GXS Reply: Motion to Dismiss Loren Data Corp Antitrust Charges

8/7/2019 GXS Reply: Motion to Dismiss Loren Data Corp Antitrust Charges

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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF MARYLAND

LOREN DATA CORP.,

Plaintiff,

v.

GXS, INC.,

Defendant.

**********

Civil Action No. 10-03474 (DKC)

* * * * * * * * * * * * * * * * * * * * *

MEMORANDUM OF LAW IN SUPPORT

OF DEFENDANTS MOTION TO DISMISS THE COMPLAINT

CHADBOURNE & PARKE LLPAttorneys for Defendant GXS, Inc.1200 New Hampshire Avenue, NWWashington, D.C. 20036(202) 974-5600 (telephone)

(202) 974-5602 (facsimile)

David H. EvansRobert A. SchwingerJames A. Stenger

Of Counsel

Case 8:10-cv-03474-DKC Document 9-1 Filed 02/03/11 Page 1 of 59


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TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT .........................................................................................1

STATEMENT OF FACTS ..................................................................................................4

A. The Use of EDI VANs for Business Communication .................................4

B. GXSs Relations with VANs Generally ......................................................6

C. Details of Loren Datas History with GXS..................................................7

D. The Complaints Conflicting Market Definitions......................................10

E. The Alleged Conspiracy to Exclude Loren Data .......................................11

F. Allegations of Actual or Incipient Monopoly Power by GXS...................12

G. Loren Datas Claims in Its Complaint .......................................................14

ARGUMENT.....................................................................................................................15

I THE COMPLAINT FAILS TO STATE A CLAIM UNDER SECTIONONE OF THE SHERMAN ACT...........................................................................17

A. The Complaint Does Not Allege Facts Showing Any Contract,Combination or Conspiracy .......................................................................17

B. The Purported Conspiracy Alleged in the Complaint Is NotPlausible.....................................................................................................19

II THE COMPLAINT FAILS TO STATE CLAIMS FORMONOPOLIZATION OR ATTEMPTED MONOPOLIZATION UNDERSECTION TWO OF THE SHERMAN ACT ........................................................21

A. The Complaint Fails to State a Claim for Monopolization........................21

1. The Complaint Alleges Facts Demonstrating That GXS DidNot Refuse to Deal with Loren Data..............................................23

a. The Mere Possibility of New ContractualArrangements in the Future Does Not Amount toMonopolization..................................................................24



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b. Loren Data Pleads Facts Showing That Using aMailbox Is Not an Inadequate Form of Access .................25

c. The Complaint Fails to Plead Facts Showing a Lackof a Legitimate Business Justification for GXSsActions ...............................................................................26

2. The Complaint Alleges Facts Demonstrating That GXSsVAN Is Not an Essential Facility...................................................27

3. The Complaint Fails to Adequately Allege a RelevantProduct or Geographic Market That Allegedly Is BeingMonopolized ..................................................................................32

a. The Complaint Does Not Plead a Product Market.............33

b. The Complaint Does Not Plead a GeographicMarket................................................................................35

4. The Complaint Does Not Plead Facts Showing That GXSPossesses Monopoly Power but Rather Pleads FactsShowing That It Does Not .............................................................37

B. The Complaint Fails to Plead Attempted Monopolization ........................38

1. The Complaint Does Not Plead Specific Intent to

Monopolize ....................................................................................39

2. The Complaint Does Not Plead a Dangerous Probability ofSuccess...........................................................................................40

III THE COMPLAINT DOES NOT ALLEGE ANTITRUST INJURY....................41

IV THE PURPORTED MARYLAND STATE-LAW CLAIMS IN THECOMPLAINT SHOULD BE DISMISSED...........................................................43

A. The State-Law Claims Should Be Dismissed for Want of FederalSubject-Matter Jurisdiction Once the Federal Question Claims AreDismissed...................................................................................................43

B. The Maryland Antitrust Act Claims in Count Four Must BeDismissed...................................................................................................44

C. The Tortious Interference Claim in Count Five Must Be Dismissed ........46

D. The Breach of Contract Claim in Count Six Must Be Dismissed..............47



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CONCLUSION..................................................................................................................49



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TABLE OF AUTHORITIES

Page(s)CASES

Abcor Corp. v. AM Intl, Inc.,916 F.2d 924 (4th Cir. 1990) .............................................................................................22, 39

Advanced Health-Care Servs. v. Giles Memorial Hosp.,846 F. Supp. 488 (W.D. Va. 1994) ..........................................................................................28

Alexander & Alexander, Inc. v. B. Dixon Evander & Assocs.,650 A.2d 260 (Md. 1994) ........................................................................................................47

Am. Online, Inc. v. GreatDeals.net,49 F. Supp. 2d 851 (E.D. Va. 1999) ................................................................................ passim

Ashcroft v. Iqbal,129 S. Ct. 1937 (2009).............................................................................................................15

Bell Atl. Corp. v. Twombly,550 U.S. 544 (2007)......................................................................................................... passim

Berlyn, Inc. v. Gazette Newspapers,223 F. Supp. 2d 718 (D. Md. 2002)...................................................................................33, 45

Brown Shoe Co. v. United States,370 U.S. 294 (1962)...........................................................................................................33, 41

Brunswick Corp. v. Pueblo Bowl-o-Mat, Inc.,429 U.S. 477 (1977).................................................................................................................41

Carnegie-Mellon Univ. v. Cohill,484 U.S. 343 (1988).................................................................................................................44

Carroll-Hall v. Arc of Baltimore, Inc.,No. 10-873, 2010 WL 3781887 (D. Md. Sept. 22, 2010)........................................................16

Cloverleaf Enters., Inc. v. Maryland Thoroughbred, Horsemens Assn, Inc.,No. 10-407, 2010 WL 3091096 (D. Md. Aug. 6, 2010) ..........................................................15

Cogan v. Harford Memorial Hosp.,843 F. Supp. 1013 (D. Md. 1994)............................................................................................41



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Colo. Interstate Gas Co. v. Natural Gas Pipeline Co. of Am.,885 F.2d 683 (10th Cir. 1989) ...........................................................................................37, 38

Consul, Ltd. v. Transco Energy Co.,805 F.2d 490 (4th Cir. 1986) .......................................................................................32, 35, 36

Contl Airlines, Inc. v. United Airlines, Inc.,277 F.3d 499 (4th Cir. 2002) ............................................................................................. 41-42

Contl Masonry Co. v. Verdel Constr. Co.,369 A.2d 566 (Md. 1977) ........................................................................................................48

Dickson v. Microsoft Corp.,309 F.3d 193 (4th Cir. 2002) .............................................................................................15, 41

E.I. du Pont de Nemours & Co. v. Kolon Indus.,683 F. Supp. 2d 401 (E.D. Va. 2009) ......................................................................................33

E.I. DuPont de Nemours & Co. v. Kolon Indus.,688 F. Supp. 2d 443 (E.D. Va. 2009) ................................................................................22, 32

Edwards v. City of Goldsboro,178 F.3d 231 (4th Cir. 1999) ...................................................................................................15

Estate Constr. Co. v. Miller & Smith Holding Co.,14 F.3d 213 (4th Cir. 1994) .....................................................................................................16

F. Hoffmann-La Roche Ltd. v. Empagran S.A.,542 U.S. 155 (2004).................................................................................................................36

Faulkner Adver. Assoc. v. Nissan Motor Corp.,905 F.2d 769 (4th Cir. 1990) ...................................................................................................47

Francis v. Giacomelli,588 F.3d 186 (4th Cir. 2009) ...................................................................................................15

havePOWER, LLC v. Gen. Elec. Co.,183 F. Supp. 2d 779 (D. Md. 2002) ..................................................................................45, 47

Hinkleman v. Shell Oil Co.,962 F.2d 372 (4th Cir. 1992) ...................................................................................................45

In re Microsoft Corp. Antitrust Litig.,274 F. Supp. 2d 743 (D. Md. 2003).........................................................................................28



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Kendall v. Visa U.S.A., Inc.,518 F.3d 1042 (9th Cir. 2008) ........................................................................................... 18-19

Laurel Sand & Gravel, Inc. v. CSX Transp., Inc.,924 F.2d 539 (4th Cir. 1991) ........................................................................................... passim

Mandava v. Howard Cnty. Gen. Hosp., Inc.,No. 91-2157, 1992 WL 165804 (D. Md. July 1, 1992) ...........................................................35

Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 575 (1986).................................................................................................................20

Mikeron, Inc. v. Exxon, Co., U.S.A.,264 F. Supp. 2d 268 (D. Md. 2003).........................................................................................46

Military Servs. Realty, Inc. v. Realty Consultants of Va., Ltd.,823 F.2d 829 (4th Cir. 1987) ...................................................................................................41

Monsanto v. Spray-Rite Service Corp.,465 U.S. 752 (1984).................................................................................................................17

Morgenstern v. Wilson,29 F.3d 1291 (8th Cir. 1994) ...................................................................................................37

Muigai v. IB Prop. Holdings, LLC,No. 09-01623, 2010 WL 5173313 (D. Md. Dec. 14, 2010).....................................................18

Murrow Furniture Galleries, Inc. v. Thomasville Furniture Indus., Inc.,889 F.2d 524 (4th Cir. 1989) ...................................................................................................33

Mylan Labs., Inc. v. Akzo, N.V.,770 F. Supp. 1053 (D. Md. 2010)................................................................................ 20-21, 42

Natural Design, Inc. v. Rouse Co.,485 A.2d 663 (Md. 1984) ............................................................................................ 45, 46-47

Oksanen v. Page Memorial Hosp.,945 F.2d 696 (4th Cir. 1991) .......................................................................................17, 21, 42

Olympia Equip. Leasing Co. v. W. Union Tel. Co.,797 F.2d 370 (7th Cir. 1986) ...................................................................................................22

Pinkley, Inc. v. City of Frederick,191 F.3d 394 (4th Cir. 1999) ...................................................................................................44



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Times-Picayune Publg Co. v. United States,345 U.S. 594 (1953).................................................................................................................39

Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield,552 F.3d 430 (6th Cir. 2008) ...................................................................................................19

U.S. Steel Corp. v. Fortner Enters., Inc.,429 U.S. 610 (1977).................................................................................................................39

United Black Firefighters v. Hirst,604 F.2d 844 (4th Cir. 1979) ...................................................................................................15

United States v. Colgate & Co.,250 U.S. 300 (1919).................................................................................................................22

United States v. Grinnell Corp.,384 U.S. 563 (1966).................................................................................................................21

United States v. Microsoft Corp.,253 F.3d 34 (D.C. Cir. 2001)...................................................................................................37

Va. Vermiculite, Ltd. v. W.R. Grace & Co.,108 F. Supp. 2d 549 (W.D. Va. 2000) .....................................................................................33

Valuepest.com of Charlotte, Inc. v. Bayer Corp.,561 F.3d 282 (4th Cir. 2009) ...................................................................................................17

Verizon Commcns, Inc. v. Law Offices of Curtis V. Trinko,540 U.S. 398 (2004)......................................................................................................... passim

STATUTES AND RULES

15 U.S.C. 1.......................................................................................................................... passim

15 U.S.C. 2.......................................................................................................................... passim

15 U.S.C. 13(a) ...........................................................................................................................45

15 U.S.C. 15................................................................................................................................43

15 U.S.C. 25................................................................................................................................43

28 U.S.C. 1331............................................................................................................................43

28 U.S.C. 1337............................................................................................................................43



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28 U.S.C. 1367......................................................................................................................43, 44

Fed. R. Civ. P. 8.......................................................................................................................15, 44

Fed. R. Civ. P. 12(b)(1)................................................................................................................1, 4

Fed. R. Civ. P. 12(b)(6)..........................................................................................................1, 4, 15

Md. Code Ann., Com. Law 11-201 ............................................................................................45

Md. Code Ann., Com. Law 11-202 ............................................................................................45

Md. Code Ann., Com. Law 11-204 ................................................................................14, 45, 47

OTHER AUTHORITIES

Notices, 75 Fed. Reg. 41,201 (July 15, 2010)................................................................................13

Report, Competition Commission, Francisco Partners LP and G International, Inc (Sept.

2005), http://www.competition-

commission.org.uk/rep_pub/reports/2005/fulltext/502.pdf..........................................11, 13, 35

About Covisint, Covisint.com, http://www.covisint.com/web/guest/about-covisint........................8

Todd Gould, GXS Antitrust Litigation (Jan. 20, 2011), http://www.ld.com/gxs-antitrust-litigation ....................................................................................................................25

Office of Fair Trading, Completed Acquisition by GXS of Inovis (July 14, 2010),

http://www.oft.gov.uk/shared_oft/mergers_ea02/2010/GXS-Inovis.pdf..................................13



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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF MARYLAND

LOREN DATA CORP.,

Plaintiff,

v.

GXS, INC.,

Defendant.

**********

Civil Action No. 10-03474 (DKC)

* * * * * * * * * * * * * * * * * * * * *

MEMORANDUM OF LAW IN SUPPORT

OF DEFENDANTS MOTION TO DISMISS THE COMPLAINT

Defendant GXS, Inc. (GXS or Defendant) respectfully submits this

memorandum of law in support of its motion, pursuant to Rules 12(b)(6) and 12(b)(1) of

the Federal Rules of Civil Procedure, to dismiss the Complaint in this action (Compl.)

filed by plaintiff Loren Data Corp. (Loren Data or Plaintiff), with prejudice, for

failure to state a claim upon which relief can be granted and for lack of subject-matter

jurisdiction as to the state-law claims.

PRELIMINARY STATEMENT

Defendant GXS provides communications services to companies that want to

exchange business documents electronically. Business documents include things like

purchase orders and invoices. There are many companies that offer services like GXS.

Plaintiff Loren Data is one of them. There are also many ways of exchanging business

documents other than using companies like GXS, including the Internet.



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GXS has invested a great deal in building its network and winning customers.

Loren Datas lawsuit seeks access to GXSs network. Basically, Loren Data wants to be

able to tell its potential customers that they can communicate with GXSs customers if

they use Loren Data. In essence, Loren Data wants to be able to offer all of the benefits

of being a GXS customer without making the investment. Loren Data claims that GXS

has refused it access. Loren Data admits, however, that it currently has access. What this

suit is really about is that Loren Data wants free access, and GXS has suggested that

Loren Data should pay for it.

The antitrust laws do not require GXS to deal with Loren Data at all. They

certainly do not require that GXS give away the fruit of its labor for free. Rather than

compete for those customers on the merits, Loren Data asks this court to bestow on it the

customers and terms of business that Loren Data has been unable to secure through its

own acumen in the market. Loren Datas suit is not about restoring competition, its

about protecting Loren Data from competition.

Loren Data bases its antitrust claims on three theories: that GXS has refused to

deal with Loren Data, that free access to the GXS network is an essential facility that

Loren Data cannot survive without, and that GXS conspired with other competitors to

refuse Loren Data free access to GXSs network. None of these theories is supported by

precedent, and each of them is contradicted by Loren Datas own allegations in the

Complaint.

Loren Data alleges that GXS is, or hopes to become, a monopoly. It further

alleges that, in furtherance of those hopes, GXS has refused to deal with Loren Data by



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denying it access to GXSs network. Loren Data concedes in the Complaint, however,

that GXS has not refused to deal. Indeed, Loren Data alleges that GXS offered Loren

Data access at a commercial rate on multiple occasions, that Loren Data currently has

access to GXS, and that GXS has only expressed an intent to negotiate an expiring

agreement. All this despite Loren Datas admitted history of failing to pay its bills. The

fact that GXS charges for its products and services is not a refusal to deal.

Loren Data also alleges that it cannot survive without free access to GXSs

network because that network is an essential facility. Loren Data concedes in its

complaint, however, that it has been competing with GXS for over ten years without free

access to the GXS network, and often without any access to the network at all.

Loren Data also alleges that GXS conspired with other parties to deny Loren Data

free access to GXSs network. The Complaint is devoid of any allegation identifying the

parties with whom GXS allegedly conspired, when they might have conspired, where

they supposedly conspired, or how this supposed conspiracy was ever implemented. The

Complaint also never provides any explanation of why GXS (or any of its supposed co-

conspirators) would even bother to form a conspiracy to do something that GXS could

just as easily do on its own. Indeed, the supposed conspiracy itselfwhere GXS

would charge Loren Data for network access, but no other competitor wouldis

implausible on its face just from the standpoint of simple common sense.

