The Anti-Trust Casebook

First Draft: September 1, 1995
Second Revision: February 1, 1997

Last Updated: May 28, 1998

This document contains brief summaries of 62 major court cases involving anti-trust law. Each case includes the area of anti-trust law involved, a brief discussion of the arguments of the parties, the decision of the court, and in some cases an editorial comment regarding the decision.

You may jump to any point in the document by clicking on the appropriate case below or you may scroll through the entire document.

For more detailed descriptions of court cases I recommend a visit to The Antitrust Case Browser by Professor Anthony Becker, Department of Economics, St. Olaf College.

For information about current antitrust cases in the news and suggestions for academic research I recommend a visit to Antitrust.org, a web page dedicated to ideas for antitrust research.

Return to Victor Matheson's home page.

• United States v. Addyson Pipe & Steel Company (1898)
• United States v. Trenton Potteries (1927)
• Appalachian Coals v. United States (1933)
• United States v. Socony-Vacuum Oil Company (1940)
• Goldfarb v. Virginia State Bar (1975)
• Arizona v. Maricopa County Medical Society (1982)
• NCAA v. Board of Regents of the University of Oklahoma (1984)

• United States v. Container Corporation of America (1969)
• United States v. United States Gypsum Company (1978)

• Interstate Circuit v. United States (1939)
• Theatre Enterprises v. Paramount Film Distribution Corporation (1954)
• Du Pont v. FTC and Ethyl Corporation v. FTC (1984)

• United States v. Sealy (1967)
• United States v. Topco Associates (1972)
• Jay Palmer, et al. v. BRG of Georgia (1990)

• Northern Securities Company v. United States (1904)
• Standard Oil of New Jersey v. United States (1911)
• United States v. United States Steel Corporation (1920)
• Brown Shoe v. United States (1962)
• United States v. Von's Grocery (1966)
• FTC v. Proctor and Gamble (1967)
• Tasty Baking and Tastykake v. Ralston Purina and Continental Baking (1987)

• United States v. ALCOA (1945)
• United States v. United Shoe Machinery (1953)
• United States v. Du Pont (1956)
• Berkey Photo v. Eastman Kodak (1979)

• United States v. Du Pont (1957)
• Brown Shoe v. United States (1962)
• Ford Motor v. United States (1972)

• Standard Fashion v. Magrane-Houston Company (1922)
• Tampa Electric Company v. Nashfield Coal (1961)

• Henry v. A. B. Dick (1912)
• International Salt v. United States (1947)
• Northern Pacific Railway v. United States (1958)
• United States v. Loew's (1962)
• Siegel v. Chicken Delight (1971)
• Jefferson Parish Hospital District #2 v. Hyde (1984)

• Fashion Originators' Guild of America v. FTC (1941)
• Lorain Journal Company v. United States (1951)
• Klor's v. Broadway-Hale (1959)
• Aspen Skiing Company v. Aspen Highlands Skiing Corporation (1985)
• FTC v. Indiana Federation of Dentists (1986)

• Northeastern Telephone v. AT&T (1981)
• Barry Wright Corporation v. ITT Grinnell (1983)
• Matsushita Electric v. Zenith Radio (1986)
• Utah Pie v. Continental Baking (1967)
• FTC v. Morton Salt (1948)

• Standard Oil Company v. FTC (1951)
• United States v. Borden Company (1962)
• Great Atlantic & Pacific Tea v. FTC (1979)

• Dr. Miles Medical Company v. John D. Park and Sons (1911)
• United States v. Colgate & Company (1919)
• United States v. Park, Davis & Company (1960)
• Kiefer-Stuart Company v. Seagrams (1951)
• United States v. Arnold, Schwinn & Company (1967)
• Continental TV v. GTE Sylvania (1977)
• Montsanto v. Spray-Rite Service Co. (1984)

• FTC v. Consolidated Foods (1965)
• United States v. International Telephone and Telegraph (1969)

• Eastern Railroad Presidents Conference v. Noerr Motor Freight (1961)
• California Motor Transportation v. Trucking Unlimited (1972)
• Otter Tail Power v. United States (1973)

United States v. Addyson Pipe & Steel Company (1898) (Return to Case Index)

• Naked vs. Ancillary price fixing.
• Six steel pipe firms controlling well over 50% of the market in the west and midwest United States colluded to raise prices in the pipe market.
• Since the reduction of competition was not simply a secondary result of cartel formed but a different purpose but rather since the cartel was formed solely to reduce competition this cartel was declared illegal. "Naked" price fixing is per se illegal without any need to look at reasonableness. However, when reduction of competition is a secondary result of a cartel or merger, then the test of reasonableness must be done.

United States v. Trenton Potteries (1927) (Return to Case Index)

• Naked vs. Ancillary price fixing.
• A group of firms comprising 82% of total sales of sanitary pottery in the United States conspired to fix prices.
• The cartel had argued that since the resale prices ordered by the cartel were reasonably low, that the cartel had engaged in a "reasonable" restraint of trade. The court decided that it is not the job of the court to decide what price levels are reasonable and that any naked restraint of trade such as this is illegal even if the firms don't fully exert their market power.

Appalachian Coals v. United States (1933) (Return to Case Index)

• Naked vs. Ancillary price fixing.
• A group of 137 small coal producers in the Appalachian area joined together to form a cooperative distribution company called Appalachian Coals. This joint production of these companies amounted to just under 12% of the total coal produced east of the Mississippi River. In their specific area their production amounts to over 54% of total production in their region.
• First, since the stated goal of the holding company is to increase efficiency in the coal industry through economies of scale in sales, distribution, storage, advertising, and R&D, the court must decide on the reasonableness of this ancillary restraint of trade rather than being able to declare a naked restraint of trade illegal per se. The court decided since the cooperative would have very little market power in the relevant resale markets it would not cause an unreasonable restraint of trade. Further, a number of small firms joining together should not be viewed differently than a single large firm controlling the same quantity of the market.

United States v. Socony-Vacuum Oil Company (1940) (Return to Case Index)

• Naked vs. Ancillary price fixing.
• A group of 27 firms was charged with conspiring to fix prices in the wholesale gasoline market. This group of firms controlled about 83% of the total market in the Midwestern United States.
• The cartel argued that the cartel was necessary to prevent "ruinous competition" that resulted from oversupply in the Texas oil fields. The court found this claim of over competition irrelevant. The claim that volatile prices harm an industry is not an excuse to engage in naked price fixing.

Goldfarb v. Virginia State Bar (1975) (Return to Case Index)

• Naked vs. Ancillary price fixing.
• The Fairfax County Bar published minimum fee requirements for member lawyers to be in good standing.
• The court found that law is a type of trade or commerce that is covered by the Sherman Act. Therefore, lawyers and other professional organizations are not exempt from the law's provisions.

