Consolidated Gas Company of Florida, Inc. v. City Gas Company of Florida, a Florida Corporation

1262 Co. Gas Consolidated laws. antitrust of F.Supp. Fla., 665 Co. v. Gas Fla. of OF COMPANY GAS

CONSOLIDATED court panel A of (S.D.Fla.1987). 1493 Plaintiff-Appellee, INC., FLORIDA, Fla. v. Co. Gas Consolidated affirmed. of v. (11th Fla., F.2d Co. City Gas of FLORIDA, OF judges COMPANY CITY GAS the active of majority Cir.1989). A Corporation, A Florida ordered service active regular in Defendant-Appellant. appeals court by the reheard appeal be panel vacated This order banc. en 87-6108. No. v. Fla. Co. Gas opinion. Appeals, Court States United (11th Fla., F.2d Co. City Gas Circuit. Eleventh Cir.1989). 19, 1990. Sept. heard and the briefs Having considered banc, en in the case argument oral Perwin, Mi- E. Kenny, Scott J. James opinion panel’s reinstates now court Fla., for defen- Miami, Nachwalter, chael affirming the F.2d at 880 reported dant-appellant. court.** district judgment O’Donnell, T. Allen, III, Edward Philip A. AFFIRMED. Miami, Ragatz, Dunaj, Teresa J. William plaintiff-appellee. Fla., for concurring Judge, JOHNSON, Circuit Fla., ami- Walbolt, Tampa, H. Sylvia in which part dissenting in and part in Power. Florida curiae cus Judge, joins: KRAVITCH, Circuit Fla., Tallahassee, Harrold, H. William opinion the Court's in I concur While Service Public Florida curiae amicus refused Florida Company City Gas Com’n. Sher- 2 of the in violation deal D.C., for Washington, Atwood, R. James 2”), I (“section Act, 15 U.S.C.A. § man Light. & Power Florida curiae amicus the Court’s from to dissent constrained am R. McGib- O’Roark, James Dulaney L. be- agreement the territorial holding that Brennan, Atlan- Sutherland, & Asbill bon, Systems, Peoples and City Gas tween D.C., for amicus Washington, and ta, Ga. from section immune is not (“Peoples”) Inc. Carbide. Union curiae action doctrine. the state liability under FACTS

I. Background A. FAY, Judge, TJOFLAT, Chief Before of natural major distributor HATCHETT, is a JOHNSON, KRAVITCH, purchas- City Gas Florida. COX, EDMONDSON, gas in southern ANDERSON, Trans- Florida RONEY, gas from natural es Judges, MORGAN Circuit then City Gas (“FGT”).1 Company mission Judges.* Circuit Senior approximately distributes a network through CURIAM: PER 100,000 customers two are the Peoples City Gas pipes. appealed Florida Company City Gas Florida. utilities natural largest en- judgment dollar million a $4.76 gas business the natural entered Both district it after against tered received for and applied they 1960, when federal had violated City Gas found court. district judgment of * anee of Stanley F. Clark A. Judges Thomas Circuit agrees to af- judges Thus, seven majority of Sen- this decision. participate did Birch court. judgment of Morgan and Paul H. firm Judges R. Lewis Circuit ior Roney decision, participate elected transporting only pipeline operates the FGT 46(c). § U.S.C.A. to 28 pursuant Florida. into ** Kravitch, concurring in Judges Johnson affirm- concur dissenting part, part and (i.e., permits) provided from the Federal facilities allocations and the services ren- dered; (“FERC”) Regulatory providing cost such Energy Commission service and the value of such service to gas public; resell natural purchase and the ability utility of the improve [and] FGT.2 such service and facilities....” Id. at period competition After a brief may 366.041. The “require FPSC § customers, Peoples and City Gas entered repairs, improvements, additions, and ex- compete (“the agreement not to into an plant tensions to the equipment any and agreement”). territorial territorial public utility reasonably when necessary to provided party each with a ser- agreement promote the convenience and welfare of the not solicit area where the other would vice public_” Id. at 366.05. § City Peoples and sub- customers. Gas After expressly the Florida statute agreement mitted the territorial provided power the FPSC with the to au- Florida Public Service Commission thorize agreements territorial between elec- 9, 1960, (“FPSC”),3 and on November 366.04(2) tric utilities. provided: Section stating: an order FPSC entered “In the jurisdiction, exercise of its opinion agree- It is our that territorial power shall have over rural electric [FPSC] minimize, perhaps ments which will and cooperatives and municipal electric utilities eliminate, unnecessary and uneco- even following for the purposes: (d) ap- ... To duplication plant nomical and facilities prove agreements territorial between and invariably accompany expansion which among rural electric cooperatives, munici- already by competing into areas served utilities, pal electric and other electric utili- utility, definitely public are inter- ties under jurisdiction.” Id. encouraged ap- est and should be and 366.04(2)(West Supp.1989). The statute § this, proved by agency an such as nothing said agreements about territorial charged duty regulating with the among gas natural City utilities such as public public utilities in the interest. Peoples.5 and In Gas Supreme Florida Court held that the FPSC Florida Railroad and Public Utilities Com- implied authority chapter had 366 to (November 9, mission, Order No. 3051 approve or agreement forbid territorial 1960) “Order”]. [hereinafter Peoples City between and Gas. Chapter 366 of the Florida Statutes Inc., Peoples v. System, Co. 182 So.2d 366”) (“chapter empowers the FPSC “to (Fla.1965).6 regulate supervise public utility each respect to its rates and service and the B. History Procedural Fla. issuance and sale of its securities.” 1. District Court rates, fixing Stat.Ann. 366.04.4 § 23, 1983, is authorized to consider “the effi April FPSC On Consolidated filed its ciency, sufficiency, adequacy complaint action. The gas industry regulat- natural Florida is 5. Section 366.04 revised in 1989 expressly empowers ed the FERC and the Florida Public Service new statute the FPSC to level, ("FPSC"). At agreements Commission the federal approve territorial between natural regulates gas FERC the wellhead cost of natural gas utilities. See 1989 Fla.Sess.Law Serv. 89- (i.e., wholesaler) producer cost from the (West). 2§ price paid by retail distribu- level, tors such as Gas. At the state Co., Peoples had sued under the regulates charged by FPSC retail rates dis- agreement prevent territorial Gas from tributors such as Gas. Retail rates are selling Peoples service area. bottled through process determined known as a “rate agree- claimed that the territorial Gas's answer case.” ment was under state and federal antitrust void Co., City Gas 182 So.2d at 431. The laws. formerly the Florida 3. The FPSC was Railroad Supreme Court held that because the Florida and Public Utilities Commission. authority approve FPSC had the the territori- agreement agreement utility" al was not invalid "public 4. The statute defines as includ- distributors, ing The court did not not LP under Florida antitrust laws. but distributors. Fla.Stat.Ann. 366.02. reach the federal issues. Id. at 436. § through or maintains quires City Gas’s alleged complaint amended development or growth than other means monopo- attempt to constituted