What really is at issue is that Loren Data is facing an expiring connectivity

contract with GXS in May 2011. This lawsuit is nothing more than Loren Datas attempt

to misuse the federal antitrust laws to secure favorable renewal terms for itself before that



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contract expires. The antitrust laws, however, are designed to protect competition, not

individual competitors. Nothing in Loren Datas Complaint comes close to stating the

harm to competition that the antitrust laws were meant to address.

For these reasons, Plaintiffs antitrust claims, as well as the state-law claims it has

appended to them, fail. The Complaint should therefore be dismissed, with prejudice,

pursuant to Rule 12(b)(6) and Rule 12(b)(1) of the Federal Rules of Civil Procedure.

STATEMENT OF FACTS1

A. The Use of EDI VANs for Business Communication

Electronic commerce (e-commerce) is the exchange of business documents,

such as purchase orders, electronically. To conduct e-commerce, one needs to have a

standard format for the messages, so both parties can understand those messages, and a

medium (or backbone) to transmit the message. There are many such formats and

types of backbones.

Electronic Data Interchange, or EDI, which is used throughout Loren Datas

Complaint, (see, e.g., Compl. 1, 2), is simply the name of a particular standard format

for a message. The term Value Added Network, or VAN, which likewise is used

throughout Loren Datas Complaint, (see, e.g., id. 2, 3, 4), is simply the name for a

1

For purposes of this Rule 12(b)(6) motion, GXS treats the well-pleaded allegations in the Complaint astrue, as it must. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 551 (2007). GXS, however, reservesthe right to dispute any and all such allegations and affirmatively states that many of the factualallegations are inaccurate and/or incomplete. Nevertheless, this motion and memorandum are confinedto, and rely on, those well-pleaded facts alleged in the Complaint to demonstrate that Loren Data hasnot stated a claim upon which relief may be granted.



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collection of computers and communications systems over which EDI messages are sent.

One sends a document formatted in EDI over the VAN to ones trading partner. (See,

e.g., id. 1, 2, 5.) The message goes from the senders mailbox to the recipients

mailbox, much like an email. (Id. 13.) There are many VANs. (Id. 2.)

Defendant GXS provides e-commerce services, among other things, including

EDI VAN services. (Id. 2, 5, 7, 20.) GXS brands its VAN as TGMS. (Id. 6.)

GXS also has a number of legacy VANs that it acquired over the years. These include

the brands IE, InovisWorks, and Tradanet (the brand in the United Kingdom). (Id. 8,

9.)

Trading partners on two different VANs can exchange business documents with

each other if the VANs are connected. One way for VANs to be connected is through an

interconnect. (Id. 3.) An interconnect is essentially a bridge between two VANs that

allows a message from a customer on one VAN to be received by a customer on another.

(Id.) Interconnects are burdensome to configure and support. If the volume of traffic

across the VANs is symmetrical, each VAN provider will devote about the same amount

of staff and resources to keep them operational. If that is so, each absorbs the associated

costs in equal proportion, and should not need a netting of payment from the other

VAN.2 (Id. 4, 14.)

2 Loren Datas Complaint refers to what it calls non-settlement interconnects, without ever explainingthe term. (See, e.g., Compl. 3, 7, 20.) It would appear that this term is derived from the concept ofsettlement as used in the telephone industry, which refers to a process by which parties to aninterconnect meter the traffic over the interconnect, net out the difference, and settle between them if

(Cont'd on following page)



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Another way for VANs to be connected is through commercial mailboxes. A

VAN will send messages to a commercial mailbox on another VAN, and the other VAN

will route those message to the intended recipient. Customers can, and do, have

mailboxes on different VANs at the same time. (Id. 4, 13.)

B. GXSs Relations with VANs Generally

GXS has granted interconnects to many other VANs, both large and small, (id.

20), but it currently has no interconnect with Loren Data on its TGMS VAN, (id. 6).

Loren Data has a transit agreement with Inovis, a GXS company. (Id. 23, 25.) Under

this agreement, Loren Data sends messages to TGMS through Inovis. (Id. 23.) By

virtue of this transit agreement, Loren Data has access to TGMS. Loren Data alleges that

it has been granted interconnects with every other existing VAN, including with two of

GXSs legacy VANs (IE and InovisWorks).3 (Id. 7, 10.)

Loren Data purports to have been functioning as a VAN since 1997. (Id. 6.)

Loren Data alleges that during this period it has accumulated approximately 18,000

(Cont'd from preceding page)

there is a difference. A non-settlement interconnect, by contrast, does not involve metering. Instead,the parties to a non-settlement interconnect simply trust that the amount of traffic going over theinterconnect is roughly similar. If it is not, however, since there is no way to meter the traffic, oneparty can impose significant costs on the other without easy detection. Loren Datas relentless focus inits Complaint about gaining access to an interconnect that is operated on a non-settlement basis mayhave some relevance to understanding the true nature of Loren Datas business objectives in

commencing this litigation.3 The Complaint is silent regarding the extent of internal interconnections among GXSs own VANs. It

is implausible that GXS would not interconnect its own VANs. If the VANs were interconnected,there would be no practical consequence from the question of which GXS VAN one was connected tobecause one could communicate with any GXS customer.



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trading partners. (Id. 15.) Loren Data contrasts this with GXS, which it alleges to

have over 40,000 customers worldwide, (id. 7), making Loren Data just slightly less

than half GXSs size in this regard. Remarkably though, of these 40,000 GXS customers,

only about a mere 0.2%over 80 of themha[ve] trading partners on the Loren Data

. . . network. (Id. 17.)

C. Details of Loren Datas History with GXS

Loren Data concedes that it has been able to function as a VAN since 1997

without having an interconnect to GXS at all for large amounts of time and by using a

commercial mailbox exclusively during various periods. (Id. 6, 10, 12, 19.) The

Complaint sets forth very revealing allegations on the history of this issue between the

parties.

Loren Data alleges that, in November 2000 (three years after Loren Data began

operating), it first approached GXS to request a free interconnect. (Id. 6, 11.) Loren

Data further alleges that, in February 2001, GXS provided Loren Data with a commercial

mailbox while the parties discussed the requested free interconnect. (Id. 12.) In August

2001, however, GXS refused Loren Datas application for a free interconnect and

terminated Loren Datas commercial mailbox. (Id.) Loren Data describes this event as

sudden and unprecedented. (Id.) Loren Data concedes, however, that GXS had asked

Loren Data to pay $30,000 in fees that it owed and only terminated the commercial

mailbox after warning Loren Data that it would do so unless Loren Data paid the

outstanding $30,000. (Id.)



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Nevertheless, Loren Data alleges that, after the commercial mailbox was

terminated, it still was able to access the GXS network and create free direct

connections to those [customers] willing. (Id. 16.) Loren Data states further that those

customers that did not want to continue to do business with Loren Data migrate[d] to

alternative networks that enjoy access to the GXS system. (Id. 34.) Those customers

were able to switch, and in fact switched, to providers other than GXS itselfto secure

service.

In June 2002, still in business a year later without a GXS interconnect or mailbox,

Loren Data once again requested a free interconnect from GXS. GXS again rejected the

request for a free interconnect.4 (Id. 17.) In September 2003, Loren Data approached

GXS yet again about a free interconnect. At the time, Loren Data was soliciting Covisint,

a large new customer that said it would use Loren Data if it had connectivity to GXS.

(Id. 19.) Only then did Loren Data decide it would settle its long outstanding debt to

GXS and acquire a GXS commercial mailbox. (Id.) That commercial mailbox

apparently was sufficient to enable Loren Data to win this significant client. 5 (See id.)

In 2005, GXS acquired from IBM a VAN called IE. IE had an interconnect

arrangement with Loren Data. (Id. 18, 25.) Loren Data admits that GXS has honored

4 The Complaint is silent as to whether GXS offered Loren Data a commercial mailbox.

5 Covisint is a very large B2B (business-to-business) e-commerce portal founded by the major globalautomobile manufacturers. It has since expanded into other industries as well. See generally AboutCovisint, Covisint.com, http://www.covisint.com/web/guest/about-covisint(last visited Feb. 3, 2011).



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the IE interconnect arrangement with Loren Data since this acquisition took place. (Id.

18, 25.)

In March 2009, Loren Data reached an agreement with Inovis, another VAN, to

route data to GXS customers over Inoviss VAN under a transit agreement. 6 (Id. 23,

25.) In addition to the transit agreement, Loren Data and Inovis maintained a separate

interconnect arrangement. (Id. 23.) When it entered into this transit agreement, Loren

Data had been using its IE interconnect and had maintained its GXS commercial mailbox

for over four years. (See id. 18, 19, 25.) The following year, in June 2010, GXS

acquired Inovis and assumed the transit agreement with Loren Data, which expires in

May 2011. (Id. 25.)

