Antitrust Law Cases Outline
The two key federal laws in the area of antitrust are the Sherman Antitrust Act and the Clayton Act. The main federal agency overseeing this area is the Federal Trade Commission. Federal courts have interpreted these statutes and reviewed FTC actions when analyzing arguably anti-competitive practices. Below is an outline of key cases in antitrust law with links to the full text of virtually every case, provided free by Justia.
Scope of Antitrust Laws
The Sherman Act bans contracts, combinations, or conspiracies in restraint of trade, as well as any monopolization, attempted monopolization, or conspiracy or combination to monopolize. The Clayton Act addresses specific practices not clearly prohibited by the Sherman Act and authorizes parties to sue for triple damages if they have been harmed by violations of either law.
Standard Oil Co. of New Jersey v. U.S. 一 The Sherman Act should be construed in the light of reason. As so construed, it prohibits all contracts and combinations that amount to an unreasonable or undue restraint of trade in interstate commerce.
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc. 一 For plaintiffs in an antitrust action to recover treble damages on account of violations of Section 7 of the Clayton Act, they must prove an injury of the type that the antitrust laws were intended to prevent and that flows from that which makes the defendants’ acts unlawful. The injury must reflect the anti-competitive effect of either the violation or anti-competitive acts made possible by the violation.
Per Se Violations
Certain acts are almost always illegal under the Sherman Act because they are considered so harmful to competition. A business cannot raise a defense or justification for per se violations, such as arrangements by competitors to fix prices or divide markets.
U.S. v. Socony-Vacuum Oil Co., Inc. 一 Agreements to fix prices in interstate commerce are unlawful per se under the Sherman Act, and no showing of so-called competitive abuses or evils that the agreements were designed to eliminate or alleviate may be interposed as a defense.
Broadcast Music, Inc. v. CBS, Inc. 一 The issuance of blanket licenses by performance rights organizations does not constitute price fixing that is per se unlawful under the antitrust laws.
Catalano, Inc. v. Target Sales, Inc. 一 An agreement among competing wholesalers to refuse to sell unless the retailer makes payment in cash in advance or upon delivery is a form of price fixing and is plainly anti-competitive. Thus, it is conclusively presumed illegal without further examination under the rule of reason.
Arizona v. Maricopa County Medical Society 一 Horizontal agreements to fix maximum prices are on the same legal footing as agreements to fix minimum or uniform prices.
NCAA v. Board of Regents of University of Oklahoma 一 A per se rule was not applied to an NCAA television plan that constituted horizontal price-fixing and output limitation, even though these restraints normally would be illegal per se, since this case involved an industry in which horizontal restraints on competition are essential if the product is to be available at all. (However, the plan still violated Section 1 of the Sherman Act under the rule of reason.)
Texaco, Inc. v. Dagher 一 It is not per se illegal under Section 1 of the Sherman Act for a lawful, economically integrated joint venture to set the prices at which it sells its products.
U.S. v. Topco Associates, Inc. 一 A scheme of allocating territories to minimize competition at the retail level was found to be a horizontal restraint constituting a per se violation.
Palmer v. BRG of Georgia, Inc. 一 Agreements between competitors to allocate territories to minimize competition are illegal, regardless of whether the parties split a market within which they both do business or merely reserve one market for one and another for the other.
FTC v. Superior Court Trial Lawyers Ass’n 一 An agreement was not outside the coverage of the antitrust laws simply because its objective was the enactment of favorable legislation.
Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co. 一 A plaintiff seeking the application of the per se rule must present a threshold case that the challenged activity falls into a category likely to have predominantly anti-competitive effects.
JTC Petroleum Co. v. Piasa Motor Fuels, Inc. 一 The conditions are ripe for effective collusion in local markets with a limited number of competitors, selling a standardized service to local governments constrained to give their business to the lowest bidder, which makes it easy for colluding bidders to determine whether one of them is cheating on the agreement to divide markets.
The Rule of Reason and Rebuttable Presumptions
Courts analyze restraints that are not per se violations under the rule of reason, which acknowledges that a business practice may have both pro-competitive and anti-competitive effects. A court must determine whether the practice promotes or suppresses competition.
Chicago Board of Trade v. U.S. 一 The true test of legality is whether a restraint merely regulates and perhaps thereby promotes competition, or whether it may suppress or even destroy competition. To determine that question, a court must consider the facts peculiar to the business, its condition before and after the restraint was imposed, the nature of the restraint, and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, and the purpose or end sought to be attained are all relevant facts.
National Society of Professional Engineers v. U.S. 一 The rule of reason, under which the proper inquiry is whether the challenged agreement promotes or suppresses competition, does not support a defense based on the assumption that competition itself is unreasonable.
FTC v. Indiana Federation of Dentists 一 Without a countervailing pro-competitive virtue, a horizontal agreement among members of a professional organization to withhold from their customers a particular service that they desire cannot be sustained under the rule of reason.
