The opinion of the court was delivered by: Louis L. Stanton, United States District Judge.
The Court of Appeals, in its opinion reported at 294 F.3d 447, 448-9, concisely describes this lawsuit:
IRI and Nielsen are both providers of retail tracking
services. These services, as described by the district
involve the continuous collection of data on the
sale of consumer packaged goods. From this data,
retail tracking services suppliers produce estimates
of trends in sales of product categories and
brands, by relevant geographic region for each
product category being tracked.
In short, a retail tracking service is the
provision of information to manufacturers and
retailers of consumer goods concerning turnover,
market share, pricing and other aspects of the sale
of fast moving consumer goods and analysis of that
information to reveal market trends, business
conditions, and the like.
Both Nielsen and IRI provide these services in the United
States. While Nielsen also offers these services in
several foreign countries, IRI generally operates abroad
through an assortment of subsidiaries and joint ventures.
These foreign affiliates find the foreign clients,
obtain the data from these clients, and deliver the
completed reports to them. The data are processed and
the resulting reports are generated by IRI in the United
In this action, IRI alleges that Nielsen engaged in
a variety of anticompetitive conduct, both in the
United States and abroad, with the purpose of
destroying IRI as competition in the retail tracking
services industry. The alleged antitrust violations
include tying and bundling contracts in violation of
Section 1 of the Sherman Act, monopolization and
attempted monopolization of the export (that is,
foreign) markets in violation of Section 2 of the
Sherman Act, and attempted monopolization of the
United States market in violation of Section 2 of the
Sherman Act. Among the principal allegations is that
Nielsen would offer "favorable pricing conditions if
Nielsen's services were purchased in a considerable
number of countries, including, at least, one country
where IRI was present." (citations omitted)
In an Opinion dated July 12, 2000, clarified by Memorandum dated February 6, 2001, both reported at Information Resources, Inc. v. Dun & Bradstreet Corp., et al., 127 F. Supp.2d 411 (S.D.N.Y. 2000), appeal dismissed, 294 F.3d 447 (2d Cir. 2002), this court decided, among other things, that (127 F. Supp.2d at 415):
From the submissions, there seems little doubt that
inflicting competitive injury on IRI was a goal and
purpose of defendants' alleged activities, and that the
economic connection between the alleged violations and
the effect on IRI is linear and short; nevertheless the
fact that the primary injury fell on the foreign
companies (who have rights to sue for whatever remedies
the law applicable to them provides), together with the
factors discussed above, leaves IRI without standing to
sue for its derivative injuries.
Defendants' motion for partial summary judgment is
granted. IRI's claims of injury suffered from
defendants' activities in foreign markets where IRI
operates through subsidiaries or companies owned by joint
ventures, or "relationships" with local companies, are
That ruling rested on acceptance of defendants' submission that, assuming antitrust violation, IRI lacks standing to sue (id. at 416)
. . . because it was not the person directly affected
by the alleged conduct. Rather, the conduct allegedly
harmed IRI's affiliates in Europe — separate
corporate entities that are not parties to this suit.
IRI was affected only in its capacity as a shareholder
of, and supplier to, the European entities. It is
hornbook law that the shareholder and supplier
relationships are insufficient to confer standing.
The opinion clarifying the July 12, Order also stated (ibid.)
Not only where IRI shared in the subsidiary's losses as
a partner, joint venture or shareholder, but also where
its volume of sales to the subsidiary was diminished
because of the subsidiary's loss of business, IRI has no
standing to sue, because (together with the other factors
stated in the Order) IRI's injury is derivative of the
antitrust injury inflicted on the subsidiary. Nor can
IRI recover damages for weakening of its competitive
position in the United States because of reduced revenue
from its foreign subsidiaries. The deprivation of
revenue, and the consequent inability to use the lost
money to competitive advantage, amount to the same thing.
