Mayer has been unable to proffer any direct, admissible evidence of retailers switching or removing rival condom brands from their shelves as a result of any coercive effect of C & D’s planogram program. Nor has Mayer submitted any admissible evidence that C & D misused its category captain positions to the detriment of its rivals. Surprisingly, Mayer failed to take the deposition of — or obtain other direct evidence from — -any retailer’s employees or other third parties who might have testified to the supposed coercive, anticompetitive effect of C & D’s conduct. Indeed, the only direct (and unrebutted) evidence from third party retailers indicates just the opposite: that the planogram program has little, if any, effect on retailers’ shelf space allocations, and that C & D had no undue influence over retailers’ decisions as category captain. Without any such direct evidence, the Court is left largely with Mayer’s (and its experts’) own theory based largely on a rough correlation between C & D’s moderately increasing market share and Mayer’s moderately decreasing market share.

Accordingly, having considered the parties’ briefs, accompanying submissions, oral argument, and all evidence of record, the Court DENIES the motion for summary judgment as to tortious interference with contract, and GRANTS the motion as to all other claims.

I. FACTUAL & PROCEDURAL BACKGROUND

The evidence submitted by the parties reflects as follows. Where there are factual disputes, they are so noted.

A. The Parties

Mayer Labs markets, distributes and sells latex male condoms. Second Amended Counterclaim (“SAC”) ¶¶ 15, 19. Mayer’s business involves the marketing and sale of, inter alia, its Kimono brand of ultra-thin latex condoms. Id. ¶ 15. Kimono condoms have a retail market share in the United States of less than one-half of 1%. Silberman Report Ex. 1. Between 2001 and 2007, Mayer’s market share increased from .31 % to .46%. Id. Starting in 2008, market share decreased to a low of .27% in 2009, and remained at .29% in 2010. Id. Its 2010 market share corresponds to annual revenue of $819,876.

Counterdefendant C & D manufactures and distributes, inter alia, Trojan and other brand-name condoms. C & D branded condoms now account for over 75% of all retail condom sales in the United States. Silberman Report Ex. 1. C & D’s market share has steadily increased from its 2001 share of 67.2% (or $143,630,000 in annual revenues) to its 2010 share of 75.43% (or $210,086,934 in annual revenues). Id. Its market share has been over 50% since 1985. Wright Report Attachment 4.

The next largest condom brand is Durex, marketed by Reckitt Benckiser Group, with approximately 14% of sales as of 2010. Id. Attachment 8. Durex has maintained a steady market share of 14-15% since at least 2004. Id. The third largest brand is Lifestyles, marketed by Ansell Healthcare, with just under 10% market share as of 2012. Id. Its market share has ranged from a high of over 12% in 2004 to a low of 8% in 2008. Id. Together, condoms sold by the three largest companies account for over 99% of the nationwide market. Wright Report Attachment 8. Globally, Durex/Reckitt is the largest condom manufacturer with a 34% share of the global market, Lifestyles/Ansell is second with a 17% share, and Trojan/C & D is third with 11%. Wright Report at 35.

B. The U.S. Condom Industry

The vast majority of condoms in the United States are sold in one of three channels. First, the food, drug, and mass merchandiser channel, absent Wal-Mart (“FDMx”), accounts for about 49% of the unit sales in the retail market. Wright Report Attachment 1. Second, Wal-Mart alone accounts for 33%. Id. Third, convenience stores (“c-stores”) account for 14.9%. Id. The remaining sales occur in club stores (e.g., Costco) and dollar stores (e.g., Dollar General). Id.

These channels differ somewhat in their pricing and sales structure. For example, drug stores tend to carry the largest variety of condom brands, and their retail prices are on average twice as high as the mass merchandiser channel. Martineau Federal Trade Commission (“FTC”) Depo., Mayer Ex. 1, at 38-40. C-stores tend to carry only one or two brands of condoms in three-unit packs due to limited shelf-space, and typically seek exclusive contract bids from manufacturers. Baseman Report at 18; Wright Report at 4. Club stores and dollar stores may also use exclusive contracts, and club stores tend to sell bulk packs only. Wright Report 55-56.

The parties dispute the extent to which there are barriers to entry in the retail condom market. Mayer claims that there are considerable barriers, including costs of FDA and state regulatory approval and compliance, production mínimums, and retailer program participation fees. See, e.g., Baseman Report at 22-23; Wedel Decl. ¶¶ 15-19; Mayer Ex. 61. C & D argues that the FDA approval process is not overly rigorous and that the barriers to entry are not substantial. See Wright FTC Report at 14.

According to both parties, condoms are unique products that rely heavily on point of sale advertising because manufacturers face constraints in television and print advertising. In that respect, condoms are generally displayed on, and sold from, pegboards and shelves in one area of a store where consumers can quickly glance at them at once. The number and visibility of products available from a particular brand are therefore important in condom sales because of the private nature of the transaction and the speed by which buying decisions are made. Brand loyalty also plays a strong role in the industry, as 52% of customers will leave a store to find their preferred brand, while 48% will choose an alternative brand if their preferred brand is not available. Baseman Report at 6 n. 13.

At the point of sale, condom manufacturers compete for retail space and sales marketing in a variety of ways. For example, they may pay retailer slotting fees for each condom “facing” on the shelf. Baseman Report at 7-8; Wright Report at 58, 89. Manufacturers may front the costs of a certain amount of new product so that they, rather than the retailer, carry the risk of meager sales. Wright Report at 176. Retailers may require certain promotional budgets at manufacturer expense, including temporary price reductions (i.e., short-term sales of a product in order to move inventory). Baseman Report at 7-8. Manufacturers can also offer promotional packages in order to secure premium shelf space at eye-level and/or on the left-hand side of the planogram. Wright Report at 88-89. Besides placement in the primary condom section, manufacturers may negotiate for promotional or ongoing placement in endcaps (the shelves located at the end of each aisle) and sidecaps, as well as other locations within the store. Wright Report at 85-88. Manufacturers might also negotiate volume discounts, whereby retailers benefit from lower wholesale prices the more they purchase of that manufacturer’s brand. Wright Report at 188. As noted above, some retailers also negotiate exclusive deals with condom manufacturers whereby the retailer carries only one brand. Wright Report 89-90. This is especially common in the c-store channel.