Arizona v. Maricopa County Medical Society (1982) (Return to Case Index)

• Naked vs. Ancillary price fixing.
• In an early form of HMO, 70% of the physicians in Maricopa County joined a medical society that mandated maximum prices that the doctors could charge for certain services.
• The court decided that maximum prices were akin to minimum prices as far as price fixing was concerned and ruled the combination illegal. The dissenting judges argued that the combination provided customers with an insurance choice unavailable in a true free market and that the efficiencies of the HMO structure outweighed the anti-competitive effects.

NCAA v. Board of Regents of the University of Oklahoma (1984) (Return to Case Index)

• Naked vs. Ancillary price fixing.
• Since the advent of televised college football, the NCAA has had specific rules regulating how member schools could sell television rights to networks including specific rules on pricing and number of appearances.
• While the court did recognize that some activities such as sports scheduling, rules interpretations, etc. can only be accomplished jointly, the NCAA's exemption from the Sherman Act on efficiency grounds did not extend to the negotiation of television contracts. Thus, while the NCAA can require member schools to abide by certain rules, it cannot force member schools to abide by set of mandates concerning the sale of television rights.

United States v. Container Corporation of America (1969) (Return to Case Index)

• Exchange of price information.
• A group of firms comprising 90% of corrugated container sales in the Southeastern United States agreed to exchange price information; however, there was no agreement to set prices based on this information.
• The court decided that this exchange of information served to stabilize prices, albeit in a downward direction. While some price competition remained, generally this exchange of information led competitors to match a previous price discouraging downward price movements. Dissenting justices argued that easy entry into this market made it impractical for any firm to earn monopoly profits even with the exchange of pricing information. They charge that the government did not prove that price levels would have dropped at a faster rate in the absence of pricing information exchange.

United States v. United States Gypsum Company (1978) (Return to Case Index)

• Exchange of price information.
• Gypsum board manufacturers exchanged information on contract prices. This industry is highly concentrated with an eight-firm concentration ratio of 94% and a 15-firm concentration ratio of 100%.
• The court held that the exchange of price information served to reduce competition and stabilize prices. Further, the court worried that exchange of price information may lead to the development of concerted price-fixing which is illegal per se.
• Examine secrecy in auctions and bidding. How does exchange of bidding information affect the price paid?

Interstate Circuit v. United States (1939) (Return to Case Index)

• Conscious Parallelism and Shared Monopoly
• Interstate Circuit and Texas Consolidated Theatres own and operate numerous movie theaters in western Texas accounting for about 3/4 of all theater revenue in their area. The manager of the motion picture theaters demanded of all movie distributors that as part of the contract to show pictures that second-run, "A" films never be shown at a price of less than 25 cents, and that "A" films at first-run theaters charging more than 40 cents never be shown as part of a double-feature. Prior to this order most second-run theaters charged 15 cents for a movie and first-run theaters commonly showed double-features for weak pictures or on weak nights.
• Since Interstate gave the independent movie distributors a chance to simultaneously to raise prices, this is interpreted as a conspiracy in restraint of trade. By coercing the distributors to require all movie houses to agree to Interstate's pricing schedule, Interstate effectively gains complete market power in their area. Further, it was clear that the distributors in the area had agreed to share the monopoly on first-run films since it could not have been mere coincidence that all eight major distributors simultaneously decided to independently require new rules on exhibitors.

Theatre Enterprises v. Paramount Film Distribution Corporation (1954) (Return to Case Index)

• Conscious Parallelism and Shared Monopoly
• Paramount Pictures distributed films on an exclusive engagement basis meaning that only one movie house in an area would receive first-run pictures. Theatre Enterprises maintained that Paramount and other distributors unfairly restricted first-run pictures to only be shown in downtown Baltimore theaters rather than in Theater Enterprises' suburban theaters.
• The court concluded that distributors are within their rights to grant exclusive engagements. Given that the distributors wish to distribute films in this manner, it only makes sense that these films go to high-traffic theaters in the downtown area. So, although all distributors granted exclusive first-runs to only downtown theaters, this was due to sound economic decision making rather than conspiracy (or conscious parallelism) on the part of the distributors.

Du Pont v. FTC and Ethyl Corporation v. FTC (1984) (Return to Case Index)

• Conscious Parallelism and Shared Monopoly
• Du Pont and Ethyl were among four producers manufacturing lead-based anti-knock compounds for gasoline controlling 38.4% and 33.5% of the market respectively. In 1973, the EPA mandated a ban on use of lead-based fuel in new cars. During the period following this announcement, Du Pont and Ethyl engaged in very little price competition while earning profits far above a normal rate of return. On this basis, the FTC charged each firm with conspiracy to restrain trade and engaging in conscious parallelism.
• The court decided that in the face of an inevitably declining market, Du Pont and Ethyl had no reason to engage in price-based competition. Further, the court recognized many types of non-price competition engaged in by each company including education, preferential buying arrangements, consulting services, etc. which constituted effective competition. Evidence was shown that many customers switched suppliers between Ethyl and Du Pont despite the lack of price competition. Again the Supreme affirmed that showing that competing firms engaged in similar behaviors does not prove that conspiracy was involved.

United States v. Sealy (1967) (Return to Case Index)

• Horizontal Restriction on Distribution
• Sealy contracted with 30 independent manufacturers to produce bedding in different areas of the United States. Each manufacturer was ordered given a exclusive territory outside of which they were prohibited to sell Sealy licenced products and inside of which they were protected from other licensees.
• The court held that this arrangement was illegal because it reduced competition between the licensees and because the original arrangement included a provision for maintaining resale prices. The court did maintain that there may be cases where granting exclusive territories may be legal under the Sherman Act.
• This is a very shaky decision by the Supreme Court. Consider the free-rider problem of a local manufacturer under licence to Sealy that engages in extensive advertising for its Sealy licenced products. Now a rival Sealy licensee comes into this manufacturer's territory to take advantage of the advertising done by its competitor.

United States v. Topco Associates (1972) (Return to Case Index)

• Horizontal Restriction on Distribution
• Topco was a buying cooperative formed by 25 small and medium sized grocery chains designed to give these smaller stores a chance to have the purchasing power of the larger chains and the chance to offer a private-label brand for canned goods like the larger chains. The market share of grocery sales held by Topco members ranges from 1.5% to 16%. Topco members agreed to exclusive territories in which member stores could sell Topco products.
• Although Topco argued that this cooperation increased competition by allowing small grocers to better compete with larger grocers, the court declared that the exclusive territory agreements of the Topco cooperative reduced competition between the smaller grocers and was therefore illegal.
• Several economic questions can be posed here. First, how does a cooperative differ from a large parent corporation? (Why would non-competition between Erickson and Kowalski's be worse than a group of Safeway stores not competing with each other?) Second, how would a parent monopolist want to set exclusive territories? Third, does Topco's argument that it increases competition by creating a worthy opponent to the large chains have any merit?