The only value of money lies in the uses to which it can
The Present Applications
By a second motion for partial summary judgment, defendants seek dismissal of all claims regarding 22 foreign markets (the "remaining markets")*fn1 where IRI operated through affiliates, or which it was unable to enter because (IRI says) its antitrust injuries in other markets deprived it of the necessary resources. Defendants' motion rests on five grounds, that: (1) The court's prior orders bar derivative claims arising in markets where IRI operated through affiliates, (2) IRI would have entered many of the remaining markets through affiliates, (3) IRI was not prepared to enter those new markets, (4) IRI cannot show that defendants' conduct caused its failure to enter the Canadian or Mexican markets, and (5) the court lacks jurisdiction over claims that IRI was prevented from entering a foreign market if the failure to enter was caused by losses sustained by a European affiliate or the entity entering the market would have been an IRI subsidiary or affiliate (citing the Foreign Trade Antitrust Improvements Act, ("FTAIA") 15 U.S.C. § 6a)
In its cross-motion for reconsideration of the July 12, 2000 and February 6, 2001 Orders, IRI reformulates its claims of injury. Essentially, its present claims focus on disbursements it had to make in the United States to repair injuries inflicted on its foreign subsidiaries; it then seeks recovery not of the sums it was required to expend, but of the injuries IRI sustained in the domestic United States market because of the lack of those funds.
Thus, IRI stresses that it "is not seeking to recover the money [it] claims to have diverted to cover the affiliates' losses" (its counsel's Nov. 15, 2002 letter to court, p. 6; emphasis in original) and IRI:
. . . is not seeking to recover any of the following: 1)
the profits on lost sales of retail tracking services in
markets where IRI operated through subsidiaries; 2) the
damages for the lost use of the profits it otherwise
expected to obtain from its subsidiaries; and 3) the
monies that IRI had to use to cover the operating losses
in Europe caused by Defendants' conduct. (id., p. 2,
emphasis in original)
In its counsel's December 19, 2002 letter to the court, IRI at p. 1
. . . reiterates that by this claim it is only seeking
to recover damages for the lost use of money that IRI
expended from the U.S. and, but for Defendants'
extra-territorial practices, would have used to
compete against Defendants in the domestic market.
The following extracts give a summary of IRI's present claim, with its foreign components (id. pp. 2, 4-7, 8) (the paragraph numbers are omitted)
The evidence establishes that by 1993, Defendants
launched a series of coordinated, anticompetitive
practices, both in the U.S. and abroad, to regain
monopoly power in the domestic market for retail tracking
services (the "U.S. Market"). These practices included:
i) bundling retail tracking services in the U.S. with
geographic markets where Nielsen had monopoly power; ii)
predatorily pricing services in the U.S. Market; iii)
informing IRI's U.S. clients, potential clients,
financial analysts and third parties that IRI was
financially unstable; and iv) draining IRI of U.S.
resources and denying it access to the capital necessary
to compete in the U.S. Market.
Draining IRI of U.S. resources was critical to the
success of Defendants' attempted monopolization of the
U.S. Market. Though IRI, through its new and innovative
service, had been able to enter the domestic market which
Nielsen long dominated, IRI did not possess Defendants'
vast financial resources or geographic coverage. By
draining IRI of U.S. resources and depressing its
earnings, Defendants determined that they could
financially cripple and outlast their smaller rival, as
IRI attempted to expand into new geographic markets.
Defendants intentionally and systematically depleted
IRI's U.S. resources by bundling and predatorily pricing
services to customers in the U.S. Market, while
simultaneously raising the cost of IRI's expansion into
new geographic markets. Defendants fully appreciated
that IRI could not afford to fend off an anticompetitive
attack on its domestic business, while covering large,
unanticipated losses in other geographic markets.
The calculated result of Defendants' extra-territorial
practices was that IRI was forced to expend millions of
dollars from the U.S. to cover excessive losses in
markets into which IRI was attempting to expand. Because
this money came from the U.S., it was then unavailable to
compete against Defendants in the U.S. Market, just as
Defendants had planned . . .
The lost use of these resources caused IRI to lose
millions of dollars in sales of domestic retail tracking
To increase the cost of IRI's geographic expansion,
Defendants entered into a number of contracts with
retailers that either inflated the cost to IRI of
acquiring scanner data or denied IRI access to it
altogether. For example, with a critical retailer in the
U.K., Defendants dramatically increased data payments to
that retailer, provided that it agreed not to sell its
data to any other supplier for a lesser amount. The
European Commission determined that through this clause
Nielsen was able to raise IRI's entry costs.
