This appeal raises two issues of antitrust law. First, do a firm’s wholly owned subsidiary and the firm itself amount to a “single seller” under the Robinson-Patman Act? 15 U.S.C. § 13. Second, can a retailer’s lost profit, brought about by a
maximum
resale price fixing agreement between that retailer and its' supplier, amount to an “antitrust injury,” thereby giving that retañer “standing” to obtain treble damages?
Atlantic Richfield Co. v. USA Petroleum Co. (“ARCO”),
I
Background
From 1981 through 1990, Caribe BMW, Inc. (“Caribe”), through contracts with the German BMW manufacturer, Bayerische Motoren Werke Aktiengesellsehaft (“BMW AG”), bought BMW automobües from BMW AG in Germany, imported them into Puerto Rico, and sold them at retaü. In February 1991, Caribe (the appellant here) brought this lawsuit against (the appellees) BMW AG and BMW’s wholly owned North American subsidiary, BMW of North America, Inc. (“BMW NA”). Caribe’s complaint (actuaUy, its second amended complaint), with commendable simplicity, listed four counts.
The district court dismissed the complaint for two related reasons. First, it found that the complaint’s two antitrust counts “fail[ed] to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). Second, it noted that a forum selection clause in the contracts between Caribe and BMW AG provided for “exclusive jurisdiction” in “Germany” to resolve “disputes” about the “termination of’ or “rights and duties arising out of’ the agreement. It found this clause applicable to the remaining (non-antitrust) claims, and it dismissed those claims “for improper venue” or, in the alternative, “on grounds of
forum non conveniens.” Caribe BMW, Inc. v. Bayerische Motaren Werke Aktiengesellschaft,
When reviewing the dismissal of the antitrust claims we take the facts basically as stated in the complaint and make reasonable inferences that will help the plaintiff.
Garita Hotel Ltd. Partnership v. Ponce Fed. Bank, F.S.B.,
II
The Robinson-Patman Act Claim
The Robinson-Patman Act forbids “any person ”
to discriminate in price between different purchasers of commodities of like grade and quality ... where the effect of such discrimination may be ... to injure ... competition with any person who ... grants ... the ... discrimination, or with [that granting person’s] customers....
15 U.S.C. § 13(a). Caribe’s complaint alleges most of the essentials of a violation. It says that a
“person
” has “discriminate^] in price between different purchasers” (namely, Caribe and other retailers in competition with Caribe) of cars, with the effect that “competition with” that
person’s,
“customer” (namely, Caribe) is “injure[d].”
See FTC v. Morton Salt Co.,
For purposes of clarity, we shall refer in our explanation to hypothetical entities whom we shall call 1) the Manufacturer (M), 2) its wholly owned Distributor (D), 3) the Retailer (Rl) who buys from D, and 4) the Direct Buying Retailer (DBR), who buys directly from M and who resells in competition with Rl. The distribution arrangement looks like the following:
[[Image here]]
In our case, BMW AG holds the position of M; BMW NA, the position of D; Caribe, the position of DBR; and Caribe’s unspecified retail competitors, the position of Rl. The legal question, put in terms of the diagram, is whether or not M’s 100% ownership of D makes M and D, together, a “single seller,” say “MD.” If so, a single “person” (allegedly) “discriminates” in price.
We now return to the reasons for our affirmative answer, which are three. First, in 1984, after many of the above-cited “single seller” cases were decided, the Supreme Court decided
Copperweld Corp. v. Independence Tube Corp.,
a complete unity of interest. Their objectives are common, not disparate; their general corporate actions are guided or determined not by two separate corporate consciousnesses, but one.... [And] [t]hey share a common purpose whether or not the'parent keeps a tight rein over the subsidiary....
Id.
at 771,
economic, legal, or other considerations that lead corporate management to choose one structure over the other are not relevant tó whether the enterprise’s conduct seriously threatens competition.
Id.
at 772,
the coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of § 1 of the Sherman Act.
Id. at 771.
Although the Court spoke of Sherman Act § 1 and of “coordinated activity,” its reasoning applies here.