California Dental Ass’n v. FTC 一 An abbreviated or “quick look” analysis is appropriate when an observer with even a rudimentary understanding of economics could conclude that the arrangements in question have an anti-competitive effect on customers and markets.
Polygram Holding, Inc v. FTC 一 If it is obvious that a restraint of trade likely impairs competition, based on economic learning and the experience of the market, the restraint is presumed unlawful. To avoid liability, the defendant must identify a reason why the restraint is unlikely to harm consumers or identify a competitive benefit that plausibly offsets the apparent or anticipated harm.
Realcomp II, Ltd. v. FTC 一 Market power and the anti-competitive nature of the restraint are sufficient to show the potential for anti-competitive effects under a rule of reason analysis. Once this showing has been made, the proponent of the restraint must offer pro-competitive justifications.
In re Sulfuric Acid Antitrust Litigation 一 A plaintiff who proves that the defendants got together and agreed to raise the price that he paid them for their products has made a prima facie case that the defendants’ behavior was unreasonable, even without proving market power.
Concerted Action
The prohibitions under Section 1 of the Sherman Act are limited to concerted action and do not cover unilateral acts by an individual or business. If there is no express agreement, circumstantial evidence may permit an inference of concerted action in some cases.
Interstate Circuit, Inc. v. U.S. 一 To establish an unlawful agreement to restrain commerce, the government can rely on inferences drawn from the course of conduct of the alleged conspirators.
Toys “R” Us, Inc. v. FTC 一 A retailer violated antitrust law when it acted as the coordinator of a horizontal agreement among a number of manufacturers, which took the form of a network of vertical agreements between the retailer and the individual manufacturers.
Matsushita Electrical Industrial Co., Ltd. v. Zenith Radio Corp. 一 To survive a motion for summary judgment, a plaintiff seeking damages for a violation of Section 1 of the Sherman Act must present evidence that tends to exclude the possibility that the alleged conspirators acted independently.
Bell Atlantic Corp. v. Twombly 一 Stating a claim under Section 1 of the Sherman Act requires a complaint with enough factual matter (taken as true) to suggest that an agreement was made. Asking for plausible grounds to infer an agreement calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of an illegal agreement.
In re Text Messaging Antitrust Litigation 一 While express collusion violates antitrust law, tacit collusion does not.
Exclusionary Conduct
While a business may obtain a monopoly through the strength of its products or outstanding innovation, a business may violate antitrust laws if it achieves or maintains a monopoly through exclusionary or predatory acts, such as tying, predatory pricing, or refusal to deal.
Lorain Journal Co. v. U.S. 一 A single newspaper, already enjoying a substantial monopoly in its area, violates the “attempt to monopolize” clause of Section 2 of the Sherman Act when it uses its monopoly to destroy threatened competition.
U.S. v. Aluminum Co. of America 一 “Exclusion” should not be interpreted as limited to maneuvers that are not honestly industrial but actuated solely by a desire to prevent competition.
U.S. v. E.I. du Pont de Nemours & Co. 一 The ultimate consideration in determining whether an alleged monopolist violates Section 2 of the Sherman Act is whether it controls prices and competition in the market for such part of trade or commerce as it is charged with monopolizing.
Aspen Skiing Co. v. Aspen Highlands Skiing Corp. 一 Although even a firm with monopoly power has no general duty to engage in a joint marketing program with a competitor, the absence of an unqualified duty to cooperate does not mean that every time that a firm declines to participate in a particular cooperative venture, that decision may not have evidentiary significance or may not give rise to liability in certain circumstances.
Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP 一 There are few exceptions from the proposition that there is no duty to aid competitors.
Eastman Kodak Co. v. Image Technical Services, Inc. 一 A defendant’s lack of market power in the primary equipment market did not preclude, as a matter of law, the possibility of market power in derivative aftermarkets.
U.S. v. Microsoft Corp. 一 The rule of reason, rather than per se analysis, should govern the legality of tying arrangements involving platform software products.
Brooke Group Ltd. v. Brown & Williamson Tobacco Corp. 一 A claim of primary-line competitive injury under the Robinson-Patman Act has the same general character as a predatory pricing claim under Section 2 of the Sherman Act. In either case, a plaintiff must prove that the prices at issue are below an appropriate measure of its rival’s costs, and the competitor had a reasonable prospect of recouping its investment in below-cost prices.
Eastern States Retail Lumber Dealers’ Ass’n v. U.S. 一 When, in this case, by concerted action, the names of wholesalers who were reported as having made sales to consumers were periodically reported to the other members of the associations, the conspiracy to accomplish that which was the natural consequence of such action could be readily inferred.