The Complaint contains no allegations that GXS has failed to honor the transit

agreement or that GXS has discontinued any of the existing interconnect arrangements it

has with Loren Data. Instead, Loren Data alleges only that GXS has expressed intent to

revert [the current connections] to a unified commercial agreement of unknown cost

when the existing arrangements expire by their terms. (Id.) In other words, Loren Data

alleges nothing more than that its contract is up for review in May 2011. Loren Data

does not allege that GXS will terminate Loren Data. It alleges only that GXS would like

to negotiate some new unspecified commercial agreement. (Id.)

6 Loren Data makes no allegation that it could not enter into another transit agreement with any of theother VANs that have interconnections to GXS.



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D. The Complaints Conflicting Market Definitions

Loren Data uses a variety of terms in its Complaint to describe the industry in

which an alleged harm to competition is supposedly occurring. The Complaint offers no

clear or consistent definition of anything approaching a relevant product or geographic

market for its antitrust claims, however. The Complaint speaks variously of

communications providers, (id. 1); the EDI communications market, (id. 2, 5, 7);

the Electronic Data Interchange industry or EDI industry, (id. 1, 2, 3, 4, 5, 18, 30,

31, 33, 36, 38, 40); the Electronic Data Interchange market or EDI market, (id. 3,

4, 35, 36); the EDI field of business, (id. 28); the EDI marketplace, (id. 32); the

EDI industry and marketplace, (id. 36); B2B integration service providers, (id. 7);

EDI network user IDs in the United States and globally, (id. 5); EDI traffic in the

United Kingdom through [the] Tradanet messaging system, (id. 8); and the U.K.

market, (id.).

The Complaints confusion continues when it makes allegations regarding market

shares. Loren Data claims that after GXSs acquisition of Inovis in 2010, it exert[s]

control over 50% or more of the EDI communications market when measured by

revenue, customer base, or IDs. (Id. 5 (emphases added); see also id. 7.)

Elsewhere, Loren Data alleges that GXS has acquired 90% of the EDI traffic in the

United Kingdom through its Tradanet messaging system. (Id. 8 (emphases added).)

The Complaint contains no factual allegations regarding many of the most basic

factors that go into consideration of whether a particular industry in a particular

geographic region constitutes a relevant antitrust market. For example, aside from



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happening to mention the names of six participants, (id. 20), Loren Data does not

mention any other participants in this industry by name, number, or market share. The

Complaint contains no allegations about the existence, non-existence, or dimension of

any functional substitutes for what this industry offers. In fact, it does not make any

allegations at all as to many basic factual indicia that are classically used to define a

relevant antitrust market.

These omissions extend to the geographic market as well. The Complaint

variously mentions the United States, the United Kingdom, and the globe broadly. But,

the Complaint never actually alleges whether the supposed geographic market is global or

consists of the United States and the United Kingdom, together or separately. 7

E. The Alleged Conspiracy to Exclude Loren Data

Loren Data charges that GXS has restrained trade and commerce by denying the

Plaintiff an essential facility and by preventing the Plaintiff from competing in the EDI

field by combining with other EDI providers to provide peer non-settlement interconnects

to the exclusion of the Plaintiff Loren Data. (Id. 28.) The Complaint is devoid of any

allegations purporting to identify the other persons or entities with which GXS allegedly

7 The Complaints failure to address these fundamental factual issues of market definition is particularlynoteworthy given the published views of governmental competition authorities that the relevant market

for a company like GXS is broader than just EDI VAN and also includes point-to-point EDI usingleased lines, and similar techniques; traditional EDI VANs; traditional EDI VANs accessed via theinternet; internet EDI VANs; web EDI; and point-to-point internet EDI, including technologies such asAS2. See Report, Competition Commission, Francisco Partners LP and G International, Inc (Sept.2005), http://www.competition-commission.org.uk/rep_pub/reports/2005/fulltext/502.pdf(addressingGXSs 2005 acquisition of IBMs EDI VAN business), at p. 15.



22/5912

conspired, what contacts GXS might allegedly have had with any such other persons or

entities about Loren Data, or how such an alleged conspiracy would have worked. In

addition, the Complaint contains no allegation that might purport to explain why GXS

would have any reason to conspire with others concerning how GXS does business with

Loren Data when GXS just as easily could take those same actions unilaterally.

F. Allegations of Actual or Incipient Monopoly Power by GXS

Loren Data charges that GXS possesses monopoly power in the Electronic Data

Interchange Industry, (id. 35), or has attempted to create a monopoly in that

industry, (id. 30). The Complaint, however, does not set forth any facts showing the

existence of a monopoly or of any probability of obtaining monopoly power. Indeed, the

Complaint expressly alleges facts inconsistent with such claims. For example, Loren

Data alleges that in 2002, GXS had approximately 25% of the EDI Trading Partner ID

population, and that currently, following certain acquisitions, GXS merely exert[s]

control over 50% or more of the EDI communications market when measured by

revenue, customer base, or IDs (akin to phone numbers or email addresses). (Id. 5.)

These market shares are far lower than anything that is conventionally thought of as a

monopoly, even assuming for the sake of argument that Loren Datas allegations focus on

relevant metrics.8

8 Loren Data expressly recognizes in its Complaint that a trading partner ID is similar to a phonenumber. (Compl. 5.) The mere fact of a phone numbers existence of course reveals nothing aboutthe number or length of phone calls (i.e., the revenue) associated with it. A single (800) number used

(Cont'd on following page)



23/5913

Here again, the Complaint alleges no facts about industry structure or participants,

or of the dynamics of competition, relevant to the question of whether an actual or

incipient monopoly exists. The Complaints omissions of these basic facts is particularly

notable given several high-profile government investigations in which competition

authorities dismissed the notion that GXS had or was acquiring market power:

A September 2005 review by the United Kingdoms CompetitionCommission of GXSs acquisition of IBMs EDI VAN business concludedthat the acquisition would not substantially lessen competition or confermarket power. See Report, Competition Commission, Francisco Partners LP

and G International, Inc (Sept. 2005), at 30, http://www.competition-commission.org.uk/rep_pub/reports/2005/fulltext/502.pdf.

Last year, the United Kingdoms Office of Fair Trading reviewed GXSs2010 acquisition of Inovis and concluded that the acquisition would notsubstantially lessen competition or confer market power either. See Office ofFair Trading, Completed Acquisition by GXS of Inovis (July 14, 2010), at30-31, http://www.oft.gov.uk/shared_oft/mergers_ea02/2010/GXS-Inovis.pdf.

The U.S. Justice Department also reviewed GXSs acquisition of Inovis lastyear and likewise concluded that it would not substantially lessencompetition or confer market power. See Notices, 75 Fed. Reg. 41,201

(July 15, 2010), http://www.gpo.gov/fdsys/pkg/FR-2010-07-15/pdf/2010-17051.pdf.

In short, the Complaint, while quick to advance broad conclusory allegations of

monopoly power, is essentially devoid of any of the required factual allegations.

(Cont'd from preceding page)

by a telemarketer, for example, would be far more economically significant than 100 landlines torarely used vacation homes.



24/5914

G. Loren Datas Claims in Its Complaint

The gravamen of Loren Datas Complaint appears to be that GXS has not granted

Loren Data a free interconnect to GXSs TGMS VAN, and that when Loren Datas

existing commercial arrangements with GXS expire by their terms in May 2011, it is

possible that the existing arrangements might not continue unchanged. Thus, despite

Loren Datas current connections with GXS, its continued operations for over ten years,

and Loren Datas interconnects with every VAN other than GXS, Loren Data charges

that GXS allegedly wrongfully refused to deal with Loren Data, (Compl. 9, 11-26),

and that GXSs network is an essential facility that Loren Data requires for its business

to function because Loren Data cannot feasibly duplicate it, (id. 9). Loren Data also

charges that GXS conspired with other VANs so that all VANs other than Loren Data

would have non-settlement interconnects with GXS. (Id. 6.)

From these allegations, Loren Data has attempted to plead a variety of federal

antitrust and Maryland state-law claims. Specifically:

Count One alleges a conspiracy in restraint of trade, allegedly inviolation of Section One of the Sherman Act, 15 U.S.C. 1, (Compl.