C & D spends approximately 17-19% of its gross sales on discounts and promotions. Overall, C & D, Mayer, Durex, and Lifestyles each offer promotional discounts of approximately 10-13% off of the wholesale price to retailers like Rite Aid. Wright Report Attachment 12.

Notwithstanding the importance of point-of-sale efforts, condom manufacturers also rely on other forms of marketing. Retailers look at a manufacturer’s promotional budget as a factor in determining whether and how to stock their products. Martineau Depo. at 80-81. C & D, most notably, currently spends over $58 million per year on marketing, of which over $28 million is dedicated solely to advertising and media expenses. Wright Report Attachment 5. Mayer spends $127,000 and $23,000 respectively on these expenses. Id.

C. C & D’s Conduct in the Industry

C & D engages in four types of conduct within the condom industry that are the source of the parties’ disputes.

First, in addition to offering a number of the discounts and promotions described above, C & D offers planogram rebate agreements, described herein as its “POG program,” to large chain retailers. C & D’s POG program accounts for under $8 million of the $40 million it spent on promotional discounts in 2010, or just 3.5% of gross sales. Wright Report Attachment 11A.

The POG program gives the retailer an opportunity to receive a percentage rebate on its purchases of C & D condoms. The retailer gets the rebate if it dedicates a specified minimum percentage of the available condom facings on its in-store display to C & D condom products. C & D “inherited” this POG program in 2001 by acquiring the Trojan brand from Carter-Wallace; the program has been in existence since at least 1997. Wright Report at 48. In 2001, the Program had three “tiers” — a 55% tier (awarding a 4.0% rebate for 55% or more of a retail chain’s display space), a 65% tier (awarding a 7% rebate for 65% or more of the display space), and a 70% tier (awarding a 7.5% rebate for 70% or more of the display space). Baseman Report at 10. In 2007, C & D changed the terms of its program, introducing 75% and 80% tiers (providing 8.0% and 8.5% rebates, respectively) and eliminating the 55% tier. Id. In 2009, C & D eliminated the 65% tier. Id. However, in 2010, C & D reinstated the 65% tier and eliminated the 80% tier. Id. Its current POG program specifies levels of 65%, 70%, or 75%, corresponding to rebates of 7%, 7.5%, and 8%, respectively. Id. About 91% of C & D’s FDMx sales derive from retailers that participate in the POG program. Wright Report at 49. Wal-Mart does not participate.

Second, in channels in which retailers request exclusive contracts, C & D bids for exclusive agreements with c-stores and dollar stores whereby the stores carry only one brand. For example, C & D holds an exclusive contract with 7-Eleven. Wright Report at 51-53. Overall, C & D has a 50-60% share of c-store condom sales, lower than its 75% share in the market as a whole. C-stores account for 14.9% of unit sales 22.5% of revenues in the overall condom market. Wright Report Attachment 1. Although the parties do not provide details, Durex and Lifestyles seem to account for the bulk of the remaining 40-50% of the c-store channel and regularly bid against C & D for c-store contracts. Id. at 92-93.

Third, C & D sometimes serves as a “category captain” for certain large retail chains. Category captains are appointed by some retailers to assist with shelf space allocation and provide advice as to how best to present the category (in this case, condoms). Wright Report at 105-06; Martineau Depo. at 74. Mayer alleges C & D has mis-used its category captaincy at certain retailers to its own advantage, at the expense of Mayer and other rivals

Fourth, the parties compete directly in the micro- or ultra-thin segment of the condom industry. Mayer began making its Kimono MicroThin condoms, sourced from a Japanese supplier named Sagami, in the 1990s. The parties dispute whether Mayer has or had an agreement with Sagami to be its exclusive North American condom distributor. See Mayer Depo. at 37, 127-29. Mayer claims it did and that C & D caused Sagami to breach that agreement. Mayer also asserts a trademark violation by C & D. Mayer trademarked the term “microthin” in 2009, but the parties dispute whether the mark is valid. C & D began using the term “micro-thin” on its packaging in 2006 to describe its ultra-thin condoms.

D. Procedural Posture

On November 21, 2008, C & D filed a declaratory action in the District of New Jersey seeking a judicial determination that C & D’s conduct was legal under applicable federal and state laws. In that complaint, C & D seeks a declaratory judgment as to the conduct that Mayer alleged in a draft complaint conveyed by Mayer’s counsel to C & D in October 2008. See Original Compl. ¶¶ 81-86. On February 17, 2009, Mayer filed an Answer together with Counterclaims. Mayer amended its counterclaims on March 9, 2009. The SAC includes claims for violations of the Sherman Act, 15 U.S.C. §§ 1 and 2 (Claims I & II); California’s prohibition against trusts (Claim III), Cal Bus. & Prof.Code §§ 16700, et seq.; California’s prohibition against exclusive dealing (Claim IV), Cal. Bus. & Prof.Code §§ 16727, et seq.; California’s prohibition against secret rebates (Claim V), Cal. Bus. & Prof.Code § 17045, tortious interference with contractual relations (Claim VI), tortious interference with prospective economic advantage (Claim VII), and unfair competition under common law (Claims VIII & XII). The SAC also asserts claims for infringement under California common law (Claim XI) as well as the Lanham Act, 15 U.S.C. § 1114(l)(a) (Claim X), and a claim for false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a) (Claim IX). Mayer’s SAC requests (1) a declaratory judgment that C & D’s Condom Planogram Agreements are unenforceable, (2) a comprehensive permanent injunction, (3) punitive and treble damages, (4) restitution and disgorgement of profits with interest, and (5) attorneys’ fees and costs. SAC ¶¶ 102-106.

C & D filed a motion to dismiss the SAC on June 18, 2012. Docket No. 71. The district court for the District of New Jersey transferred the case, including C & D’s pending motion to dismiss Mayer’s counterclaims, to this Court. See Docket No. 76 (Order transferring case). On April 1, 2011, the Court granted C & D’s motion to dismiss with respect to Mayer’s Fifth Counterclaim (§ 17045) without prejudice, and denied the motion to dismiss with respect to all other counterclaims. See Docket No. 105; Church & Dwight Co., Inc. v. Mayer Laboratories, Inc., C-10-4029 EMC, 2011 WL 1225912 (N.D.Cal. Apr. 1, 2011).