See
Areeda & Kaplow,
supra,
¶ 601(c), at 929. In essence, the Court saw an identity of economic interest between parent and wholly owned subsidiary
Second, there does not seem to be any special Robinson-Patman Act purpose that a case-specific “control” inquiry would further. To the contrary, one would not want a seller to be able to defeat the statute’s clear objectives by transforming unlawful, into lawful, price discrimination through the creation of a separately incorporated subsidiary “distributor” that sells to the disfavored customers, whether or not the parent retained “control” over the pricing decisions of the subsidiary. Suppose, for example, that M violates the Act by selling to one retailer (DBR) at $10 and another competing retailer (Rl) at $12. M should not be able to avoid the law simply by creating a wholly owned, but “independent” D, to whom it sells at $10, knowing that “independent” D will (say, for profit-maximizing reasons) “independently” resell to Rl at the same $12 price.
We are aware that this area of the law is filled with difficulty. For example, should Robinson-Patman Act liability attach in the example just given if (contrary to our assumption) the wholly owned distributor, D, really fulfills an important distribution function, necessary to supply Rl, but not needed in the case of sales to DBR, such that DBR “ought” to receive a lower price? Or, suppose M (perhaps as here) sets a higher price to direct buyers in order to discourage direct sales and thereby to encourage the creation of an independent distribution network? These problems arise, however, in part, because it is difficult to reconcile the Robinson-Patman Act’s strictures with traditional practices of corporations that seem to make sense from a practical viewpoint.
See, e.g., Texaco Inc. v. Hasbrouck,
For present purposes, however, we need only note that these same problems exist, in one form or another, regardless of our holding in this case. That is to say, a contrary holding would nonetheless produce the same problems wherever M does “control” the pricing policies of its wholly-owned subsidiary D (i.e., in most cases). And, in the-remaining cases (where wholly-owned D is somehow nonetheless “independent”), various other, related, Robinson-Patman Act problems would often arise if DBR complained about differences in price between M’s price to D and M’s price to DBR. See pp. 750-51, infra. Thus, we find nothing special in the Robinson-Patman Act context that militates against Copperweld’s reasoning or result.
Third, applying
Copperweld
avoids a potential anomaly. A majority of courts, using a Copperweld-type analysis, have held that a firm M’s sale of a good to a wholly owned subsidiary D is not a “sale” for Robinson-Patman Act purposes; rather, it is simply a transfer; and that is so whether D is, or D is not, somehow “independent” in reality.
See City of Mt. Pleasant v. Associated Elec. Coop., Inc.,
But, suppose we were to hold the contrary. Suppose that we were to hold that a wholly-owned subsidiary D and its owner M were
not
a “single seller” where D was somehow nonetheless “independent.” Then, an anomalous difficulty might well prevent DBR from bringing an action where M “transfers” to D at 10, D resells to Rl at 12, but M insists on charging DBR 14 (i.e., approximately the allegations before us). The doctrine just mentioned — in effect finding that M and D are a single entity for purposes of the transfer between them — would prevent DBR from complaining about the effect of the M-D “transfer.”
Cf. Hasbrouck,
Perhaps one could somehow avoid this anomaly in other ways, but it seems undesirable to invent epicycles in an already too complex area of the law. It is simpler to hold in parallel fashion that ownership alone makes a “single seller” of a firm and its wholly owned distributor, just as ownership alone eliminates the possibility of a Robinson-Patman Act “sale” between them.
We therefore find it appropriate to apply Copperweld’s reasoning outside Sherman Act § 1.
See, e.g., City of Mt. Pleasant,
We now turn to a second, independent reason the district court gave for concluding that the complaint did not adequately state a Robinson-Patman Act claim. The court correctly noted that if a seller makes its favorable prices and terms available to an otherwise disfavored cüstomer, that customer has no legal right to complain.
See, e.g., Bouldis v. U.S. Suzuki Motor Corp.,
despite Caribe’s remarkable success, BMW attempted to convert Caribe from being an importer-retailer purchasing directly from the factory to being a mere retail dealer purchasing from BMW N.A.