Jay Palmer, et al. v. BRG of Georgia (1990) (Return to Case Index)

• Horizontal Restriction on Distribution
• Prior to 1980, BRG and Harcourt Brace Jovanovich were the largest providers of Bar Review materials and courses in Georgia. In 1980, Harcourt agreed to stop competing with BRG in Georgia and made BRG the exclusive dealer of its materials in Georgia in exchange for a payment by BRG of a set amount per student as well as an agreement by BRG not to compete with Harcourt outside of Georgia. At the same time, BRG raised the price of its course from $150 to $400.
• Lower courts ruled that since Harcourt had no direct ability to influence the prices set by BRG following the agreement, the agreement could not be called price fixing. Furthermore, since BRG was given the entire market of Georgia, this was not an explicit division of territory since Harcourt was not allocated any territory in which the two companies previously competed. The Supreme Court correctly overturned the rulings of the lower courts since the agreement between BRG and Harcourt clearly served to reduce competition and raise prices even though the case didn't neatly pigeon hole into previous court decisions.

Northern Securities Company v. United States (1904) (Return to Case Index)

• Mergers of Competitors: Actual and Potential
• Great Northern Railway (owned by James J. Hill) and Northern Pacific Railway (owned by J. Piermont Morgan) both controlled railroads connecting Mpls./St. Paul and Duluth/Superior with Seattle and Portland. In 1901, these two companies merged essentially bringing all railroad traffic in the Northwest under the control of a single company.
• The court deemed that this merger clearly be "a combination in a restraint of trade" and is therefore illegal.

Standard Oil of New Jersey v. United States (1911) (Return to Case Index)

• Mergers of Competitors: Actual and Potential
• John Rockefeller, beginning in 1870, actively engaged in a series of mergers and acquisitions of petroleum companies that ultimately resulted in the Standard Oil Company controlling up to 90% of petroleum production, refining, distribution, and retailing in the United States.
• During this case the court, realizing that any merger or partnership has some restraint on trade, first advocated a "rule of reason" for anti-trust cases. Some activities such as price fixing are declared to be illegal per se (illegal no matter what.) Other activities, such as mergers and acquisitions are judged on a case-by-case basis depending on the intent and the effect of the activity. Since both the intent and effect of Standard Oil's actions were to monopolize the industry with the end result being monopolistic pricing, the court ordered Standard Oil to be broken up into smaller companies.

United States v. United States Steel Corporation (1920) (Return to Case Index)

• Mergers of Competitors: Actual and Potential
• U.S. Steel, through a combination or acquisitions and internal growth, became by far the largest steel company in the United States with up to 80-90% of the nation's steel production.
• The court, using the two-pronged rule of reason, decided that U.S. Steel had not violated the Sherman Act. First, they attributed it size to successful evolution rather than an attempt to the monopolize the industry. Secondly, they agreed that U.S. Steel had not attained monopoly and had not exerted its market power to the detriment of society.

Brown Shoe v. United States (1962) (Return to Case Index)

• Mergers of Competitors: Actual and Potential
• Brown Shoe, the nation's 4th largest shoe manufacturer with about 4% of total shoe production, proposed a merger with Kinney, the nation's largest family shoe retailer with about 1.2% of total national retail sales and 0.5% of national shoe production.
• The court decided that while nationwide neither company's manufacturing or retailing market shares would prevent a merger, in several smaller cities where both Brown and Kinney operated shoe stores, the merger would result in a substantial reduction in competition, and therefore the merger was declared illegal. The merger would lead to a lowering of competition in "an economically significant submarket," a significant term in future decisions.
• Because of about 30 cities where the combined market shares for Kinney and Brown exceeded 20% and 6 cities where the combined market share exceeded 40% a merger involving about 1000 stores is scuttled. This was a terrible decision.

United States v. Von's Grocery (1966) (Return to Case Index)

• Mergers of Competitors: Actual and Potential
• In 1960 Von's Grocery, the third-largest Los Angeles grocery chain comprising 27 stores, merged with Shopping Bag Stores, the sixth largest L.A. chain with 34 stores. This chain created the second-largest grocery chain in L.A. with 7.5% of the total market.
• Citing a increase in the concentration of market in L.A. (the number of single store owners dropped roughly 35% between 1950 and 1963,) the court ordered the breakup of the newly merged companies. Dissenting justices pointed out that technological factors such as the widening use of the automobile was chiefly responsible for the decline of the "mom-and-pop" grocer and that other measures of industry concentration, such as the 5-firm concentration ratio, actually decreased during this period.

FTC v. Proctor and Gamble (1967) (Return to Case Index)

• Mergers of Competitors: Actual and Potential
• Clorox was the largest manufacturer of household bleach in the United States with roughly 50% of the market. Procter and Gamble was a huge diversified manufacturer of household products but had not yet entered the bleach market. In 1957, Procter and Gamble acquired Clorox.
• The court ruled that while Clorox and Procter were not direct competitors, the sheer size of Procter and Gamble, the lack of technological barriers in the production of bleach, and Procter's role as a major producer of substitute and complimentary products for bleach, placed Procter as a major "potential" competitor in the bleach market. Procter's potential entry into the bleach market played a strong role in promoting real competition in the highly concentrated bleach market. Thus, the court ordered the dissolution of the merger.
• Examine how the potential entry of a strong competitor keeps market prices below that of monopoly even if only one firm is in the market.

Tasty Baking and Tastykake v. Ralston Purina and Continental Baking (1987) (Return to Case Index)

• Mergers of Competitors: Actual and Potential
• Continental Baking, bakers of the Hostess Twinkie and the Ding Dong, merged with Drake, the makers of the Ring Ding. Nationwide, Hostess is the largest snack-cake producer with about one-third of the market while Drake represents less than 5% of the market. However, in the Northeast, Drake represents nearly one-quarter of the market with market shares reaching nearly 50% in New York and Boston.
• The big question before the court was what to define as the appropriate market. If snack cakes compete directly against other types of snack foods or pastries, then the merger of the two big snack cake companies is insignificant because the new company would still only have a small piece of the relevant market. If the relevant market is defined as "snack cakes and pies" then the proposed merger significantly raises industry concentration. In addition, the relevant geographic area is also important since each company had widely varying market shares in different Northeastern cities. The court decided that, indeed, a specific "snack cake" market can be defined and that the market effects in major metropolitan areas should be examined. The court ordered the companies to halt the merger. (Note that in U.S. v. Continental Can and U.S. v. Philadelphia National Bank e court set market shares of 25% and 30% as benchmarks for when merging companies would have to actively prove that their merger would have no anti-competitive effects in order to complete the merger.)