27-28);

Count Two alleges attempted monopolization, allegedly in violation ofSection Two of the Sherman Act, 15 U.S.C. 2, (Compl. 29-33);

Count Three alleges actual monopolization, allegedly in violation of

Section Two of the Sherman Act, 15 U.S.C. 2, (Compl. 34-36);

Count Four alleges violations of the conspiracy, monopolization,attempted monopolization and price discrimination provisions of theMaryland antitrust law, Md. Code Ann., Com. Law 11-204(a)(1)-(3), (Compl. 37-40);



25/5915

Count Five alleges tortious interference with business relationshipsand opportunities, (id. 41-42); and

Count Six charges GXS with breach of contract both in its long-termrelationship and in its current contract with Inovis, Inc., (id. 43-45).

ARGUMENT

A complaint must be dismissed if it fails to state a claim upon which relief can

be granted. Fed. R. Civ. P. 12(b)(6); Edwards v. City of Goldsboro, 178 F.3d 231, 243

(4th Cir. 1999). A plaintiff in its complaint has an obligation to provide the grounds of

[its] . . . entitle[ment] to relief, which requires more than labels and conclusions. Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (hereinafter Twombly); see also

Cloverleaf Enters., Inc. v. Maryland Thoroughbred, Horsemens Assoc., Inc., No. 10-

407, 2010 WL 3091096, at *6 (D. Md. Aug. 6, 2010).

[A] formulaic recitation of the elements of a cause of action or naked

assertion[s] devoid of further factual enhancement are not enough to state a claim.

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal citations omitted). The Court

cannot accept unsupported legal allegations, Dickson v. Microsoft Corp., 309 F.3d 193,

212-13 (4th Cir. 2002); legal conclusions couched as factual allegations, Iqbal, 129 S. Ct.

at 1950; or conclusory factual allegations devoid of any reference to actual events, United

Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979); see also Francis v.

Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) ([W]here the well-pleaded facts do not

permit the court to infer more than the mere possibility of misconduct, the complaint has

alleged-but it has not shown-that the pleader is entitled to relief, as required by Rule 8.)

(internal quotations omitted).



26/5916

To survive dismissal, a complaint must plead enough facts to state a claim to

relief that is plausible on its face. Twombly, 550 U.S. at 570; see also Carroll-Hall v.

Arc of Baltimore, Inc., No. 10-873, 2010 WL 3781887, at *3 (D. Md. Sept. 22, 2010).

Twombly requires that a court examine whether an antitrust complaint contains enough

fact to raise a reasonable expectation that discovery will reveal evidence of the alleged

antitrust violations. 550 U.S. at 556. If the allegations in a complaint cannot raise a

claim of entitlement to relief, that basic deficiency should . . . be exposed at the point of

minimum expenditure of time and money by the parties and the court. Id. at 558

(citations and quotations omitted). This requirement ensures that meritless claims

particularly those based on a flawed legal theoryare dismissed. Id. at 558-59; Reiter v.

Sonotone Corp., 442 U.S. 330, 345 (1979) (emphasizing that courts need to exercise

sound discretion and use the tools available to dismiss baseless antitrust claims).

An important corollary to the need to plead non-conclusory facts is that when a

complaint simply fails to address key factual points that are relevant to whether a claim

exists, the complaint should not be treated as necessarily implying that such facts exist.

Rather, if the necessary facts are not set forth in allegations, the claim must fall. See

Estate Constr. Co. v. Miller & Smith Holding Co., 14 F.3d 213, 221 (4th Cir. 1994)

(stating that courts should not assume that plaintiffs can prove facts that they have not

alleged or that the defendants have violated the antitrust laws in ways that have not been

alleged).

Judged against these basic pleading standards, it is clear that Loren Datas

Complaint fails to state a claim upon which relief can be granted and therefore should be



27/5917

dismissed. Indeed, Loren Data has pleaded facts sufficient to show it cannot make any

amendment to its Complaint that would state a claim. Accordingly, the Court should

dismiss the Complaint with prejudice.

I

THE COMPLAINT FAILS TO STATE A CLAIM

UNDER SECTION ONE OF THE SHERMAN ACT

Count One asserts a violation of Section One of the Sherman Act. Section One

prohibits any contract, combination . . . or conspiracy, in restraint of trade. 15 U.S.C.

1; see Valuepest.com of Charlotte, Inc. v. Bayer Corp., 561 F.3d 282, 286 (4th Cir.

2009). Specifically, Loren Data alleges that GXS combin[ed] with other EDI providers

to provide peer non-settlement interconnects to the exclusion of Loren Data. (Compl.

28.) Loren Data provides no factual or inferential basis for this claim.

A. The Complaint Does Not Allege Facts ShowingAny Contract, Combination or Conspiracy

Fundamental to a claim under Section One is that there be an agreement. See

Oksanen v. Page Memorial Hosp., 945 F.2d 696, 702 (4th Cir. 1991) (citing Monsanto

Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761 (1984)); see also Valuepest.com of

Charlotte, Inc., 561 F.3d at 286 (Section One liability only applies to an agreement

between two legally distinct parties). Unilateral conduct does not violate Section One.

Twombly, 550 U.S. 544, 545 (2007) ([T]he crucial question is whether the challenged

anticompetitive conduct stems from independent decision or from an agreement, tacit or

express.) (quotations omitted).



28/5918

Loren Data explains the alleged conspiracy with which it has charged GXS in two

sentences:

By its conduct, practices and intent, Defendant GXS, Inc., has entered intocontracts, combinations and/or conspiracies in restraint of trade and/orcommerce among the several states and with foreign nations that excludethe Plaintiff from participation in the EDI field of business in violation of15 USC Sec. 1. Specifically it has restrained trade and commerce bydenying the Plaintiff an essential facility and by preventing the Plaintifffrom competing in the EDI field by combining with other EDI providers toprovide peer non-settlement interconnects to the exclusion of the PlaintiffLoren Data.

(Compl. 28.)

Nothing in these two sentences alleges even the barest of facts about the

purported anticompetitive agreement. The Complaint does not allege where any such

agreement was made, when it was made, or with whom GXS allegedly made it. The

Complaint also does not allege anything about how this supposed agreement was

implemented to Loren Datas purported detriment, how it enabled GXS to bring about

some result that it was otherwise unable to achieve unilaterally, what actions were taken

by other participants pursuant to this supposed agreement, or what benefit any such

others supposedly obtained as a result of this supposed agreement. For these reasons

alone, Count One must be dismissed. See Twombly, 550 U.S. at 565 n.10 (dismissing

Section One complaint that mentioned no specific time, place, or person involved in the

alleged conspiracies); Muigai v. IB Prop. Holdings, LLC, No. 09-01623, 2010 WL

5173313, at *4 (D. Md. Dec. 14, 2010) (dismissing Section One complaint where

Plaintiff allege[d] no specific facts as to how or when [defendant] conspired. Plaintiff

ma[de] mere legal conclusions); Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1048 (9th



29/5919

Cir. 2008) (affirming dismissal of Section One claim because the complaint does not

answer the basic questions: who, did what, to whom (or with whom), where, and when);

Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d

430, 436 (6th Cir. 2008) (upholding dismissal of Section One claim because nowhere

did Plaintiffs allege when Defendants joined the . . . conspiracy, where or how this was

accomplished, and by whom or for what purpose).

Not only does the Complaint fail to set forth facts showing any agreement, it

expressly sets forth factual allegations that exclude the possibility of conspiracy. Loren

Data affirmatively alleges that other VANs dealt with Loren Data on the very terms that

Loren Data was seeking: Loren Data has been granted Interconnects with every other

VAN. (Compl. 6.) IBM, one of GXSs competitors, contracted with Loren Data to

provide all interconnect outsourcing for their US Federal Government and Department of

Defense EDI traffic. (Id. 18.) A second competitor, Inovis, even contracted with GXS

to re-route Loren Datas GXS-related traffic through Inoviss network to TGMS, as well

as to arrange an interconnect. (Id. 23.)