We do not believe, however, that one can draw from this statement the “availability” concession that the district court found. The complaint also says that
[ujnbeknownst to Caribe, and beginning by at least 1987, BMW began lowering its prices for BMWs sold to Caribe’s competitors and offering those competitors other economic advantages while maintaining its prices to Caribe at a discriminatorily high level and not making the other economic advantages available to Caribe on proportionately equal terms.
The emphasized language says that Caribe did not know that its competitors were receiving favored treatment. And, we do not see how ordinarily one could say that a seller has made favored treatment “available” to a disfavored customer if the disfavored customer
does not know
about the favored treatment.
See, e.g., Alterman Foods, Inc. v. F.T.C.,
Caribe also argues that the favored treatment, as a practical matter, was not “available” because BMW AG insisted that it give up various advantages of its importer’s contract in order to obtain it. We cannot tell from the complaint, however, just what those advantages were and how they related to the practical “availability” of the favorable treatment given other retailers. Thus, we cannot say, at this time, whether or not Caribe will be able to prove that the favorable price and terms, as a practical matter, were not available. At this stage, however, Caribe has sufficiently alleged that they were not.
Our conclusion is that Caribe’s complaint states a valid Robinson-Patman Act claim, in respect to price discrimination under Robinson-Patman Act § 2(a), and for similar reasons, under the Robinson-Patman Act sections that deal with payments for services, furnishing services, and brokerage payments. 15 U.S.C. § 13(b), (d)-(e). Although Caribe’s pleadings regarding these other Robinson-Patman Act sections are rather sparse, they are sufficient to give BMW AG and BMW NA notice of the substance of Caribe’s complaint. Caribe also claimed that BMW NA violated § 2(f), which forbids knowingly inducing or receiving a discrimination in price. 15 U.S.C. § 13(f). In light of our holding that BMW NA is not a separate “person,” however, that portion of the complaint must be dismissed.
Ill
The Sherman Act
Count Two of the Complaint says that
BMW has for years imposed as a secret condition of Caribe’s contracts an agreement or understanding that Caribe charge its customers prices set by BMW.... More specifically, BMW threatened to terminate Caribe’s contracts unless Caribe agreed not to raise its margins (i.e., and thus its retail prices) above levels fixed and set by BMW, and Caribe reluctantly agreed.
This complaint sets forth a claim that BMW and Caribe agreed to fix “maximum” resale prices. The Supreme Court has held that Sherman Act § 1 forbids this kind of agreement.
See Albrecht v. Herald Co.,
The district court nonetheless dismissed the complaint in light of Clayton Act § 4’s requirement that the injury must result from an action that the antitrust laws forbid. The courts have held that this requirement means the injury itself must be a special “antitrust injury,” which is to say that it must amount to “the
type”
of harm “the antitrust laws were intended to prevent,” and it must flow “from
that which
makes [the] defendants’ acts unlawful.”
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
As the district court pointed out, in
ARCO
the Supreme Court considered the anticom-petitive possibilities that had earlier led the Court to find maximum resále price agreements unlawful. The Supreme Court referred to three. First, the “maximum” resale price agreement might be, in reality, a disguised “minimum” resale price agreement, in which case the agreement would threaten the very kinds of harm that led the Court, in
Dr. Miles Medical Co. v. John D. Park & Sons Co.,
The Supreme Court went on to hold that the ARCO plaintiffs had not suffered “antitrust injury.” But it noted, and we note, that, unlike Caribe, the ARCO plaintiffs were not dealers who themselves had entered into (or been forced to enter into) such agreements; rather they were the competitors of those dealers. They had claimed that the agreements had helped the ARCO dealers (who entered into the agreements) obtain more sales, thereby leaving them,- the competitors of the ARCO dealers, with fewer ■ sales for themselves. The Supreme Court held that, whatever else might be wrong with the plaintiffs’ assertion, it did not allege harm of the type that Albrecht sought to prevent. That kind of harm would have taken the form of fewer ARCO dealers, or fewer sales for the dealers who had entered into the agreements (because those customers wanting higher prices and extra services could not get them), not more ARCO dealer sales. The Supreme Court then wrote that the plaintiffs, being rival dealers, were
benefited rather than harmed if [ARCO’s] pricing policies restricted ARCO sales to a few large dealers or prevented [ARCO’s] dealers from offering services desired by consumers such as credit card sales.