Fashion Originators’ Guild of America v. FTC 一 A practice short of a complete monopoly that tends to create a monopoly and deprive the public of the advantages from free competition in interstate trade offends the policy of the Sherman Act.
Klor’s, Inc. v. Broadway-Hale Stores, Inc. 一 A group boycott is not to be tolerated merely because the victim is only one merchant, whose business is so small that their destruction makes little difference to the economy.
U.S. v. VISA USA, Inc. 一 MasterCard and Visa violated Section 1 of the Sherman Act by enacting and enforcing exclusionary rules that prohibited their member banks from issuing American Express or Discover cards.
Ohio v. American Express Co. 一 Evidence of a price increase on one side of a two-sided transaction platform cannot by itself demonstrate an anti-competitive exercise of market power.
Pacific Bell Telephone Co. v. linkLine Communications, Inc. 一 When there is no duty to deal at the wholesale level and no predatory pricing at the retail level, a firm is not required to price both of these services in a manner that preserves its rivals’ profit margins.
Mergers and Acquisitions
Section 7 of the Clayton Act prohibits mergers and acquisitions when the effect may be substantially to lessen competition, or to tend to create a monopoly. Heightened concerns arise from horizontal mergers between direct competitors.
Brown Shoe Co., Inc. v. U.S. 一 A merger must be functionally viewed in the context of its particular industry. Factors to consider include whether the consolidation will take place in an industry that is fragmented rather than concentrated, whether the industry has seen a recent trend toward domination by a few leaders or has remained consistent in its distribution of market shares, whether the industry has experienced easy access to markets by suppliers and easy access to suppliers by buyers or has witnessed foreclosure of business, and whether the industry has witnessed the ready entry of new competition or the erection of barriers to prospective entrants.
U.S. v. Baker Hughes, Inc. 一 A defendant seeking to rebut a presumption of anti-competitive effect must show that the prima facie case inaccurately predicts the relevant transaction’s probable effect on future competition.
FTC v. H.J. Heinz Co. 一 When high market concentration levels are present, a court must undertake a rigorous analysis of the kinds of efficiencies being urged by the parties to ensure that those efficiencies represent more than mere speculation and promises about post-merger behavior.
U.S. v. H&R Block, Inc. 一 The relevant product market should ordinarily be defined as the smallest product market that will satisfy the hypothetical monopolist test.
Hospital Corp. of America v. FTC 一 When an economic approach is taken in a case under Section 7 of the Clayton Act, the ultimate issue is whether the challenged acquisition is likely to facilitate collusion.
FTC v. Staples, Inc. 一 The fact that a firm may be termed a competitor in the overall marketplace does not necessarily require that it be included in the relevant product market for antitrust purposes. Within a broad market, well-defined submarkets may exist that constitute product markets for antitrust purposes.
U.S. v. Waste Management, Inc. 一 Entry by potential competitors may be considered in appraising whether a merger will substantially lessen competition.
Vertical Restraints
Intrabrand restraints affect competition between sellers of the same supplier or brand, while interbrand restraints affect competition between competing brands. Examples of interbrand restraints include tying arrangements and exclusive dealing agreements.
Continental T.V., Inc. v. GTE Sylvania, Inc. 一 When anti-competitive effects are shown to result from particular vertical restrictions, they can be adequately policed under the rule of reason. (This case concerned only non-price vertical restrictions.)
Leegin Creative Leather Products, Inc. v. PSKS, Inc. 一 Vertical price restraints should be judged by the rule of reason.
Jefferson Parish Hospital District No. 2. v. Hyde 一 Tying arrangements need only be condemned if they restrain competition on the merits by forcing purchases that would not otherwise be made. A lack of price or quality competition does not create this type of forcing.
Illinois Tool Works, Inc. v. Independent Ink, Inc. 一 A patent does not necessarily confer market power on the patentee. Therefore, in any case involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product.
U.S. v. Microsoft Corp. 一 An integrated product is most reasonably understood as a product that combines functionalities (that may also be marketed separately and operated together) in a way that offers advantages unavailable if the functionalities are bought separately and combined by the purchaser.
Brantley v. NBC Universal, Inc. 一 A plaintiff bringing a rule of reason tying case cannot succeed in stating the third element of a Section 1 claim merely by alleging the existence of a tying arrangement, but instead must allege an actual adverse effect on competition caused by the tying arrangement.
McWane, Inc. v. FTC 一 Exclusive dealing arrangements are not per se unlawful, but they can run afoul of the antitrust laws when used by a dominant firm to maintain its monopoly. More specifically, an exclusive dealing arrangement can be harmful when it allows a monopolist to maintain its monopoly power by raising its rivals’ costs sufficiently to prevent them from growing into effective competitors.
This outline has been compiled by the Justia team for solely educational purposes and should not be treated as an independent source of legal authority or a summary of the current state of the law. Students should use this outline as a supplement rather than a substitute for course-specific outlines.