B. The Purported Conspiracy Alleged

in the Complaint Is Not Plausible

Although unclear, Loren Data is likely alleging that GXS agreed with other VANs

that GXS alone would charge Loren Data for an interconnect or a mailbox, while other

VANs would not (i.e., that only GXS was refusing to provide a non-settlement



30/5920

interconnect).9 The suggestion that competitors entered into such an agreement is

implausible and, frankly, nonsensical. It is implausible that GXS would go to the effort

of entering into an agreement with other VANs where GXS would charge Loren Data,

but none of the other co-conspirators would. GXS would not need the agreement or even

the acquiescence of any other VAN to charge Loren Data. Behavior equally consistent

with unilateral action is not evidence of a conspiracy. Twombly, 550 U.S. at 554; see

Mylan Labs., Inc. v. Akzo, N.V., 770 F. Supp. 1053, 1068 (D. Md. 2010) (dismissing

Section One claim, in part because the plaintiff ha[d] alleged nothing tending to exclude

the possibility that the defendants acted independently).

Indeed, according to the Complaint, GXS would not have needed to enter into any

conspiracy because [o]nly GXS had the market power to do this before and after its

spate of consolidation. (Compl. 20.) Where a defendant has no rational economic

motive to conspire, and if their conduct is consistent with other, equally plausible

explanations, the conduct does not give rise to an inference of conspiracy. Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 575, 596-97 (1986); see also Twombly,

550 U.S. at 552 (plaintiffs must allege additional facts that tend to exclude independent

self-interested conduct as an explanation for the allegedly wrongful behavior)

(quotations omitted); Mylan Labs., Inc., 770 F. Supp. at 1067-68 (dismissing Section One

claim, in part because defendants actions [were] at least as likely to have been the

9 See, e.g., Compl. 19 (As mailboxes are metered connections, Loren Data was charged for every bytesent and received, for reports, and for failed communication sessions.).



31/5921

product of self-interested competition as anti-competitive conspiracy); Power

Conversion, Inc. v. Saft America, Inc., 672 F. Supp. 224, 227 (D. Md. 1987) ([I]f the

factual context renders plaintiffs claim implausible-if the claim is one that makes no

economic sense-plaintiffs must come forward with more persuasive evidence to support

their claim than would otherwise be necessary.) (quotations omitted).

II

THE COMPLAINT FAILS TO STATE CLAIMS FOR

MONOPOLIZATION OR ATTEMPTED MONOPOLIZATIONUNDER SECTION TWO OF THE SHERMAN ACT

Counts Two and Three assert a violation of Section Two of the Sherman Act for

monopolization and attempted monopolization. Section Two provides that it is illegal to:

monopolize, or attempt to monopolize, or combine or conspire with anyother person or persons, to monopolize any part of the trade or commerceamong the several States, or with foreign nations.

15 U.S.C. 2; see Oksanen v. Page Memorial Hosp., 945 F.2d 696, 710 (4th Cir. 1991).

A. The Complaint Fails to State a Claim for Monopolization

Liability for monopolization under Section Two requires:

(1) the possession of monopoly power in the relevant market and (2) thewillful acquisition or maintenance of that power as distinguished fromgrowth or development as a consequence of a superior product, businessacumen, or historic accident.

United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966); see also Verizon

Commcns, Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 407 (2004) (To

safeguard the incentive to innovate, the possession of monopoly power will not be found

unlawful unless it is accompanied by an element of anticompetitive conduct.)



32/59


33/5923

monopolist phone company denied interconnection services to rivals in order to limit

entry. 540 U.S. at 407. The incumbent phone company also allegedly discriminated

against rivals in terms of filling orders and providing service, among others. Id. at 404.

Nonetheless, the Supreme Court conclude[d] that [the monopolists] alleged insufficient

assistance in the provision of service to rivals is not a recognized antitrust claim. Id. at

410; see Am. Online, Inc. v. GreatDeals.net, 49 F. Supp. 2d 851, 859 (E.D. Va. 1999)

(stating that denying a competitor access to AOLs email customers over which it

allegedly held a monopoly was not an antitrust violation).

Loren Data alleges that GXS has refused to deal with it and refused to grant it

access to what Loren Data claims is an essential facility, and asserts that these constitute

acts of monopolization. But Loren Datas own allegations admit that GXS in fact has not

refused to deal with Loren Data even though it has no obligation to deal with Loren Data

at all. Loren Data has pleaded facts showing that access to GXSs network is not

essential to competition. And the Complaint fails to plead a relevant product and

geographic market, much less that GXS has monopoly power in it. As a consequence,

Loren Datas Complaint fails to state a claim under Section Two of the Sherman Act.

1. The Complaint Alleges Facts Demonstrating

That GXS Did Not Refuse to Deal with Loren Data

By Loren Datas own admission, it currently has three connections with GXS,

(Compl. 10), thus belying any suggestion that there is any ongoing refusal to deal. As

for what might happen in the future, Loren Data has alleged only that GXS has

expressed intent to revert . . . [the current connections] . . . to a unified commercial



34/59


35/5925

2d at 859 (dismissing a Section Two claim where the party claiming monopolization did

not point to any exclusive or anti-competitive objectives other than AOLs requirement

that advertisers pay for the right to advertise on AOLs network to AOLs subscribers).

b. Loren Data Pleads Facts Showing That Using a

Mailbox Is Not an Inadequate Form of Access

Loren Data alleges that the commercial mailbox it now has is inadequate for its

needs. (Compl. 19.) Loren Data contradicts this claim, however, when it pleads that it

was able to operate from February 2001 through August 2001 with a commercial

mailbox, (see Compl. 12, 16), and then from August 2001 to August 2003 without any

connection at all with GXS, (id. 19). Furthermore, Loren Data pleads that it

reestablished its relationship with GXS in 2003 only in order to win a single new, large

customer, and only received a commercial mailbox at that time. (See id. 19.) This

commercial mailbox must have been sufficient for Loren Data to serve that large client. 11

11 These admissions in Loren Datas Complaint are entirely consistent with a recent statement discussingthis case that Loren Data posted on its website. In that statement, Loren Data asserted that ouralternative transit arrangements have worked thus far and acknowledged that Loren Data could easilyhave rid[den] out the next few years acting as if nothing was wrong. See Todd Gould, GXS

Antitrust Litigation (Jan. 10, 2011), http://www.ld.com/gxs-antitrust-litigation(last visited Feb. 3,2011). Indeed, the Loren Data statement goes on to boast that 2010 has been an outstanding year forLoren Data. We have grown our partner roster . . . and have forged partnerships . . . from . . . America[and] across the Atlantic with NetEDI in the UK. Id. It is certainly difficult for the Complaint toraise a plausible inference that Loren Datas current level of access is so inadequate as to constitute aform of Section Two monopolization in the face of such public statements.



36/5926

c. The Complaint Fails to Plead Facts Showing

a Lack of a Legitimate Business Justification

for GXSs Actions

As the Complaint itself makes clear, Loren Data is not just seeking access to

GXSs customers. It is seeking access on terms that are not available to the general

public and that would force GXS to incur extra costs. (See Compl. 13.) An

interconnectwhich Loren Data acknowledges is merely a transit point between

networks, (id. 14)is not marketed or available to the general public. Rather, as the

Supreme Court explained in Trinko, this type of service exist[s] only deep within the

bowels of [the Defendant] . . . [and is] offered not to consumers but to rivals, and at

considerable expense and effort. 540 U.S. at 410. The Court in Trinko explicitly stated

that the defendant was under no obligation to share it with others. Id.

The Complaints conclusory allegations that GXS acted out of an anticompetitive

motive are also entirely inconsistent with its admission that GXS provided interconnects

to other VANs both large (Sterling, Inovis, Easylink, NuBridges) and small (Advanced

Communications Systems, I-Connect, York Worldwide). (Compl. 20; see id. 21

(All other VANs enjoyed non-settlement).) The Complaint alleges that GXS incurs

costs from such interconnects, (see id. 14), and that it does so solely for the economic

benefit of the EDI industry and the trading partners, (id. 4). In short, Loren Data

alleges that GXS freely grants interconnects to all other competing VANs in order to

maintain a robust VAN network, but then contradictorily alleges that GXS denies an

interconnect to the lone remaining VAN, Loren Data, because GXSs true motive is to

monopolize the market. That is not a plausible monopolization allegation.