C & D now seeks summary judgment on all of Mayer’s counterclaims. Docket No. 187, 198 (redacted version). That motion is pending before the Court.

II. DISCUSSION

A. Motion for Summary Judgment — Legal Standard

Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be rendered “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). An issue of fact is genuine only if there is sufficient evidence for a reasonable jury to find for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “The mere existence of a scintilla of evidence ... will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party].” Id. at 252, 106 S.Ct. 2505. At the summary judgment stage, evidence must be viewed in the light most favorable to the nonmoving party and all justifiable inferences are to be drawn in the nonmovant’s favor. See id. at 255, 106 S.Ct. 2505.

Where the plaintiff has the ultimate burden of proof, he or she may prevail on a motion for summary judgment only if he or she affirmatively demonstrates that there is no genuine dispute as to every essential element of its claim. See River City Mkts., Inc. v. Fleming Foods W., Inc., 960 F.2d 1458, 1462 (9th Cir.1992). In contrast, where the plaintiff has the ultimate burden of proof, the defendant may prevail on a motion for summary judgment simply by pointing to the plaintiffs failure “to make a showing sufficient to establish the existence of an element essential to [the plaintiffs] case.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

In the instant case, Plaintiff C & D moves for summary judgment on Defendant Mayer’s counterclaims. Accordingly, the Court’s inquiry will focus on whether Mayer has made a “showing sufficient to establish the existence of an element essential to [its] case.” Id.

B. Section 1 — Sherman Act

1. Legal Standard

Section 1 of the Sherman Act prohibits, in broad terms, contracts or agreements that unreasonably restrain trade or commerce. It provides: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal.” 15 U.S.C. § 1. See Allied Orthopedic Appliances, Inc. v. Tyco Health Care Group LP, 592 F.3d 991 (9th Cir. 2010). To state a claim under § 1, a party must allege (1) an agreement, conspiracy, or combination between two or more entities, (2) an unreasonable restraint of trade, (3) anticompetitive effects within the relevant market, and (4) a resulting antitrust injury suffered by the claimant. See generally Queen City Pizza v. Domino’s Pizza, 124 F.3d 430, 442 (3d Cir.1997).

Vertical restraints on trade, including those alleged by Mayer, are subject to analysis under the “rule of reason.” See Continental T.V. v. GTE Sylvania, 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977) (concerted action on non-price restrictions is subject to rule of reason analysis, requiring a showing of an adverse effect on competition in the relevant market); Bus. Electr. Corp. v. Sharp Electr. Corp., 485 U.S. 717, 723-36,108 S.Ct. 1515, 99 L.Ed.2d 808 (1988) (holding that a vertical restraint of trade is not per se illegal under § 1 of the Sherman Act unless it includes some agreement on price or price levels). An example of a vertical restraint is an exclusive dealing agreement. “Under the antitrust rule of reason, an exclusive dealing arrangement violates Section 1 only if its effect is to foreclose competition in a substantial share of the line of commerce affected.” See Allied Orthopedic Appliances, Inc. v. Tyco Health Care Group LP, 592 F.3d 991 (9th Cir.2010) (internal quotation marks and citation omitted); Omega Envtl., Inc. v. Gilbarco, Inc., 127 F.3d 1157, 1162 (9th Cir.1997) (explaining that an exclusive dealing arrangement violates § 1 only if its effect is to “foreclose competition in a substantial share of the line of commerce affected”).

The antitrust plaintiff “earr[ies] the initial burden of showing that the challenged conduct has an actual adverse effect on competition as a whole in the relevant market.” R.J. Reynolds Tobacco Co. v. Philip Morris, 199 F.Supp.2d 362, 380 (M.D.N.C.2002) (internal quotation marks and citation omitted). Such a burden is substantial, and requires the plaintiff to demonstrate that a firm has market power within the relevant market, and that its conduct has actual anticompetitive effects within that market. See Tanaka v. University of Southern California, 252 F.3d 1059, 1063 (9th Cir.2001) (“The plaintiff bears the initial burden of showing that the restraint produces ‘significant anticompetitive effects’ within a ‘relevant market.’ ”) (quoting Hairston v. Pacific 10 Conference, 101 F.3d 1315, 1319 (9th Cir. 1996)); XI Areeda & Hovencamp, Antitrust Law, ¶¶ 1820-21 at 178-80 (3d ed.2011) (describing requirements for a prima facie case of illegality under the Rule of Reason as including a showing of an exclusive agreement, market power in the relevant market, and foreclosure “sufficient to warrant an inference of injury to competition”); id. ¶ 1822e at 220 (characterizing the plaintiffs prima facie burden as “substantial”). If the plaintiff succeeds, the burden shifts to the defendant “to establish the pro-competitive redeeming virtues of the action.” Reynolds, 199 F.Supp.2d at 380. If the defendant sustains that burden, the claimant “can still prevail by showing that the same pro-competitive effect could be achieved through an alternative means that is less restrictive of competition.” Id. (quotation marks and citation omitted).

As set forth below, the Court concludes that Mayer has failed to carry its initial burden of demonstrating that C & D’s conduct in imposing a vertical contract has foreclosed competition from a substantial share of any relevant market. Accordingly, the Court does not evaluate whether C & D has proffered sufficient pro-competitive rationales for its conduct, or whether those effects could be achieved through less restrictive means.

2. Adverse Effect on Competition

C & D argues that Mayer has failed to establish a genuine issue of material fact as to whether C & D’s planogram agreements violate § 1 of the Sherman Act. C & D claims that (1) it lacks market power in the relevant market because there is no evidence that it can charge supra-competitive prices or that its competitors lack the capacity to increase their output in the short run; (2) the agreements do not substantially foreclose competition under controlling Ninth Circuit precedent and other persuasive authority; and (3) the agreements have pro-competitive effects that override any competitive harm.

a. Relevant Market

As a preliminary matter, the parties dispute the relevant market within which to analyze C & D’s market power and purportedly anticompetitive conduct. See Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1434 (9th Cir.1995) (defining the relevant market is the first step in assessing a party’s market power); Twin City Sportservice, Inc. v. Charles O. Finley & Co., Inc., 676 F.2d 1291, 1300 (9th Cir. 1982) (“A definition of a relevant market [i]s necessary in order to assess possible Sherman Act violations.”).