United States v. ALCOA (1945) (Return to Case Index)

• Monopolization and the Dominant Firm
• Alcoa produced 90% of all virgin aluminum in the United States due to its early purchase of the patent rights to the process to converting bauxite ore into aluminum. Alcoa had been found guilty of a conspiracy to monopolize the industry in 1912, but it had refrained from such activities over the next 25 years.
• The court followed several arguments. First, the court considered whether recycled aluminum should be considered a substitute for virgin aluminum which would reduce Alcoa's market share from 90% where they would be considered a true monopoly to 60% where they may or may not be a monopoly or even 33% where they would definitely not be considered a monopoly. Next, the court realized that there was a difference between Alcoa having actively sought a monopoly position and Alcoa ending up with a monopoly through superior management and R&D. The court decided that although Alcoa did not actively pursue an industry monopoly, they did clearly end up in a position where they could engage in monopolistic behavior. Thus, Alcoa was found guilty of violating the Sherman act.

United States v. United Shoe Machinery (1953) (Return to Case Index)

• Monopolization and the Dominant Firm
• Although the shoe manufacturing industry is a highly competitive industry, the production of 85-90% of shoe manufacturing equipment is concentrated in the hands of a single firm, United Shoe Machinery. United Show Machinery exercised its monopoly in the more complex machines by only leasing machines and never allowing their machines to be sold.
• Again, as in the Alcoa decision, although United Shoe did not necessarily engage in practices that monopolized the market, the court found that the monopoly in the market was not economically inevitable, and since United Shoe did definitely possess market power, they were found guilty of restraining trade in violation of the Sherman Act. Since United Shoes' leasing policy exaggerated United Shoes' monopoly position, the court ordered that any machine that the company leases must also be made available for sale (at comparable prices.)
• Does requiring leased machines to be available for purchase raise or lower economic welfare? An economic analysis suggests that in the case of durable good monopolists, the exclusive leasing policy allows the monopolist to fully capture monopoly profits while requiring sale of the durable good lowers monopoly profits and increases societal welfare. Under extreme conditions, the durable good monopolists may entirely lose the ability to capture monopoly profits. This possibility is known as the "Coase Conjecture" and is named for law professor and Nobel Laureate, Ronald Coase.

United States v. Du Pont (1956) (Return to Case Index)

• Monopolization and the Dominant Firm
• During the relevant period, Du Pont controlled 75% of the cellophane market but less than 20% of the market for "flexible packaging materials."
• The court examined the cross elasticity of demand for cellophane and decided that there were sufficient substitutes for cellophane so Du Pont did not possess monopoly power in the cellophane market. Dissenting justices argued that large changes in the price cellophane did not affect the price of competing materials. (Of course there is nothing said about how these declines in price affect competing materials' demands.)

Berkey Photo v. Eastman Kodak (1979) (Return to Case Index)

• Monopolization and the Dominant Firm
• Prior to 1954 Kodak included a processing charge in the cost of film that it sold customers. This naked tie-in between film and processing was declared illegal dropping Kodak's market share of film processing from 96% in 1954 to 10% in 1976. Kodak's share of the paper market dropped from 94% to 60%. By 1976 it also controlled roughly 65% of the small, instant camera market and 85% of the color film market. In 1972, Kodak introduced the Pocket Instamatic along with a specially designed film for this camera. Since competitors such as Berkey Photo were given no advanced warning of Kodak's introduction, Kodak was given "flying start" in the sale of cameras, film, and film developing.
• The court decided that Kodak had no obligation to provide competitors with information on their product. A firm that engages in R&D and the risk of introducing a new product has the right to profit from their invention. Invention and development is an entirely legal method of acquiring a monopoly.

United States v. Du Pont (1957) (Return to Case Index)

• Vertical Integration
• In 1919 Du Pont purchased a 23% interest in General Motor corporation. Over time Du Pont became a major supplier of paint finishes and fabric to General Motors supplying two-thirds of G.M.'s need for finishes and half of their need for fabrics. The question raised was whether Du Pont captured General Motors' business on a competitive basis or as a result of its substantial financial stake in the company.
• The court ruled that it was clear that Du Pont used its financial stake in General Motors to pry open General Motors' fabric and paint market and to entrench itself as the primary supplier of these products in violation of the Clayton Act. The dissenting justices argued that the court had unfairly focused only on two markets where Du Pont held a commanding portion of G.M.'s market ignoring many other markets where Du Pont products were not chosen by the company. Many examples show that despite the large financial stake, Du Pont faced vigorous competition for many G.M. contracts. They further argue that as substantial investors in G.M., Du Pont would not want to encourage G.M. to supply an inferior product. Finally, they show that even if Du Pont's vertical arrangement with G.M. did effectively guarantee Du Pont exclusive control over G.M.'s purchases, General Motors represented such a small portion of the total market for these products as to be insignificant.
• Did the court make the right decision?

Brown Shoe v. United States (1962) (Return to Case Index)

• Vertical Integration
• Brown, primarily a show manufacturer, proposed to acquire Kinney, primarily a shoe retailer.
• The court ruled that Brown's purchase of Kinney would place all other shoe manufacturers at a competitive disadvantage to Brown when it comes to Kinney's purchase of shoe for sale in their retail stores. The resulting reduction in competition was ruled a violation of the Clayton Act.

Ford Motor v. United States (1972) (Return to Case Index)

• Vertical Integration
• Ford Motor, who until 1961 manufactured no spark plugs, acquired Autolite's spark plug manufacturing division leaving only one independent manufacturer of sparkplugs. (Champion controlled 50% of the market, AC Delco 35%, and Autolite 15%.)
• The court decided that this merger served to lessen competition in the market and therefore violated Section 7 of the Celler-Kefauver Antimerger Act. Ford's role as a potential major competitor served to moderate prices in this oligopolistic industry.
• In perhaps the stupidest thing said in a court decision the court clearly said that cost-benefit analysis cannot be used in anti-trust cases because this method is beyond the comprehension of the court system. Therefore, anticompetitive mergers, even if they end up having beneficial net effects on the economy, are declared illegal.