37/5927

The Complaint itself is chock full of far more plausible reasons for GXSs alleged

denial of an interconnect to Loren Data. One is that Loren Data is, to put it bluntly, a bad

business partner. By its own admission, Loren Data at least at one point owed GXS more

than $30,000, and only finally settled that account when it was pitching a customer that

wanted access to GXS. (Id. 16, 19.)12

Another reason is that, by the Complaints own admission, GXS does not consider

Loren Data to be a VAN. (Id. 22.) Loren Data implicitly acknowledges that this was

the real reason it has been denied an interconnect when it complains that GXS was

asserting itself as the sole arbiter of who qualifies as a VAN. (Id. 9.) And

significantly, Loren Data alleges that GXSs decision that Loren Data did not qualify for

a VAN interconnect was taken in 2001, (see id. 16), when, according to the Complaint,

GXSs EDI network represented no more than 25% of the alleged market, (id. 5).

GXS denied Loren Data an interconnect at a time when there was no possibility that such

denial could give GXS monopoly power. Given such circumstances, it is highly

implausible to infer that this denial arose from dreams of monopoly.

2. The Complaint Alleges Facts Demonstrating

That GXSs VAN Is Not an Essential Facility

Loren Datas monopolization claim is not improved by its allegation that GXSs

network amounts to an essential facility. (See id. 33.)

12 The Complaint is conveniently silent as to what level of arrears Loren Data currently has with GXS.



38/5928

The Supreme Court has never recognized the essential facilities doctrine. Trinko,

540 U.S. at 411. Indeed, in Trinko, the Supreme Court refused to find that an incumbent

telephone companys telephone network was an essential facility. Id. It is thus not clear

that denying access to an alleged essential facility could even be the basis for a viable

monopolization claim under Section Two any longer.

There is older Fourth Circuit precedent that addresses what was considered

necessary in order to plead a viable essential facilities claim before Trinko, but Loren

Datas allegations would fail to state a claim even if this precedent were still viable. In

1991 (13 years before Trinko), the Fourth Circuit held that to state a Section Two claim

for denying access to an essential facility, a plaintiff must allege: (1) control by a

monopolist of an essential facility; (2) the inability of the competitor seeking access to

practically or reasonably duplicate the facility; (3) the denial of the facility to the

competitor; and (4) the feasibility of the monopolist to provide the facility. Laurel Sand

& Gravel, 924 F.2d at 544. The plaintiff must allege that the facility is not merely

helpful but vitalto the claimants competitive viability. Am. Online, Inc., 49 F. Supp. at

862 (emphasis added and internal quotations omitted). [A]ccess to the facility must be

necessary for meaningful competition. In re Microsoft Corp. Antitrust Litig., 274

F. Supp. 2d 743, 745-46 n.3 (D. Md. 2003). As a result, more than inconvenience, or

even some economic loss is necessary to show that a facility is essential. Advanced

Health-Care Servs. v. Giles Memorial Hosp., 846 F. Supp. 488, 498 (W.D. Va. 1994)

(internal quotations omitted). In addition, a plaintiff may not use the essential facilities

doctrine as a means to dictate the terms of its access to a facility. A competitor may not



39/5929

demand his own price or terms, even if the offered rate is uneconomic for that

competitor. Laurel Sand & Gravel, 924 F.2d at 544-45.

In Laurel Sand & Gravel, a competitor of a national railroad demanded access to

its rail network at a highly discounted rate so that the competitor could provide services

to a potential customer. Id. at 541-42. Instead, the alleged monopolist offered its

competitor a commercial rate. Id. The competitor and its customer could not compete at

that rate, however. Id. They sued the alleged monopolist, claiming that it had violated

Section Two by denying a competitor access to an essential facility. Id. at 544. The

Fourth Circuit disagreed, finding that [a]ccess to the essential facility was not refused

through the rail rate offer and the trackage rights denial. Id. at 545. The court found

that the commercial rate offered to the competitor was reasonable from the perspective of

the alleged monopolist, and thus the facility could be duplicated by the competitor simply

paying the commercial rate. Id. at 544. The court specifically noted that [a]lthough [the

highly discounted rate was] preferable, that, alone, did not make the rate offer

unreasonable. Id. at 545.

Similarly, in America Online, a spammer demanded access to AOLs email

network. 49 F. Supp. 2d at 854. The spammer alleged that AOL possessed monopoly

power in Internet access or information services and that for AOL to charge for the right

to advertise on AOLs network constituted a Section Two violation. Id. at 857-89. The

court dismissed the claim. Id. at 857-63.



40/5930

The facts pleaded in the Complaint foreclose any viable essential facilities

claim. GXS has not denied Loren Data access. (See Point II.A.1, supra.) For that reason

alone, the essential facilities claim should fail.

Loren Data has also pleaded facts that are inconsistent with the facility being truly

essential. Loren Data alleges that it was able to operate from 1997 to 2001 without a

connection to the GXS network, (Compl. 6, 12); for a period in 2001 with a

commercial mailbox, (id. 12); and from late 2001 to 2003 with no connection at all to

GXS, (id. 19).

The Complaint also makes clear that there is still ample access to this supposed

essential facility. Loren Data pleads that when GXS terminated its mailbox and

denied it an interconnect in 2003, Loren Data was forced, at increased expense, to create

free direct connections to those willing. (Id. 16.) Loren Data also pleads that without

an interconnect, users such as retailers and suppliers [customers] would be forced to

purchase mailboxes on multiple VANs, (id. 4), or migrate to alternative networks,

(id. 3). Moreover, Loren Data has pleaded that GXS granted non-settlement peer

interconnects to [numerous] other VANs. (Id. 20.) Loren Data has admitted that

customers have plenty of options for connecting to the GXS network even if they do not

do so through Loren Data. In short, Loren Data has pleaded that if it loses an

interconnect with GXS, (1) it can recreate the functionality itself, (2) other suppliers have

access to the alleged essential facility, and (3) customers can easily switch to other

suppliers or even purchase additional mailboxes, and still access GXS. Thus, even if

GXS were a monopolist and its customers were an essential facility, Loren Datas own



41/5931

allegations demonstrate that Loren Data, and, more importantly, its customers, had and

continue to have access to the very facility Loren Data terms essential.

Lastly, Loren Data complains that it cannot feasibly duplicate the GXS VAN.

(Id. 9; see also id. 33, 35.) But Loren Datas focus is not on the use of some

technology uniquely possessed by GXS, rather on obtaining a particular mode of access

to customers who are part of GXSs network.

Loren Datas complaints are simply about inconvenience and price:

Commercial mailboxes must be configured by the user manually,(id. 15, 19);

Loren Data was charged, (id. 19);

Reaching another network is only economically feasible through afree interconnect, (id. 9); and

When Loren Datas connection was terminated in 2001, it was forced,at increased expense, to create free direct connections, (id. 16(emphasis added)).

Even assuming anything today remains of the essential facilities concept, the

Fourth Circuit in Laurel Sand & Gravel made clear that offering a facility to a competitor

at the price the competitor found convenient was not required under the antitrust laws.

See 924 F.2d at 544-45 (holding that an offer was reasonable because it was reasonable

from the defendants perspective).

Accusing GXS of having a monopoly and an essential facility does not enable

Loren Data to dictate the commercial terms upon which GXS must deal. The fact that

Loren Data, unlike many other small VANs, does not like the terms GXS offers, does not

make an antitrust violation. Id. at 545. And in any event, the Supreme Court in Trinko



42/5932

has dispatched with the notion that GXS owes a duty to deal with Loren Data at all, or

that GXS owes Loren Data any particular form of access to GXSs infrastructure. See

540 U.S. at 407 (As a general matter, the Sherman Act does not restrict the long

recognized right of a trader . . . freely to exercise his own independent discretion as to

parties with whom he will deal.) (internal quotations omitted).

3. The Complaint Fails to Adequately Allege a Relevant Product

or Geographic Market That Allegedly Is Being Monopolized

It is impossible to consider whether monopoly power exists without reference to a

properly defined market. A plaintiff must first define the relevant market because the

concept of competition has no meaning outside its own arena; however broadly that arena

is defined. Satellite Television & Assoc. Res., Inc. v. Contl Cablevision of Va., Inc.,

714 F.2d 351, 355 (4th Cir. 1983). A claim for monopolization that fails to establish a

relevant market must be dismissed. Consul, Ltd. v. Transco Energy Co., 805 F.2d 490,

493 (4th Cir. 1986) (affirming trial courts dismissal of case in which the relevant market

had not been established); E.I. DuPont de Nemours & Co., 688 F. Supp. 2d at 457

(dismissing monopolization claims in which it was apparent . . . that the alleged market

suffer[ed] a fatal legal defect). Likewise, a claim for attempted monopolization requires

a definition of the relevant market that the defendant is allegedly attempting to

monopolize. Sun Microsystems, Inc. v. Microsoft Corp. (In re Microsoft Corp. Antitrust

Litig.), 333 F.3d 517, 534 (4th Cir. 2003).