The Ninth Circuit has held that the “definition of the relevant market is a question of fact for the jury.” Theme Promotions, Inc. v. News America Marketing FSI, 546 F.3d 991, 1002 (9th Cir. 2008) (citing Forsyth v. Humana, Inc., 114 F.3d 1467, 1476 (9th Cir.1997)). “However, that an issue is factual does not necessarily preclude summary judgment. If the moving party shows that there is an absence of evidence to support the plaintiffs case, the nonmoving party bears the burden of producing evidence sufficient to sustain a jury verdict on those issues for which it bears the burden at trial.” Rebel Oil, 51 F.3d at 1435.

The relevant market encompasses “commodities reasonably interchangeable by consumers for the same purposes,” and “all sellers or producers who have actual or potential ability to deprive each other of significant levels of business.” Id. (citations omitted); see also United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 393, 76 S.Ct. 994, 100 L.Ed. 1264 (1956) (“Determination of the competitive market for commodities depends on how different from one another are the offered commodities in character or use, how far buyers will go to substitute one commodity for another.”); Rebel Oil, 51 F.3d at 1434 (“A ‘market’ is any grouping of sales whose sellers, if unified by a monopolist or a hypothetical cartel, would have market power in dealing with any group of buyers.”). As the Ninth Circuit explained in more detail,

Determining the relevant market can involve a complicated economic analysis, including concepts like cross-elasticity of demand, and “small but significant non-transitory increase in price” (“SSNIP”) analysis. See United States v. Oracle Corp., 331 F.Supp.2d 1098 (N.D.Cal. 2004) (Walker, C.J.). Cross-elasticity of demand measures the percentage change in quantity that consumers will demand of one product in response to a percentage change in the price of another. Forsyth, 114 F.3d at 1483 (Wallace, J., concurring). When demand for the commodity of one producer shows no relation to the price for the commodity of another producer, it supports the claim that the two commodities are not in the same relevant market. Forsyth, 114 F.3d at 1477.

Similarly, a SSNIP analysis asks whether a monopolist in the proposed market could profitably impose a small but significant and nontransitory price increase. Oracle, 331 F.Supp.2d at 1112. If a significant number of customers would respond to a SSNIP by purchasing substitute products, the SSNIP would not be profitable for the hypothetical monopolist. Id. If a monopolist could not profitably impose a SSNIP, the market definition should be expanded to include those substitute products that constrain the monopolist’s pricing. Id.

Theme Promotions, 546 F.3d at 1002.

In the instant case, the parties agree that the relevant geographic market is the United States. They differ, however, as to the scope of the relevant product market. While Mayer’s counterclaim had proposed a market of male condoms sold to retailers, Mayer’s expert now proposes a market definition of all male condoms sold to retailers in the FDM channels, excluding c-stores, club stores, and dollar stores. Mayer also proposes a submarket of drugstores specifically. By contrast, C & D proposes a market defined as all male condoms sold to retailers.

The Court agrees with C & D (and with Mayer’s initial proposal) that the relevant market consists of all male condoms sold to retailers. Mayer conducts the wrong inquiry in assessing the relevant market. First, it focuses on the end-use consumers of condoms and argues that, for example, the c-store channel is a separate market from the food, drug, and mass channel because the retail price per unit in c-stores is higher and because consumers cannot avoid a per-unit price increase in the FDM channel by moving to the c-store channel. However, for purposes of this case, the relevant “consumers” are the retailers who buy and stock the manufacturers’ products, and it is their views as to the substitutability and interchangeability of products that matter. See Twin City Sportservice, Inc. v. Charles O. Finley & Co., Inc., 676 F.2d 1291, 1297-99 (9th Cir. 1982) (finding that the focus for market definition purposes was the level at which the parties compete); Allied, 592 F.3d at 998 (defining the market as the “U.S. pulse oximetry sensor market”); Concord Boat, 207 F.3d at 1044 (“[T]he relevant market is the market for inboard and stern drive marine engines.”); Reynolds, 199 F.Supp.2d at 383 (“[T]he relevant product market for the purpose of this litigation is all cigarette sales through retail outlets and [] the relevant geographic market is the United States.”); El Aguila Food Products, Inc. v. Gruma Corp., 301 F.Supp.2d 612, 615 (S.D.Tex.2003) (debating between market definitions of the retail market for tortillas vs. retail market for broader category of starches based on whether tortilla producers competed with producers in the broader category); Frito-Lay, Inc. v. Bachman Co., 659 F.Supp. 1129, 1137 (S.D.N.Y.1986) (defining the market for salted snack foods as retail sales of “corn chips, tortilla chips, potato chips, cheese puffs, pretzels and popcorn”). Thus, the interchangeability and substitutability analysis must be conducted one level up, at the wholesaler-retailer level, rather than the retailer-consumer level.

Second, Mayer attempts to segregate the market by separating certain types of consumers for manufacturers’ products. However, the Ninth Circuit has held that “the relevant market must be a product market. The consumers do not define the boundaries of the market; the products or producers do.” Newcal Industries, Inc. v. Ikon Office Solution, 513 F.3d 1038, 1045 (9th Cir.2008) (citing Brown Shoe v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962)); see also Omega, 127 F.3d at 1162 (“The relevant market for [the] purpose [of determining foreclosure effects] includes the full range of selling opportunities reasonably open to rivals, namely, all the product and geographic sales they may readily compete for, using easily convertible plants and marketing organizations.”) (quoting 2A Phillip E. Areeda et al., Antitrust Law ¶ 570bl at 278 (1995)). Accordingly, the relevant question is whether the products (in this case, condoms) are substitutable within the market, not whether certain customers (i.e., c-stores vs. drugstores) may make their purchasing decisions based on somewhat different criteria. See Brown Shoe, 370 U.S. at 326, 82 S.Ct. 1502 (“Brown argues that the predominantly medium-priced shoes which it manufactures occupy a product market different from the predominantly low-priced shoes which Kinney sells. But agreement with that argument would be equivalent to holding that medium-priced shoes do not compete with low-priced shoes. We think the District Court properly found the facts to be otherwise.”).