Standard Fashion v. Magrane-Houston Company (1922) (Return to Case Index)

• Exclusive Dealing
• Standard Fashions manufactured dress and children's clothing patterns which were sold in retail outlets such as the department stores owned by Magrane-Houston. Standard's contract with Magrane specifically called upon Magrane to sell no other competing brands of patterns in their store as a condition of the contract. While 52,000 independent companies manufactured patterns, 40% of the pattern market was controlled by Standard.
• The court affirmed that the result of this contract would be to reduce competition especially in smaller towns where only one store in town might carry dress patterns. In addition, this type of arrangement raised significant barriers to entry for small firms who may not be able to supply a full line of fashion patterns. Those designers supplying only a handful of patterns would be effectively denied the market in an industry dominated with this type of contract.

Tampa Electric Company v. Nashfield Coal (1961) (Return to Case Index)

• Exclusive Dealing
• Tampa Electric signed a 20-year contract with Nashville Coal to supply fuel for their generating station. Nashville later advised Tampa that the contract violated the anti-trust statutes and canceled the contract forcing Tampa to secure coal elsewhere at a substantially increased cost.
• The court said that while Tampa's contract with Nashfield called for Tampa to purchase all of their coal from Nashfield, an exclusive dealing arrangement, contracts of this type were illegal only if they foreclosed a significant portion of the market to competition. While the generating stations of Tampa Electric were responsible for nearly half of the coal consumed in Florida in a given year, the court decided that the relevant market for coal in which Tampa was competing was really the entire Appalachian and Eastern United States area, leaving Tampa Electric with less than 1% of the relevant market. Since neither the seller nor the buyer was in a dominant market position, this exclusive dealing contract was found to have no anti-competitive effects.

Henry v. A. B. Dick (1912) (Return to Case Index)

• Tying
• A.B. Dick, the manufacturer of mimeograph duplicating machines, required purchasers of their copiers to also buy any paper and ink used in the machine from A.B. Dick as well.
• The court decided (wisely) that it really makes no difference whether a monopolist makes its money through the sale of a patented product or through of non-patented products to use with the patented item. They recognized that barring this tied sale would simply transfer the monopoly power from the ink and paper market to the machine market with little effect on the public. Dissenting justices argued against allowing this practice by reductio ad absurdum without realizing that no person would purchase a patented product under such ridiculous restrictions.
• This decision, although economically correct, was extremely unpopular, and led, in part, to the passage of the Clayton Act in 1914 which specifically prohibited tied sales.

International Salt v. United States (1947) (Return to Case Index)

• Tying
• International Salt manufactured salt dispensing equipment which it leased to food processors. As a condition of the lease agreement, International required the lessees to purchase all salt and salt tablets from International.
• The court held that International's patent on the dispensing equipment did not give it the right to restrain competition in salt market. International countered that its machines required a certain quality of salt to prevent excessive wear on its machines. The court responded that it was within International's rights to set quality requirements on its lessees but that it could not force its customers to purchase a particular brand-name.
• See Heaton Peninsular v. Eureka Specialty for an excellent problem showing that, contrary to the court's claim that tying arrangements are almost always harmful, tying agreements can serve to increase societal welfare.

Northern Pacific Railway v. United States (1958) (Return to Case Index)

• Tying
• As part of the government's initial land grants to the railroads in the 1870's, Northern Pacific was granted the ownership of a 20-40 mile wide strip of land along it railways in the Northwestern United States. Northern Pacific offered these lands for sale but under the stipulation that the new landowner must use Northern Pacific for any transportation and shipping needs.
• The court reasoned that tying arrangements are only illegal when the firm has significant market power over the tying good since its could not otherwise compel customers to agree to the tying arrangement. In addition, the firm must pose a significant threat to competition in the tied good market as well. While the dissenting justices ruled that Northern Pacific could never have had a commanding position in the entire real estate market, the majority ruled that this tying arrangement did serve to reduce competition.

United States v. Loew's (1962) (Return to Case Index)

• Tying
• Loew's, a major distributor of motion pictures to television stations, required the block booking of movies such that any station purchasing the rights to broadcast a high quality film had to also purchase the rights to a lower quality film at the same time.
• The court held that Loew's did hold significant market power in the distribution of motion pictures, and therefore his arrangement served to reduce competition in this market.
• The real question is why block booking would realize more revenue for Loew's than simply selling each movie individually.

Siegel v. Chicken Delight (1971) (Return to Case Index)

• Tying
• Chicken Delight, a fast-food company, gave the rights to its recipes, brand-names, and trademarks at no cost to its franchisees in exchange for an agreement by which the franchisees agreed to purchase a certain amount of paper products, cooking equipment, and prepared food items from Chicken Delight.
• Chicken Delight argued that this tying arrangement should be exempt from the normal anti-trust statutes since these agreements, besides allowing Chicken Delight to collect revenue, also served to enforce quality standards on its franchisees. The court responded that there were ways to collect revenue and ensure quality that did not violate anti-trust law, and thereby denied Chicken Delight's claim.
• Chicken Delight's argument has strong merits, and this is another example of a case where society may actually benefit from the imposition of a tied sale.

Jefferson Parish Hospital District #2 v. Hyde (1984) (Return to Case Index)

• Tying
• Jefferson required all surgery patients using their hospital to also use the anesthesiologists employed by the hospital. No other anesthesiologists are authorized to administer anesthesia at the hospital.
• The court began by establishing that Jefferson did have some degree of market power in the relevant market, the first requirement of declaring a tied arrangement illegal. Next they further defined that a tied sale requires that the customer may wish to purchase either the tying good or the tied good independently of the other. (Thus, Ford is within its rights to require customers to purchase both a car body and engine together.) Since patients only require anesthesia services in conjunction with other hospital services, these two goods cannot be considered independent goods, and therefore the arrangement is considered legal since Jefferson is not using its market power in one area to gain market power in an unrelated market. The court also considered that having a single service did confer significant efficiency advantages on the hospital in terms of lower administration costs. Thus, this tying arrangement was ruled legal.

Fashion Originators' Guild of America v. FTC (1941) (Return to Case Index)

• Boycotts and refusals to deal
• The Fashion Originator's Guild represents a large number of fashion designers and manufacturers who organized in an attempt to reduce "style piracy." This group, whose combined membership exercised significant market control (38-60% of the relevant market,) registered particular designs and called upon its members to boycott and refuse to sell merchandise to retail stores that sold imitations of these registered designs.
• The court easily found against the Guild since the Guild's own declared purpose was to relieve its members from competition from cheaper imitations of its own products. The case hinged upon the fact that in the United States, garment designs are cannot be protected from unauthorized imitation by copyrights, trademarks, or patents in the same way books or product inventions are.