A relevant market has two components: (1) the relevant product market, which

identifies the products or services that compete with each other; and (2) the relevant



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geographic market, which identifies the geographic area within which competition takes

place. Am. Online, Inc., 49 F. Supp. 2d at 857 (citing Brown Shoe Co. v. United States,

370 U.S. 294, 324 (1962)). Loren Data has failed to allege either.

a. The Complaint Does Not

Plead a Product Market

To define a product market, a plaintiff:

must take account of which products, if any, compete with the defendantsproduct, and must include reasonably interchangeable substitute products

that limit the defendants ability to sustain an increase in price abovecompetitive levels.

Va. Vermiculite, Ltd. v. W.R. Grace & Co., 108 F. Supp. 2d 549, 576 (W.D. Va. 2000)

(citing Murrow Furniture Galleries, Inc. v. Thomasville Furniture Indus., Inc., 889 F.2d

524, 528 (4th Cir. 1989)). The key issue is whether and under what conditions

consumers would substitute one product for another. Berlyn, Inc. v. Gazette

Newspapers, 223 F. Supp. 2d 718, 726 (D. Md. 2002) (internal quotations omitted).

Where the plaintiff . . . alleges a proposed relevant market that clearlydoes not encompass all interchangeable substitute products even when allfactual inferences are granted in plaintiffs favor, the relevant market islegally insufficient, and a motion to dismiss may be granted.

E.I. du Pont de Nemours & Co. v. Kolon Indus., 683 F. Supp. 2d 401, 409 (E.D. Va.

2009) (citation omitted).

As an initial matter, it is not clear what product market the Complaint is

attempting to allege, or if the Complaint purports to be referring to just one market or

multiple different things, some of them markets and some not. The Complaint variously

refers to communications providers, (Compl. 1); the EDI communications market,



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(id. 2, 5, 7); the Electronic Data Interchange industry or EDI industry, (id. 1, 2,

3, 4, 5, 18, 30, 31, 33, 36, 38, 40); the Electronic Data Interchange market or EDI

market, (id. 3, 4, 35, 36); the EDI field of business, (id. 28); the EDI

marketplace, (id. 32); the EDI industry and marketplace, (id. 36); B2B integration

service providers, (id. 7); EDI network user IDs, (id. 5); and EDI traffic, (id.

8). These inconsistent terms make it impossible to determine if the alleged market is

limited to some undefined communications aspect of the EDI industry, or some

supposed EDI market as a whole that would include B2B integration service.

Regardless of which of these terms is used, the Complaint fails to allege even the

most basic facts showing what range of substitutable products would or would not also be

considered part of the alleged market for antitrust purposes. The Complaint defines the

industry at issueElectronic Data Interchange or EDIas the electronic

exchange of business data and documents, such as purchase orders or invoices, in a

standardized digital format that can be processed via the Internet by computer systems.

(Id. 1.) The Complaint further broadly characterizes Plaintiff and Defendant as

communications providers in the industry. (Id.) However, the Complaint narrowly

focuses its entire discussion of electronically exchanged business data and documents to

only those messages formatted in EDI that travel over a VAN. (Id. 2.) The Complaint

does not allege that there are no reasonable substitutes for EDI VANs available to

potential consumers, or any facts that would support an inference that there are no such

reasonable substitutes. Indeed, an inference from the Complaint that no such substitutes

exist could not even be plausible given the published determinations by respected



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governmental competition authorities that the relevant market for a company like GXS is

broader than just EDI VAN. These decisions suggest that the relevant market includes

point-to-point EDI using leased lines, and similar techniques; traditional EDI VANs;

traditional EDI VANs accessed via the internet; internet EDI VANs; web EDI; and point-

to-point internet EDI, including technologies such as AS2. See, e.g., Report,

Competition Commission, Francisco Partners LP and G International, Inc (Sept. 2005),

http://www.competition-commission.org.uk/rep_pub/reports/2005/fulltext/502.pdf, at

p. 15.

On the contrary, the well-known existence of things such as the Internet, e-mail,

peer-to-peer technologies, and a variety of other methods of electronic communication

belies any suggestion that VANs are the only means for the electronic exchange of

business data and documents. (Compl. 1.)

b. The Complaint Does Not Pleada Geographic Market

A geographic market is an area in which buyers or sellers of the relevant product

effectively compete. Consul, Ltd., 805 F.2d at 495. An antitrust claim that fails to plead

a relevant geographic market must be dismissed. Mandava v. Howard Cnty. Gen. Hosp.,

Inc., No. 91-2157, 1992 WL 165804, at *4 (D. Md. July 1, 1992) (dismissing antitrust

claim, in part, because Plaintiffs definition of relevant geographic market is too narrow

and does not take into account the realities of competition).

Loren Data fails to define a relevant geographic market. Instead, the Complaint

merely references various geographic areas where EDI VANs operate generally, where



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GXS has user IDs, or where GXSs VANs are located. For example, the Complaint

states that there is a global system of VANs, (Compl. 2), and that the EDI industry

exists as a vital carrier of intrastate, interstate and international commercial data that

traverses every state (including Maryland) and international borders to and between

foreign countries, (id.).

While data sent over the system of VANs may exist in various locations globally,

this allegation makes no mention of where Loren Data and GXS effectively compete.

See Consul, Ltd., 805 F.2d at 495. Similarly, the Complaint claims that GXS controls a

significant population of EDI network user IDs in the United States and globally.

(Compl. 5.) This conclusory allegation provides no guidance regarding whether the

parties effectively compete for those user IDs on a global scale, in the United States

alone, or just a subsection of the United States. Moreover, to the extent Loren Data is

suggesting that the market is global, the Complaint fails to allege any facts about the

existence, number or size of any other global providers of EDI VAN services.

Loren Data further confuses the issue by alleging that GXSs core service is

located in the United States and the United Kingdom. (Id. 6.) In fact, the only

geographic market ever specifically referenced in the Complaint is the U.K. market.

(Id. 8.) But if the relevant geographic market is the United Kingdom, Loren Data

would not be able to pursue redress for its antitrust claims in United States courts.

See, e.g., F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 158 (2004)

(Sherman Act does not reach conduct that causes only foreign injury).



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Because the Complaint fails to allege a coherent geographic market, its antitrust

claims must fail.

4. The Complaint Does Not Plead Facts Showing

That GXS Possesses Monopoly Power but

Rather Pleads Facts Showing That It Does Not

Despite its conclusory assertions that GXS is a monopoly, Loren Data fails to

make any factual allegations that support an inference that GXS possesses monopoly

power within a relevant market. The existence of monopoly power can be supported by

allegations of a dominant share in a relevant market with high barriers to entry. United

States v. Microsoft Corp., 253 F.3d 34, 51 (D.C. Cir. 2001). While the Supreme Court

has refused to specify a minimum market share necessary to indicate a defendant has

monopoly power, lower courts generally require a minimum market share between 70%

and 80%. Colo. Interstate Gas Co. v. Natural Gas Pipeline Co. of Am., 885 F.2d 683,

694 n.18 (10th Cir. 1989); Spirit Airlines v. Nw. Airlines, 431 F.3d 917, 935-36 (6th Cir.

2005) (reasonable to find monopoly power based on market share between 70% and

89%); Morgenstern v. Wilson, 29 F.3d 1291, 1296 n.3 (8th Cir. 1994) (market share of

80% sufficient to show monopoly power).

The Complaint makes no such allegation, however. Rather, Loren Data asserts

only generally that GXS exert[s] control over 50% or more of the EDI Communications

market when measured by revenue, customer base, or IDs. (Compl. 5.) Control of



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over 50% of a market is well short of the greater than 70% market share that courts

have found sufficient to constitute a monopoly.13 See Colo. Interstate Gas Co., 885 F.2d

at 694 n.18. Loren Datas express factual allegations are simply inconsistent with its

conclusory assertion of monopoly power.

B. The Complaint Fails to Plead Attempted Monopolization

Loren Data also attempts to assert a Section Two claim for attempted

monopolization. To state a claim for attempted monopolization under Section Two, a

plaintiff must allege: (1) that the defendant has engaged in predatory or anticompet

GXS Reply: Motion to Dismiss Loren Data Corp Antitrust Charges

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