In another case involving condom manufacturers, a district court defined the relevant market to include all retail sales of condoms. See Ansell Inc. v. Schmid Laboratories, Inc., 757 F.Supp. 467, 475 (D.N.J. 1991). Addressing the differences between the retail market and the entire wholesale sales market (including sales to government agencies and nonprofits), the court found that all “retailers’ decision to carry a product depends upon the product’s proven or reasonably anticipated product turnover,” and that all retailers are focused on sales to the individual consumer. Id. at 473. The court also found the retail market to be the best market according to factors such as industry recognition of the market and price sensitivity. Id. at 473-74.

Mayer offers no evidence to demonstrate otherwise in this case. Indeed, at the wholesaler-retailer level, as in Ansell, it is undisputed that the parties herein compete with each other and with other manufacturers for retailers’ business, and that retailers view their products as substitutable. See Martineau Depo. at 60-61, 117 (retailer decision-making process for what products to stock is based on sales performance of the product and sales per shelf-space allocation). There is also unrebutted evidence that retailers pay attention to other retailers’ prices, and attempt to demand price equity from manufacturers. See Martineau Depo. at 106 (when C & D raised prices in 2008, CVS confirmed that the increase would be applied to “all retailers” and then increased its own price accordingly). While Mayer points to significant retail price differences between channels, those price differences are much less severe at the wholesale price level, the level at which the parties compete. For example, there is only a 10% difference in the wholesale price for drugstores over mass merchandisers. Wright Rebuttal Report at 9; Baseman Report at 20. Mayer also provides no evidence that prices in one channel do not constrain prices in another. Mr. Baseman fails to cite to any support for his contention that “condom prices in convenience stores are not a significant constraint on the prices that prevail in FDM channels,” and he fails to address the relevant prices for purposes of this analysis: the wholesale prices retailers pay for manufacturers’ products. Baseman Report at 18. Mr, Baseman’s later corollary argument, that there is “obviously price-based substitution across the FDM channels,” is similarly unsupported by citation or reference to evidence. Id. at 19. He provides no basis for the conclusion that Wal-Mart’s low prices have taken market share only from other FDM retailers and not from c-stores, dollar stores, and/or club stores.

Moreover, price equity is not dispositive. Twin City Sportservice, 512 F.2d at 1274 (“[T]he scope of the relevant market is not governed by the presence of a price differential.”). The Ninth Circuit explained in Rebel Oil that cross-elasticity of both supply and demand are relevant to defining a market. Rebel Oil, 51 F.3d at 1434-35. The Court applied this principle in con-eluding that full-serve gasoline had to be included in the relevant market with self-serve gasoline even though there were enduring price differences between the two segments, and even though consumers did not necessarily switch readily from one service to the other. The Court nevertheless found that they were both part of the relevant market because of “[t]he ease by which marketers can convert their full-serve facilities to increase their output of self-serve gasoline.” Rebel Oil, 51 F.3d at 1436; see also Ansell, 757 F.Supp. at 475-76 (finding product substitution to be a key component in the market definition analysis, where manufacturers could divert products from one segment of the market to another).

Similarly, in this case, manufacturers can respond to limited opportunities or price increases in one channel by directing their efforts to alternative channels and increasing output in those channels. For example, Durex has won exclusive contracts with retailers in the c-store and dollar store segments, and both Durex and Lifestyles have competed for premium shelf space at Wal-Mart in the mass segment. See, e.g., Wright Report at 55-56 & n. 187, 191, 192 (Costco, Family Dollar and Dollar General replaced C & D with Durex as the exclusive supplier); Wright FTC Report at 72 (internal documents reveal that C & D believed it had been “out maneuvered” by Durex and Lifestyles for premium space in Wal-Mart). Thus, as in Rebel, it may be “immaterial that consumers do not regard the products as substitutes, that a price differential exists, or that the prices are not closely correlated.” Rebel Oil, 51 F.3d at 1436. Rather, what matters is that condom manufacturers compete across these channels and that they can respond to changes in one channel through conduct in another.

Mayer’s claim that the different size of products offered across these channels- — i.e., 3-count packs versus larger packs — warrants excluding c-stores from the relevant market is unpersuasive. In Reynolds, the court examined the different behavior of pack outlets — “comprised of convenience stores and gas stations where primarily cigarette packs are sold” — as opposed to carton outlets— “comprised of supermarkets and cigarette and tobacco stores where primarily cigarette cartons are sold,” but included both within the relevant market. Reynolds, 199 F.Supp.2d at 383. Mayer fails to explain why differences between the FDM and c-store channels are relevant {i.e., the fact that e-stores sell 3-count packs at higher per-unit prices), but differences between other retailers within the FDM channel are not relevant (i.e., the fact that mass merchandisers sell a substantial number of 36-count packs and larger, at lower prices). See Baseman Report at 18. In addition, the fact that c-stores carry largely 3-packs of condoms, while other channels carry 3, 12, 24, 36, and higher-quantity packs is irrelevant to the market analysis, as the manufacturers compete for sales within all channels. That each channel may cater to certain distinct tastes or preferences for individual consumers {e.g., variety of brands offered, low price, bulk packs, etc.) does not separate the channels into distinct markets vis á vis manufacturers — the pertinent arena for defining the relevant market herein.

Mayer’s remaining arguments in favor of a narrower market are similarly unavailing. For example, Mayer’s expert argues that c-stores are not part of the relevant market because C & D does not use its POG program and faces stiffer competition in that channel. See Baseman Report at 18-19. However, Mayer cannot simply eliminate all segments in which C & D does not (allegedly) exclude competitors so that it can generate a higher foreclosure rate in its antitrust analysis. Instead, the fact that the POG program does not encompass all condom retailers may indicate a lesser degree of foreclosure for antitrust purposes. See Omega, 127 F.3d at 1163 (“If competitors can reach the ultimate consumers of the product by employing existing or potential alternative channels of distribution, it is unclear whether [restrictive arrangements] foreclose from competition any part of the relevant market.”) (emphasis in original). Thus, the fact that certain channels are untouched by C & D’s planogram program does not render them distinct for purposes of defining the relevant market. C & D competes with Durex and Lifestyles in c-stores. As noted above, Durex and Lifestyles do relatively well, garnering approximately 40% of the c-store market. Since a key inquiry of antitrust analysis is whether alternative channels of distribution exist through which businesses can compete, Mayer’s attempt to exclude those channels in which competitors have the best success against C & D, simply on the basis of their success, is unwarranted.