Id.
495 - U.S. at 336-37,
lowers prices but maintains them above predatory levels, the business lost by rivals cannot be viewed as an “anticompeti-tive”, consequence of the claimed violation.
Id.
at'337,
In this case, Caribe is not in the same position as the ARCO plaintiffs, for Caribe is the very firm that the alleged maximum resale price fixing agreement forced to keep its price below the level it preferred to set. At least in theory, if customers would have preferred a higher price and consequently better product quality or greater service, the 'agreement forced Caribe to provide less of what they wanted; the agreement thereby might have led to lower Caribe profits. And, at least in theory, if the agreement helped other, larger BMW dealers, Caribe is the firm that would have suffered. Thus, Caribe’s complaint here alleges antitrust harm of the “type” that Clayton Act § 4 authorizes it to assert. ARCO supports, it does not deny, Caribe’s standing.
We recognize that
Albrecht
has proved a controversial case. That is, in part, because it seems to outlaw not only anticompetitive uses of maximum price fixing, but also pro-competitive uses as well, namely, use of a
maximum
resale price agreement that protects consumers from the exercise of a retailer’s monopoly power.
See-, e.g.,
8 Phillip E. Areeda
Antitrust Law
¶ 1636 (1989). And insofar as Caribe’s claim, of “lost profits” refers to “losses” that occurred because the agreement prevented Caribe from raising prices above the competitive level, it is at
We recognize that one might also wonder, as did the district court, how Caribe could have been injured
both
by a Robinson-Pat-man Act violation and by a maximum resale price agreement. How could it have suffered lost customers attracted by the
lower
prices of retailers who bought cheaply from BMW NA and also have suffered lost profits because it could not
increase
its prices? One might answer this question, however, by inferring from the complaint that Caribe has two different kinds of customers. Some want to pay the lowest possible prices; others would pay more to receive special services that Caribe would offer only if it could charge higher prices. At least in principle, possibilities of this sort are not outlandish. And, it seems to us that Caribe is entitled to have a court draw these inferences at this complaint stage of the proceeding.
Hospital Bldg. Co. v. Trustees of Rex Hospital,
We conclude that the district court should not have dismissed count II of the complaint.
IV
Puerto Rico Antitrust Claims
Caribe asserted claims under Puerto Rico’s antitrust law that parallel its federal antitrust claims. As the parties seem to agree, courts interpret Puerto Rico’s laws as essentially embodying the jurisprudence relevant to the parallel federal law. For that reason we reinstate the Commonwealth antitrust claims to the same extent that we have reinstated the federal claims.
Cf. R.W. Int’l Corp. v. Welch Food, Inc.,
V
The Contract Claims and the Act 75 Claim
Our antitrust count decisions require the district court to reconsider its remaining dismissals, of Caribe’s breach of contact claims and its Act 75 claim. The district court dismissed those counts because of a forum selection clause in the Caribe contracts, which says
the exclusive jurisdiction for disputes concerning the ... termination of this agreement as well as all and any rights and duties arising out of this agreement is ... Germany.
The court did not decide, however, whether or not this clause covers antitrust counts (for it had dismissed those counts for failure to state a valid claim). We cannot tell from the wording of the clause alone whether it does, or does not, cover antitrust claims — whether such claims “concern” the “termination” of, or “rights and duties arising out of,” the “agreement.” And, it seems to us that the parties should have an opportunity to pursue that question further in the district court.
Compare Mitsubishi Motors,
The answer to this question, depending upon what it is, might add strength to (or weaken) plaintiff’s argument that the forum selection clause cannot apply to the Act 75 claim. It also could affect the arguments about the comparative “convenience” of Puerto Rico for a trial on the contract and Act 75 claims. Were it to turn out, for example, that an antitrust trial had to take place anyway in Puerto Rico, the compara
We do not mean to express any view, however, on the merits of these or other arguments (such as jurisdictional arguments) that the parties may make as the case proceeds further. We simply hold that the district court should not have dismissed the antitrust claims in the complaint. And, that holding, in turn, requires the court to reconsider its other dismissals.
The judgment of the district court is vacated and the case is remanded for further proceedings.
So ordered.