Lorain Journal Company v. United States (1951) (Return to Case Index)

• Boycotts and refusals to deal
• The Lorain Journal, the only daily newspaper published in Lorain, Ohio, refused to accept advertising from customers who also used radio advertising on the local station.
• The court interpreted the Journal's behavior as "bold, relentless, and predatory commercial behavior" whose only possible goal would be to drive its competitor out of business. The newspaper's right to chose potential advertisers is tempered by its responsibility to not engage in behavior designed to drive out potential competition.

Klor's v. Broadway-Hale (1959) (Return to Case Index)

• Boycotts and refusals to deal
• Klor's, a small appliance retailer, argued that Broadway-Hale had conspired with its suppliers to limit the number of products that these wholesalers would supply to Klor's or to only make certain items available to Klor's at unfavorable terms.
• The court sided with Klor's saying that this boycott clear reduce competition by making Klor's unable to compete with Broadway-Hale on even terms. Specifically, the court stated that despite Kor..'s small size, and the fact that the bankruptcy of Kor.'s would not affect the market, this refusal to deal was still illegal as the court needs to defend the country from "creeping monopoly" just as it does from "galloping monopoly."

Aspen Skiing Company v. Aspen Highlands Skiing Corporation (1985) (Return to Case Index)

• Boycotts and refusals to deal
• The Aspen area has 4 ski resorts within close proximity of the main town. While originally developed by three independent companies, by 1977 three of the mountains were owned by the Aspen Skiing Company with only Aspen Highlands remaining independent. Traditionally skiers could purchase a multi-day, multi-area pass that allowed them to ski at any of the four mountains in the region; however, with the consolidation of ownership by the Aspen Skiing Company, Aspen Skiing refused to let Aspen Highlands participate in any multi-day/multi-area ticket deals with Aspen Skiing.
• While the court ruled that Aspen Skiing could not be generally be forced to enter into cooperative agreements with its competitors, the court found that Aspen Highlands had made legitimate proposals concerning join lift tickets to Aspen Skiing and that Aspen Skiing had no reason to turn these offers down besides pure predation. The right to select with whom one deals is not an unqualified right. In this case the court ruled that Aspen Company's refusal to fairly negotiate with Aspen Highlands can be considered anti-competitive, denying Aspen Highlands a right to compete for multi-day travelers and denying skiers the choice of skiing all four mountains.
• Question: Would Aspen Skiing have been found guilty of exclusionary practices if they had not engaged in cooperative behavior in the past? Would the court have condemned Aspen Skiing as harshly if they had refused to sign a brand new deal as opposed to their refusal to continue a historical practice? "The reasoning of the court seems to put a higher burden on a monopoly that once dealt with a rival than one that never did."- Carlton and Perloff.

FTC v. Indiana Federation of Dentists (1986) (Return to Case Index)

• Boycotts and refusals to deal
• The Indiana Federation of Dentists was a small group of dentists that managed to enlist a significant percentage of practicing dentists around Fort Wayne and Lafayette. The group enjoined its members to not submit dental X-rays at the request of insurance companies in an effort to block insurers' efforts to implement new benefits plans.
• It is certainly conceivable that a customer may choose one dentist over another depending on the ease of filing insurance claims, and therefore the court ruled that this policy by the Federation denied dentists the right to compete with other dentists based on their handling of insurers.

Northeastern Telephone v. AT&T (1981) (Return to Case Index)

• Predatory Pricing and price discrimination
• Northeastern Telephone, a small supplier of telephone terminal equipment, accused AT&T, a giant twenty times its size in the terminal equipment market alone, of predatory pricing.
• The court defined predatory pricing as sacrificing current revenue in order to drive a competitor from the market to gain increase market power in the future. They also defined a benchmark for predatory pricing as being any price below marginal cost. Since marginal cost is difficult to observe in the real world, average variable cost is accepted as a proxy for marginal cost by the court. The court stated that since Northeastern had presented no evidence of pricing by AT&T below marginal cost/average variable cost, AT&T could not be found guilty of predatory pricing. Northeastern countered that AT&T's sheer size would allowing it to absorb losses in one sector while making it up with profits in another area. The court responded that while AT&T's sheer size would allow it to engage in predatory pricing without fear of bankruptcy, AT&T would still be subject to potentially unrecoverable losses from these actions. So, while size is a necessary condition of predatory pricing to occur, it is not sufficient to prove a claim of predation.

Barry Wright Corporation v. ITT Grinnell (1983) (Return to Case Index)

• Predatory Pricing and price discrimination
• Grinnell was the sole manufacturer mechanical shock absorbers (called snubbers) for use in nuclear power plants. Barry Wright attempted to enter this market in 1977 with the aid of Pacific Scientific, the largest purchaser of snubbers. Upon learning of Barry Wright's entry into the market, Grinnell offered Pacific a substantial discount on snubbers in exchange for long-term contracts guaranteeing Grinnell a substantial portion of Pacific's business for the next several years. When Barry Wright was unable to meet Pacific's schedule for the production of snubbers, Pacific agreed to this contract with Grinnell resulting in Barry Wright's departure from the market.
• While it was true that Barry Wright's entry resulted in substantial discounting by Grinnell that ultimately led to Barry Wright's exiting the market, the court found that Grinnell's discounted price was still well above the price necessary to meet average variable costs and was therefore legal. The court specifically ruled that of course many instances of price-cutting harm competitors and that it did not want to "chill" pro-competitive price cutting by declaring that price-cutting may violate anti-trust laws.

Matsushita Electric v. Zenith Radio (1986) (Return to Case Index)

• Predatory Pricing and price discrimination
• Zenith argued that, from 1960 to 1985, a cartel of Japanese consumer electronics manufacturers conspired to sell their products in the United States at below cost in order to drive American manufacturers from the market. These predatory pricing schemes were funded by excess profits made in the cartelized Japanese market.
• While agreeing that Japanese firms did make large profits from their domestic sales (and engaging in activities in Japan that would not pass the scrutiny of American anti-trust laws,) the court found it unreasonable that a cartel of companies would be content to suffer losses for 25 years in order to attain a monopoly position that even after 25 years they were far from achieving. As in Northeastern v. AT&T, the ability to engage in predatory pricing does not equate to guilt.