Mayer has also failed to produce evidence of a relevant submarket consisting of drugstores only. The existence of a submarket may be determined “by examining such practical indicia as industry or public recognition of the submarket as a separate economic entity, the products’s peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes and specialized vendors.” Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). In this case, the unrebutted evidence in the record suggests that drug retailers view the rest of the category as competitors. See Martineau Depo. at 106. As discussed above, Mayer has failed to explain how any distinctions between the drug segment and food and mass segment are more salient than distinctions within or between the food and mass segments, or between other segments of the retail market. While Mayer notes certain differences between the drug channel and other channels {e.g., higher retail prices), as noted above, it fails to account for the fact that other channels within its proposed market definition also vary in price. Indeed, the Ansell court examined the Brown Shoe factors and concluded that all condom retail sales formed a relevant submarket; it did not note any salient distinctions within the retail market. Ansell, 757 F.Supp. at 475-76.

“In the context of antitrust law, if there are undisputed facts about the structure of the market that render [an] inference economically unreasonable, the expert opinion is insufficient to support a jury verdict.” Rebel Oil, 51 F.3d at 1435-36 (citing Eastman Kodak Co. v. Image Technical Serv., Inc., 504 U.S. 451, 468-69, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992)). In the instant case, Mayer’s expert opinion on the pertinent issues regarding the relevant market is without a factual basis. In attempting to define the relevant market Mayer seeks to carve out channels in which C & D has been exposed to the most rigorous competition and in which Mayer has elected not to compete (i.e., c-stores, dollar stores, and club stores), and to create a separate category for the channel in which C & D appears to have had the most success with its POG program (i.e., drugstores). This bootstrap is not a proper basis for defining the relevant market. The question is whether manufacturers compete with each other across these segments, not whether their inclusion or exclusion supports one party’s case.

Accordingly, the Court finds that the relevant market is all male condoms sold to retailers in the United States. However, the Court notes that even accepting Mayer’s market definitions, the below analysis would largely yield the same outcome, as much of the parties’ available data focus specifically on the FDM channels.

b. Market Power

C & D argues that Mayer has failed to provide evidence that C & D holds market power. “Market power is the power to force a purchaser to do something that he would not do in a competitive market.” Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 464, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) (citation and quotation marks omitted). Market power is required in order to demonstrate an adverse effect on competition, because without market power firms cannot rationally adopt restraints that have anticompetitive effects if they wish to survive. R.J. Reynolds Tobacco Co. v. Philip Monis, 199 F.Supp.2d 362, 380 (M.D.N.C. 2002) (“ ‘A threshold inquiry in any Rule of Reason case is whether the defendant had market power’ in the relevant product and geographic markets.”) (quoting Murrow Furniture Galleries, Inc. v. Thomasville Furniture Indus., Inc., 889 F.2d 524, 528 (4th Cir.1989)); Church & Dwight Co., 2011 WL 1225912 at *6 (noting in the context of the motion to dismiss that the counterclaim adequately alleged market power and that such a showing would be necessary for a § 1 claim). Market share alone does not establish market power, though it is relevant to the analysis. Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1439 (9th Cir.1995) (“A mere showing of substantial or even dominant market share alone cannot establish market power sufficient to carry out a predatory scheme.”) (citing Ryko Mfg. Co. v. Eden Servs., 823 F.2d 1215,1232 (8th Cir.1987)). There are two ways of demonstrating market power: directly or circumstantially.

i. Direct Evidence

Under the direct method, Mayer must put “forth evidence of restricted output and supracompetitive prices.” Rebel Oil, 51 F.3d at 1434 (citing Federal Trade Comm’n v. Indiana Fed’n of Dentists, 476 U.S. 447, 460-61, 106 S.Ct. 2009, 90 L.Ed.2d 445 (1986)). C & D claims that Mayer has failed to put forth any evidence to satisfy the direct method of showing market power, as Mayer has not created a genuine issue of fact as to either restrictive output or supracompetitive prices. Mayer claims to have produced evidence of supracompetitive pricing through C & D’s documents indicating that it will not engage in price competition “because it does not need to.” Opp. at 40.

Mayer has not produced the direct evidence necessary to demonstrate market power as defined in Rebel Oil. First, Mayer has not offered any evidence of restricted output. Although it claims that C & D’s planogram agreement successfully drives some competitors out of the market, it offers no evidence that C & D has used such a program to restrict its own, and hence the market’s, output. See Rebel Oil, 51 F.3d at 1434 (“A predator has sufficient market power when, by restricting its own output, it can restrict marketwide output and, hence, increase marketwide prices.”) (emphasis added). Indeed, the only evidence in the record regarding supply indicates that, while both parties have faced hiccups with their supply chain, C & D has never attempted to restrict its supply. See Mayer Depo., C & D Ex. 17, at 250 (discussing document in which Mr. Mayer had noted the company’s supply problems and the fact that competitors would point out to retailers that Mayer’s supply was unreliable); Daniels Depo., Mayer Ex. 2, at 178-85 (C & D’s head of Sexual Health Marketing Department noting problems at certain points with fulfilling supply orders when demand exceeded their expectations); C & D 11/9/10 Letter to Federal Trade Commission (“FTC”), C & D Ex. 28, at 6 (stating in response to FTC inquiry that C & D’s Colonial Heights plant is running at capacity). Mayer does not directly respond to C & D’s arguments regarding output in its brief, nor does it attempt to highlight any evidence in the record that would support this prong of the direct evidence test.