In addition, Defendants offered contracts that
discounted services in markets where Nielsen dominated if
the customer purchased services in European markets that
IRI was entering . . .
These bundled contracts prevented IRI from selling its
services to a critical market segment — multi-nation
customers. As the European Commission and Canadian
Tribunal determined, once in a position to provide a
retail tracking service, a supplier must have access to
customer revenue to support entry and operating costs.
By denying IRI access to multi-national customers,
Defendants dramatically increased the losses that IRI had
to cover from the U.S.
While IRI certainly planned to expend money from the
U.S. to cover anticipated losses in new geographic
markets, it expected that those markets would be
profitable and would require no further cash infusions
from the U.S. by 1997 at the latest. IRI did not expect
that it would have to cover the inordinate losses that
Defendants' anticompetitive conduct caused. Nor did IRI
expect that its joint venture partners would be unable to
cover their share of these losses.
IRI's expenditures from the U.S. to cover these losses
have come in the form of capital contributions, loans
made to the subsidiaries and the payment by IRI of its
subsidiaries' production costs. [footnote omitted]
To be clear, with respect to the capital contributions
and loans, IRI typically wire transferred funds from its
Harris Bank account in Chicago to the bank accounts of
its subsidiaries in the countries identified above. With
respect to the production costs, IRI did the work in the
U.S. and shipped the data reports overseas. Regardless
of the form of the expenditure, however, in each case IRI
expended money from the U.S. to cover the losses in
Europe caused by Defendants' anticompetitive conduct,
which money would otherwise have been used to compete
against Defendants in the U.S. Market.
To fund the losses overseas, IRI was forced to sell its
EXPRESS technology and line of software products to
Oracle in July 1995. This netted IRI approximately $90
million which, along with U.S. profits, IRI expended from
the U.S. to cover the excess losses that Defendants
caused through their extra-territorial practices.
Defendants described this as IRI selling the "crown
jewels." Defendants announced that "by selling what many
believe is the best and most profitable asset, and one
long portrayed as their growth engine, IRI retains what
may be the less attractive side of their business" —
retail tracking services.
In addition, IRI had been able to stay ahead of its
deep-pocketed rival in the U.S. Market by more quickly
developing and bringing to market innovative products
and services. The outflow . . . from the U.S., because
of Defendants' anticompetitive conduct, undermined
IRI's ability to make capital improvements and invest
in research and development that had been so critical
to its early success. As a result, IRI has lacked
funds to reengineer its operating and production
systems and invest in new services.
In short, the lost use of money has inhibited IRI's
ability to continue improving its systems and services to
stay ahead of Defendants. Indeed, in 1994, as IRI's
European losses were mounting, Defendants launched a
communication strategy to inform customers that IRI would
not be able to invest in research and development as it
had before and that customers would be taking a risk by
choosing a company that could no longer afford to support
their technical needs.
The upshot, IRI asserts, undermined its ability to make improvements and invest in research and development, depressed its earnings and stock price, impaired its relationships with customers, creditors and key employees, and damaged its ability to compete with defendants in the domestic market and to engage in the remaining markets abroad.
Defendants regard IRI's revision of its claim as "a matter of semantics, not substance." They argue (Oct. 22, 2002 br. pp. 3, 42)
No matter how IRI seeks to describe them, its claims
amount to the same thing: that the losses of the European
affiliates allegedly deprived IRI of resources to compete
in the U.S. and enter foreign markets. As we show, these
are derivative injuries that this Court correctly ruled
IRI lacks standing to assert.
In any event, IRI's newly redrawn theory of injury in
the United States from Defendants' conduct in the markets
where IRI had affiliates is a distinction without a
difference, it makes no difference whether IRI claims a
lack of resources due to the loss of anticipated revenue
from the European affiliates or because it chose to
divert U.S. resources to cover the losses of the European
affiliates resulting from Defendants' conduct in the
Defendants conclude in their Feb. 14, 2003 brief (p. 42)
IRI's claim for the lost use of money that it allegedly
paid to cover the affiliates' injuries is a derivative
consequence of the harm to the affiliates. By IRI's own
admission, its injury results from its relationship as a
shareholder, creditor, and supplier of the European
affiliates that were allegedly the direct victims of
Defendants' conduct in the European markets in which the