Here’s my rough and dirty antitrust law analysis of the situation.
If a party sued DB alleging monopolization under federal antitrust law, it would have to prove that DB: (1) possessed monopoly power in the relevant market, (2) willfully acquired or maintained that power through exclusionary conduct and (3) caused antitrust injury. That sentence contains three terms of art about which reams have been written. Some quick (although hopelessly incomplete) definitions of these terms:
Antitrust injury: injury to competition in the relevant market, which generally means less selection, higher prices, etc. This is distinct from injury to particular competitors, because particular competitors may be harmed in ways that help consumers. Both sides of an antitrust case will present competing economic models to demonstrate why the alleged actions are pro or anti competitive.
Exclusionary conduct: also called predatory, anticompetitive, and abusive conduct in antitrust jurisprudence. A broad concept that means different things according to context–generally, the specific harmful actions taken by the monopolist.
Monopoly power: The power to control prices or exclude competition. This can be proved directly with evidence of restricted output and supracompetitive prices. This can also be proved circumstantially. To do so, a plaintiff must: (1) define the relevant market, (2) show that the defendant owns a dominant share of that market, and (3) show that there are significant barriers to entry and show that existing competitors lack the capacity to increase their output in the short run. Unfortunately, I just introduced three more thorny terms of art:
Define the Relevant Market: The relevant market consists of two components: product market and geographic market. The product market is the pool of goods or services that enjoy reasonable interchangeability of use and cross-elasticity of demand. Or, in other words, the group or groups of sellers or producers who have actual or potential ability to deprive each other of significant levels of business. The geographic market is the area of effective competition where buyers can turn for alternate sources of supply. Both sides of an antitrust case will present competing economic models that attempt to define the relevant market.
Dominant Market Share: The alleged monopolist generally must have more than a 50 % market share; there is no hard and fast rule how more than a 50% market share is sufficient.
Significant Barriers to Entry and Lack of Capacity to Increase Output: Barriers to entry are additional long-run costs that were not incurred by DB but would have to be incurred by new entrants, or factors in the market that deter entry while permitting incumbent firms to earn monopoly returns. Lack of capacity to increase output considers whether DB’s competitors could respond to a DB contraction (limiting output and raising prices) by increasing their output.
Anyway, turning to the DB/SBT deal, a key unanswered question is how DB will take advantage of the market share it gained by acquiring SBT. Will selection decrease and prices rise in the market as a whole? Will DB seek to maintain its additional girth or even grow larger by engaging in exclusionary or predatory conduct? (Interesting question even if the DB/SBT deal may render it moot: was DB’s threat to cut off SBT that apparently led to the deal predatory conduct?)
Other key questions may only be answered by complex economic modeling. Going into antitrust litigation, it can be difficult to predict whether action that looks monopolistic on the surface truly is harmful to competition.
Still, some facts are in place that would help an antitrust claim against DB. As far as market power goes, it appears that DB has become particularly dominant in the intermountain west states. Assuming a geographic market limited to the intermountain west, it appears that DB would have well over a 50% market share. Also, as far as barriers to entry are concerned, one in particular stands out: DB’s affiliation with the church and the related perception of official church approval.
In short, DB’s acquisition of SBT may give rise to a legitimate monopolization claim, but it is too early to tell. If I were a publisher or bookseller considering antitrust litigation against DB, I would watch for the impact of the DB/SBT deal on the market in the coming months and years.