Second, Mayer has not provided evidence of supracompetitive prices. While Mayer alleges broadly that C & D is able to charge high prices, it fails to note that its own prices are even higher. See Opp. at 40 (citing Silberman Expert Rebuttal Report, Mayer Ex. 20, at 7 (noting that the weighted average price for Trojans is 23% higher than Ansell and 2% higher than Durex, but failing to note that Table R-l, on which Mr. Silberman relies, shows that Mayer’s prices are even higher than Trojan)); Mayer Depo. at 178 (‘We’ve made some decisions about how we wish to position our product. We price it high. End of story.”). Mayer also noted at oral argument that C & D enjoys a higher profit margin in the U.S. condom market (65-67%) than it does in the Canadian market (51-56%). See Baseman Report at 46. However, Mayer fails to provide any basis for comparison between the two markets or account for the variety of factors that may affecting pricing and profit margins, such that a jury might reasonably infer that this difference was an indication of supracompetitive pricing. More to the point, Mayer does not provide evidence as to its own or other rivals’ comparative margins.

In addition, high prices are not equivalent to supracompetitive prices. The court in Reynolds similarly concluded that plaintiffs had failed to demonstrate supra-competitive pricing when they had merely alleged that defendants’ prices were “artificially high” without providing evidence that they were supracompetitive. 199 F.Supp.2d at 382. Similarly, a court in this district has rejected evidence of price inelasticity and price increases over the relevant time period as insufficient to withstand summary judgment as to direct evidence of market power. See In re Ebay Seller Antitrust Litigation, No. C 07-01882 JF (RS), 2010 WL 760433, at *5 (N.D.Cal. Mar. 4, 2010) (“Evidence that eBay has raised prices over a period of years, and that several of its employees believe that the company may have raised them too high, proves nothing with respect to whether the prices are supracompetitive.”).

Mayer also refers to C & D documents discussing C & D’s ability to raise prices without suffering lower sales, but the evidence it cites indicates that this inelasticity applies to the condom market as a whole as well. While C & D does appear to enjoy especially high price inelasticity, its own research indicates that it is also at least somewhat vulnerable to price competition from its rivals. See Mayer Ex. 7 (2007 Nielsen report to C & D indicating that a regular price increase had little impact because condoms are one of the most price inelastic categories in the FDM channel, and Trojan in particular is even more inelastic; but noting that competitive influence accounts for 20-30% of Trojan’s elasticity).

Moreover, even assuming C & D’s “high prices” are supracompetitive, they must also be accompanied by output restrictions in order to constitute direct evidence of market power. See Forsyth v. Humana, Inc., 114 F.3d 1467, 1476 (9th Cir.1997) (“The plaintiffs submitted evidence that Sunrise Hospital routinely charged higher prices than other hospitals while reaping high profits. With no accompanying showing of restricted output, however, the plaintiffs have failed to present direct evidence of market power.”). There is no such evidence in the record.

Accordingly, Mayer has failed to raise a triable issue of fact as to C & D’s market power under the direct evidence test,

ii. Circumstantial Evidence

Mayer has also failed to demonstrate market power via circumstantial evidence. A plaintiff can demonstrate market power circumstantially by: “(1) defin[ing] the relevant market, (2) showing] that the defendant owns a dominant share of that market, and (3) showing] that there are significant barriers to entry and showing] that existing competitors lack the capacity to increase their output in the short run.” Rebel Oil, 51 F.3d at 1434. As noted above, a large market share alone does not in and of itself demonstrate such power. Id. at 1439. “A mere showing of substantial or even dominant market share alone cannot establish market power sufficient to carry out a predatory scheme. The plaintiff must show that new rivals are barred from entering the market and show that existing competitors lack the capacity to expand their output to challenge the [defendant’s] high price.” Id. citing Ryko Mfg. Co. v. Eden Servs., 823 F.2d 1215, 1232 (8th Cir.1987). “To justify a finding that a defendant has the power to control prices” sufficient to warrant judicial intervention, “entry barriers must be ... capable of constraining the normal operation of the market to the extent that the problem is unlikely to be self-correcting.” Id. (citing United States v. Syufy Enters., 903 F.2d 659, 663 (9th Cir.1990)).

The Court has already addressed the first prong above. The second prong is not in dispute, as regardless of how the parties define the relevant market, C & D holds a dominant share of approximately 75%.

With respect to the third prong, the parties dispute the level of barriers to entry in the condom market. The Ninth Circuit has defined entry barriers as “additional long-run costs that were not incurred by incumbent firms but must be incurred by new entrants,” or “factors in the market that deter entry while permitting incumbent firms to earn monopoly returns.” Western Parcel Exp. v. United Parcel Service of America, Inc., 190 F.3d 974, 975 (9th Cir.1999) (quoting Los Angeles Land Co. v. Brunswick Corp., 6 F.3d 1422, 1427-28 (9th Cir.1993)). “The main sources of entry barriers are: (1) legal license requirements; (2) control of an essential or superior resource; (3) entrenched buyer preference; (4) capital market evaluations imposing higher capital costs on new entrants; and, in some situations, (5) economies of scale.” Rebel Oil, 51 F.3d at 1439.

Mayer claims that barriers are high because of the FDA approval and inspection process, consumer brand loyalty, and C & D’s POG program. See Baseman Report at 22-23; Wedel Decl. ¶¶ 15-19. The parties do not dispute that consumer brand loyalty is high in this industry. See Baseman Report at 6 n. 13 (stating that Church & Dwight’s Omnibus Study concluded 52% of consumers would go to another store to purchase condoms if their preferred brand were not available); Wright Rebuttal Report at 54 n. 154 (acknowledging same). This factor accordingly weighs in Mayer’s favor. As for regulation, C & D’s expert characterizes the FDA approval process, which takes anywhere from 6-24 months, as insubstantial, but it does not explain the basis for this opinion. See Wright Report at 18. On the other hand, Mayer does not provide any data to quantify the extent of costs associated with the FDA process. In addition, as the Court explains in detail below, the Court disagrees with Mayer’s claim that the POG program constitutes a substantial barrier to entry. See Western Parcel Exp., 190 F.3d at 975-76 (rejecting argument that purported “exclusive dealing contracts” constituted a barrier to entry where contracts were of short duration, easily terminable, and did not prevent consumers from also contracting with competitors).

However, it is undisputed that just three major players have long dominated the condom market, and that while numerous small players have entered the market, none have seriously challenged the big three in recent history. See, e.g., Wright Report, Attachment 8. Such a market structure indicates that the combination of factors described above may prevent the market from self-correcting in the face of anticompetitive conduct. See Rebel Oil, 51 F.3d at 1440 (“Barriers may still be ‘significant’ if the market is unable to correct itself despite the entry of small rivals.”). Accordingly, the Court concludes that Mayer has at least raised a question of fact as to the extent of barriers to entry.