Utah Pie v. Continental Baking (1967) (Return to Case Index)

• Price discrimination
• Utah Pie, a small, locally owned baker in Salt Lake City, filed suit against its three major competitors in the rapidly expanding frozen pie market, Continental Baking, Pet Milk, and Carnation. While Utah Pie only operated in the Salt Lake City area, the other three firms had nationwide operations. The three national companies charged lower wholesale prices for their pies in the Salt Lake City area than in other areas of the country and often charged prices below cost.
• The court ruled that this type of price discrimination was anticompetitive with the intent to drive Utah Pie from the market. Dissenting justices argued that the market structure in Salt Lake City following the actions of the three firms was more competitive than before their price wars.
• This is another terrible decision by the court. Basic oligopoly models would show that markets where four major competitors compete should have lower prices than markets where only three competitors exist. Price differentials between Salt Lake City and other markets are due to effective competition rather than anticompetitive behavior. The court would better ask why prices in other cities are so high rather than why prices in Utah are so low.

FTC v. Morton Salt (1948) (Return to Case Index)

• Price discrimination
• Morton offered discounts on sales to customers purchasing large quanities of salt charging $1.60 per case for the smallest orders and down to $1.35 per case for orders of more than 50,000 cases.
• The court argued while the discounts were potentially available to any customer, in actuality they were available only to a select few customers who could buy in that sort of quantity. The court stated that quantity discounts are only legal to the extent that quanity sales lower costs to the seller. The court also firm stated its intention to protect small businesses from the competition of giant firms.
• It is questionable to me whether quantity discounts truly reduce competition.

Standard Oil Company v. FTC (1951) (Return to Case Index)

• Special defenses for buyers and sellers

• Standard Oil sold gasoline to four large "jobbers" in the Detroit area at a price substantially below the price at which it sold its gasoline to regular retailers in the area. The difference in price was more than the cost differential to Standard Oil.
• Standard argued that it only charged a lower price to these jobbers in order to retain their business in the face of competition from other oil firms. The court granted that a firm may make price changes in order to meet competition for a major customer without simultaneously cutting its prices to all its other customers.

United States v. Borden Company (1962) (Return to Case Index)

• Special defenses for buyers and sellers
• Borden engaged in price discrimination in the sale of milk between the two large Chicago grocers, Jewel and A&P, and the numerous independent grocers in the area.
• Borden defended its discriminatory pricing with volumous analyses of the costs of providing milk to the average store in the two large chains versus the cost of providing milk to the average independent store. The court ruled that "proof by average" was an inadequate defense since it failed to recognize instances where the cost a providing milk to a single particular independent store could be far lower than the cost of providing milk a single chain store. Discrimination by store size may be acceptable, but discrimination by chain size is not.

Great Atlantic & Pacific Tea v. FTC (1979) (Return to Case Index)

• Special defenses for buyers and sellers
• Great Atlantic solicited bids from milk producers to provide an in-house milk brand for its A&P stores. Borden submitted the winning bid and offered to provide milk to A&P and a substantial discount over the price it charged to other firms. Great Atlantic accepted this offer. Great Atlantic was named in the suit because the Clayton Act declares it to be illegal for a firm to use its market power to secure a discriminatory price from a supplier.
• Since Borden was simply bidding for a contract, it could not possibly be guilty of illegal price discrimination. Borden was clearly acting to meet competition. Since Borden was not guilty of illegal price discrimination, Great Atlantic could not be guilty of securing a discriminatory price.

• Vertical price fixing and market division
• Dr. Miles sold patented drugs to wholesalers and retailers and set specific minimum wholesale and retail prices at which the drugs could be sold.
• The court ruled that resale price maintenance clearly reduced competition between retailers and between wholesalers and was therefore illegal.
• For the court's decision to be economically correct one must assume that competition exists in the wholesale and retail markets. Otherwise, one ends up with the classic double-marginalization problem as posed in Albrecht v. Herald.

United States v. Colgate & Company (1919) (Return to Case Index)

• Vertical price fixing and market division
• Colgate, a manufacturer of soap and toilet articles, required its dealers to maintain minimum resale prices or be subject to termination by Colgate.
• Weakening the decision made eight years earlier in Miles v. Park, the court affirmed that a firm cannot enforce minimum resale prices among its dealers. However, the court declared that a firm is legally entitled to refuse to do business with dealers who do not agree to their minimum resale prices.
• In the spirit of other anti-trust laws decisions such as Aspen Skiing v. Aspen Highlands, it would be reasonable to assume that later courts would decide that a firm's right to do business bears with it the responsibility to not engage in practices that damage competition. Therefore, later courts certainly would have found in favor of the government. In addition, the court's decision is economically unsound if Colgate had significant market power while the dealers operated in a competitive market.

United States v. Park, Davis & Company (1960) (Return to Case Index)

• Vertical price fixing and market division
• Park-Davis required its wholesalers and retailers to maintain specific retail and wholesale prices for its drugs. When several retailers and wholesalers began to violate these required prices, Park-Davis announced that it would suspend sales of drugs to any company violating the proscribed prices and in addition would suspend sales of drugs to any wholesalers who sold products to retailers who were violating the price maintenance agreements.
• The court said that Park-Davis's drafting of wholesalers into their battle to maintain prices among retailers went beyond the allowances of U.S. v Colgate, and therefore Park-Davis's price maintenance scheme was illegal. However, it is reasonably clear that the court was simply looking for some excuse to reverse the Colgate decision. Justice Stewart clearly stated in a concurring opinion that he simply considered the Colgate decision invalid. Three dissenting justices argued that the majority's decision effectively rendered Colgate obsolete and maintained that court precedent should be allowed to stand at all costs. The overturning of Colgate should be the duty of Congress rather than the Supreme Court.

Kiefer-Stuart Company v. Seagrams (1951) (Return to Case Index)

• Vertical price fixing and market division
• Seagrams and Calvert corporations conspired to set maximum resale prices to be abided by liquor wholesalers in Indiana including the Kiefer-Stuart Company. Seagrams and Calvert agreed to refuse to deal with wholesalers who did not agree to these maximum resale prices.
• Since Seagrams and Calbert had conspired to set prices (even maximum prices) they were in violation of the Sherman Act. The company's argued that Kiefer-Stuart and the other liquor wholesalers in the area had formed a cartel to raise wholesale prices and that the setting of maximum resale prices by Calbert and Seagrams was designed to counter this anti-competitve cartel. The court responded that collusion is not permissible even in order to combat cartelization on the part of other firms.
• It is not clear how the court would have ruled on the setting of maximum resale prices in the absence of collusion between Calbert and Seagrams.

