703 F.3d 1004
7th Cir.2012Background
- Class action under Sherman Act §1 dismissed on merits on per se theory before trial; plaintiffs appealed seeking reinstatement of per se theory.
- Defendants Noranda and Falconbridge merged into Xstrata Canada; production of sulfuric acid tied to environmental and market dynamics.
- Canadian companies converted sulfur dioxide to sulfuric acid and sought U.S. market retention; domestic distributors were enlisted to distribute Canadian acid.
- Shutdown agreements: U.S. producers agreed to curb production in exchange for compensation, allegedly raising U.S. acid prices.
- Exclusive distribution territories and a 1998 joint venture with DuPont coordinated output and lowered U.S. acid prices; plaintiffs challenged these as per se violations.
- Court held that the proper framework is rule of reason, not per se, due to potential procompetitive effects and novel context of the conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether shutdown agreements fall within per se price fixing | Plaintiffs contend shutdowns are classic price fixing per se | Defendants argue the conduct could be procompetitive or ancillary | Rule of reason applies; not per se illegal |
| Whether exclusive territories and the DuPont joint venture are per se or under rule of reason | Exclusive territories and JV facilitate entry and may be procompetitive | Coordination may be ancillary to legitimate venture purposes | Rule of reason scrutiny; not per se violation |
| Whether discovery rule applies to antitrust statute of limitations | Injury discovery timing governs limitations | Discovery timing should not alter limitations | Discovery rule governs antitrust limitations; not time-barred by four-year rule in this context |
| Whether the district court’s procedural handling and reclassification of theory was correct | Trial should proceed under per se theory as originally sought | Judge can decide legal question of proper framework; not error to rule under rule of reason | Affirmed district court’s ruling on framework; disagreed on separate limitations point |
Key Cases Cited
- Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1 (1979) (rule of reason governs restraints, including other agreements that restrict competition)
- Texaco Inc. v. Dagher, 547 U.S. 1 (2006) (joint ventures coordinating price may be scrutinized under rule of reason)
- Polk Bros., Inc. v. Forest City Enterprises, Inc., 776 F.2d 185 (7th Cir.1985) (ancillary restraints to legitimate business ventures permissible under rule of reason)
- Socony-Vacuum Oil Co., 310 U.S. 150 (1940) (hot oil; per se illegality not absolute, context matters)
- BMI v. CBS, 441 U.S. 1 (1979) (per se vs. rule of reason; licensing as product-like value creation)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (per se rule limited; context matters for restraints affecting competition)
- Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977) (per se rules limited; scrutiny under rule of reason when procompetitive justifications exist)
- General Leaseways, Inc. v. National Truck Leasing Ass’n, 744 F.2d 588 (7th Cir.1984) (prima facie case under rule of reason requires substantial market power evidence)
- In re Copper Antitrust Litigation, 436 F.3d 782 (7th Cir.2006) (discovery rule applies to antitrust injury timing)