Nonetheless, even assuming significant barriers to entry, Mayer has inexplicably failed to produce either evidence or argument as to the last portion of the third prong, whether “existing competitors lack the capacity to increase their output in the short run.” Rebel Oil, 51 F.3d at 1434. Mayer’s opposition brief omits this language from its quotation of Rebel, stating only that it must “show that there are significant barriers to entry....” Opp. at 40 (citing Rebel Oil, 51 F.3d at 1434). However, Rebel is clear that both are required. “Market power cannot be inferred solely from the existence of entry barriers and a dominant market share. The ability to control output and prices-the essence of market power-depends largely on the ability of existing firms to quickly increase their own output in response to a contraction by the defendant.” Rebel Oil, 51 F.3d at 1441.

Although Mayer’s counsel stated at oral argument that C & D’s competitors lacked capacity to increase output due to lack of access to shelf space, such an argument is unpersuasive for several reasons. First, Mayer does not claim that Durex, Lifestyles, and other rivals have no or mere de minimus shelf space. As indicated below, nearly 50% of the industry display space is not covered by the POG program, including non-POG retailers in the FDM channel, Wal-Mart, c-stores, dollar stores, and club stores. Moreover, Mayer seems to assume that the only way to increase output would be to increase shelf space, but it fails to account for (much less produce evidence regarding) a competitor’s ability to increase output by, e.g., increasing the sales velocity of each item they already have on the shelves. See Martineau Depo. at 117 (noting the importance for CVS of sales per shelf-space allocation); Daniels Depo., C & D Ex. 13, at 39-41 (noting that retailers can swap out products for new ones with better sales velocity).

Second, Mayer does not argue that rivals lack the capacity to expand output. Indeed, given that Durex and Lifestyles have larger global market shares than C & D, it is obvious there is no capacity limitation. Mayer conceded at the hearing it makes no such claim. Mayer cites no case which establishes that the Rebel Oil requirement that rivals “lack the capacity to increase output in the short run” can be based simply on marketing advantages of the dominant incumbent.

Accordingly, Mayer cannot demonstrate market power via circumstantial evidence as defined by Rebel.

Notwithstanding Mayer’s failure to produce evidence to satisfy the Ninth Circuit’s tests for market power, Mayer contends that the Court’s analysis places excessive weight on Rebel Oil. Mayer notes that its primary claim is that C & D can exclude rivals, regardless of whether C & D has raised prices and thus the capacity to expand output to provide price competition is irrelevant. Mayer also argues that other cases have employed a more flexible and practical method of analyzing direct evidence of market power. Indeed, the Supreme Court has suggested that market power can include not only a firm’s power to set prices, but also its ability to exclude competition. See, e.g., Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 464-65, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) (considering evidence that certain parts were available exclusively through Kodak, that Kodak had restricted the availability of used machines, “that consumers have switched to Kodak service even though they preferred ISO service,” that Kodak’s services were higher priced and lower quality, and that certain ISO’s had been driven out of business as' a result; concluding that this evidence was “sufficient to, entitle respondents to a trial on their claim of market power”). Eastman cautions that “[l]egal presumptions that rest on formalistic distinctions rather than actual market realities are generally disfavored in antitrust law,” and that “in determining the existence of market power ... this Court has examined closely the economic reality of the market at issue.” Eastman, 504 U.S. at 466-67, 112 S.Ct. 2072; see also Re/Max Intern., Inc. v. Realty One, Inc., 173 F.3d 995, 1016 (6th Cir.1999) (finding that there was “a genuine issue of material fact as to whether the plaintiffs’ evidence shows direct evidence of a monopoly, that is, actual control over prices or actual exclusion of competitors”) (emphasis added); R.J. Reynolds Tobacco Co. v. Cigarettes Cheaper, 462 F.3d 690, 695 (7th Cir.2006) (the lower court erred in ruling on summary judgment that a 25% market share was “too small to create market power” for purposes of § 1, where a triable issue of possible market power was raised by evidence of brand differentiation, high market concentration, and the defendant’s demonstrated ability to change prices of its brands substantially without affecting output).

Such a functional approach suggests that evidence of the ability to exclude some competitors from the market, even in the absence of market-wide restricted output or supracompetitive prices, could suffice to demonstrate market power in certain instances, especially given C & D’s undisputed dominant market share. For example, although the district court in Reynolds cited Rebel Oil for its market power tests, it also entertained RJ Reynolds’ argument — -similar to the one advanced here— that Philip Morris’s merchandising contracts excluded competition from the market and were thus evidence of market power. 199 F.Supp.2d at 381. Despite the thin evidence produced by Mayer, because this inquiry essentially dovetails with Mayer’s arguments and burden on the merits (ie., does Church & Dwight’s conduct substantially foreclose competition), the Court assumes arguendo that Mayer has at least raised a triable issue fact as to C & D’s market power and proceeds to the elements of its § 1 claim.

c. Substantial Foreclosure

C & D argues that Mayer fails to raise a genuine issue of material fact as to whether C & D’s planogram agreements “foreclose competition in a substantial share of the line of commerce affected.” Allied Orthopedic, 592 F.3d at 996 (quoting Omega, 127 F.3d at 1162). Rather than merely potential foreclosure, actual foreclosure is required for Mayer’s Sherman Act claim: “[I]n a case under Section 1 of the Sherman Act, the plaintiff must prove that the exclusive dealing arrangement actually foreclosed competition.” Id. at 996 n. 1 (citations omitted).

C & D claims that Allied Orthopedic renders its agreements permissible as a matter of law. See Mot. at 21. In addition, C & D argues that Mayer has failed to produce any quantitative or qualitative evidence of substantial foreclosure.

The parties do not dispute that the vertical restraint imposed by the POG program should be analyzed by the Allied Orthopedic test: foreclosure of competition in a substantial share of the market. That test is rooted in cases involving exclusive dealing agreements. Although the POG program here is not as inherently coercive as an exclusive dealing agreement — which, instead of incentivizing the establishment of limits on retailers’ display space or sales, completely preclude