United States v. Arnold, Schwinn & Company (1967) (Return to Case Index)

• Vertical price fixing and market division
• Schwinn, the nation's largest manufactuer of bicycles in the 1950's, sold and consigned bicycles through a series of wholesale distributors and licenced retailers. By their contracts with Schwinn, the wholesalers were limited in the geographical territories in which they could sell bicycles and were required sell bicycles only to licenced Schwinn dealers. Licenced dealers were permitted to sell other brands of cycles but had to give at least equal standing to Schwinn bicycles.
• The court ruled that if Schwinn sells its products to wholesalers, thereby parting with ownership and the accompanying risk of loss, it cannot require wholesalers to submit to restrictions on their sales such as territorial divisions or prohibition of selling to non-licenced dealers. In fact, the court went as far as to say that all franchise restrictions were per se illegal if title had passed from the franchiser tot he franchisee. However, if Schwinn were engage in the same sort of restrictions while maintaining ownership of the goods, that is selling goods on a consignment basis and allowing the wholesalers and retailer to return unsold products, then reasonable restrictions would be permissible. It would be the difference between vertical restraints and vertical integration. Justice Stewert in dissent argued that it was unclear how franchising through sales was more anticompetitive than franchising through consignment, and he advocated less strict rules on franchising by large firms.

Continental TV v. GTE Sylvania (1977) (Return to Case Index)

• Vertical price fixing and market division
• Sylvania sold all of its television sets through franchised dealers who were restricted to selling the product in the specific location franchised. Sylvania made no guarantees as to territorial exclusivity reserving the right to add new franchises or deny the move a of a franchise as it saw fit. Contintental, a disgruntled franchise of Sylvania, filed suit against these policies of Sylvania.
• First, the court found that the franchising arrangements of Sylvania fit squarely into the framework found to be per se illegal in United States v. Arnold, Schwinn & Company (1967). However, the court decided the review the decision in Schwinn on the basis that in previous court rulings the court had declared that per se directives on anti-trust actions were only to be issued in the case where the prohibitted action was clearly anticompetitive with no redeeming qualities. In the case of franchising, while intrabrand competition will be lowered by the type of actions taken by Sylvania, interbrand competition may be stimulated. With this in mind, the court reversed its per se ruling against franchising restrictions returning to a "rule of reason" in deciding these cases. In a concurring opinion, Justice Byron "Whizzer" White also advocated dropping the per se rules for vertical pricing arrangements also and not just for vertical sale arrangements.

Montsanto v. Spray-Rite Service Co. (1984) (Return to Case Index)

• Vertical price fixing and market division
• Monsanto sold herbicide through wholesalers who were encouraged to maintain a certain resale price and were required to undergo training from Monsanto about their products. Spray-Rite, a discounter known for cut-price selling, was terminated following complaints from other distributors about its pricing.
• The court reiterated the court's policies on manufacturer/distributor relations. First, Colgate generally gives the right to manufactuers to independently choose with whom to do business, allowing them, for example, to refuse to deal with wholesalers who do not sell their products at a proscribed price. Dr. Miles declares concerted action by producers in regards to pricing decision to be per se illegal. Sylvania declares concerted action by producers on non-price decisions to be subject to a rule of reason. The court here decided that it was evident that Spray-Rite was dropped in part due to pressure from other wholesalers, and therefore not a decision arrived at independently by Monsanto. Therefore, this action would be outside the strictures of Colgate and within the bounds of Dr. Miles, and therefore Monsanto's action was illegal and subject to treble damages under the Sherman Act.

FTC v. Consolidated Foods (1965) (Return to Case Index)

• Conglomerate mergers
• Consolidated Foods, a large food processor and wholesaler, acquired Gentry, a manufacturer of dehydrated onion and garlic. This industry was large duopolistic with Gentry controlling roughly 35% of the market and its leading competitor controlling another 55%.
• The court ruled that it was likely that Consolidated could use its market power in its other products in order to entice customers to also purchase its garlic and onion products in a reciprocal buying arrangement. This potential reciprocity, although not proven to have actually occurred, was enough to have the court decided that this merger had anti-competitive effects.

United States v. International Telephone and Telegraph (1969) (Return to Case Index)

• Conglomerate mergers
• ITT, a major industrial conglomerate, proposed to buy Hartford Insurance, one of the nation's largest private insurers.
• The government argued that ITT's acquisition of Hartford may lead to reciprocal arrangements between Hartford and customers of ITT's other products. ITT argued that insurance is too complicated a product to easily lend itself to reciprocal arrangements. Next, the government argued that Hartford's large capital reserves would give other subsidiaries to ITT access to funds at advantageous rates not available to other competitors. ITT argued that its draining Hartford's funds for other use by other divisions of the company would place Hartford at a disadvantage in the insurance business and that ITT's subsidiaries already had sufficient access to capital markets to meet any of their needs. The court found in favor of ITT on both of the points and allowed the merger to proceed. The stated that the Sherman Act calls on the court to prevent the erosion of competition not prevent the concentration of economic power.

Eastern Railroad Presidents Conference v. Noerr Motor Freight (1961) (Return to Case Index)

• Monopolization through abuse of government procedures
• A group of railroads joined together to lobby state and national legislatures to pass laws restricting truckers' ability to compete in the market.
• The court ruled that the Sherman Act did not go so far as to prohibit free speech and political allegiance giving competitors the right to band together in this manner. A reduction in competition that results from government actions cannot be considered illegal. However, the court did sound a warning that it would not tolerate competitors to use this decision as a sham to cover up actual anti-competitive behavior.

California Motor Transportation v. Trucking Unlimited (1972) (Return to Case Index)

• Monopolization through abuse of government procedures
• California Motor accused Trucking Unlimited of abusing their influence within the California government administrations relating to interstate trucking essentially denying California Motor access to the decision making bodies.
• The court ruled that while Eastern Railroad Presidents Conference v. Noerr Motor Freight (1961) did guarantee Trucking Unlimited the right to attempt to influence political behavior, Trucking Unlimited was using the Noerr defense as a sham to disguise true anti-competitive behavior. Trucking Unlimited could not use their power to attempt to bar California Motor from access to courts and other bodies administrating trucking. Therefore, the court ordered Trucking Unlimited to stand trial to decide if California Motor's allegations were substantiated.

Otter Tail Power v. United States (1973) (Return to Case Index)

• Monopolization through abuse of government procedures
• When faced with non-renewal of a supply contract by a city favoring a switch to a municipally-owned generating plant, Otter Tail, an electric utility serving small towns in Minnesota, South Dakota, and North Dakota, would file a lawsuit intended to halt the formation of the new municipal power plant. The delay and expense of the potential litigation often served to force these small towns into dropping their plans for a locally owned generating system.
• While granting that Otter Tail does have the right to excise the court system, the Supreme Court judged their activities to be designed specifically to prevent the formation of independent electricity producers. Otter Tail was prohibited from engaging in this type of anti-competitive behavior.