actions products, superior consequence of sec- violation monopolization lize and acumen, historical accident. business dam- treble asked 2. Consolidated tion 384 U.S. Corp., v. Grinnell States United injunctive and 15 15 U.S.C.A. ages § under 1703-04, 1698, 16 563, 86 S.Ct. 26. Gas 15 U.S.C.A. § under relief Parker, (1966). In L.Ed.2d 778 restric- Consolidated’s counterclaimed pass- that in recognized Supreme Court Bel Aire easements and covenants tive in- Congress did not Act ing the Sherman competing from City Gas precluded ac- official or action state to restrain tend of 15 in violation customers Consolidated’s competi- by a restrain state tion directed 2,1, and 14. U.S.C.A. §§ 351, at 63 S.Ct. Parker, at 317 U.S. tion. nine-day bench held district court The 313. court deter The 1985. in October trial Liquor Dealers Retail violat agreement the territorial California mined Inc., Aluminum, 445 U.S. v. Ass’n Midcal City Gas’s de rejected 2 and section ed (1980),the 937, 233 63 L.Ed.2d 97, 100 S.Ct. approved FPSC that because fense doc that the Parker found Supreme-Court agreement was territorial agreement who restrain parties private applied trine liability under the antitrust exempt from Act Sherman in violation-of competition Brown, v. of Parker action doctrine state imple (1) challenged restraint 313, if 307, 351, 87 341, 63 S.Ct. 317 clearly articulated pursuant mented v.Co. (1943). Gas Consolidated L.Ed. 315 policy, expressed affirmatively state and (S.D.Fla. Co., F.Supp. 1493 City Gas supervised actively (2) policy.was 1987). 943. at 100 S.Ct. Id. at by the state. Rate Motor Carriers Opinion In Southern 2. Panel Confer 48, 105 States, 471 U.S. v. United ence it was argued that City Gas appeal, On Su (1985), the 85 L.Ed.2d S.Ct. the ter liability'for antitrust from immune applicability reaffirmed preme Court to deal refusal and the agreement ritorial par private test to two-pronged Midcal the state action with Consolidated immunity and action claims of state ties’ unanimously rejected panel The doctrine. but permits policy that that a state held affirmed arguments anticompetitive conduct compel does not chapter because held that panel The court. purposes clearly articulated may be agree territorial explicitly authorized Id., 471 U.S. Midcal. prong of first without utilities electric ments between at 1729. utilities, not did the statute mentioning gas the territorial favoring argues policy City Gas a state clearly articulate liabili- immune antitrust among gas utilities agreement agreements territorial Motor immunity and Southern under Midcal ty action state and, argues v. Consolidated Gas Co. Carriers. apply. not im- entitled (11th is not Cir. agreement 301-02 Co., F.2d territorial con- does not chapter 366 argu munity rejected Gas’s because 1989). panel The au- policy clearly state deci articulated Supreme Florida Court stitute ment the state chapter agreements Co., holding that thorizing such sion policy. such supervise agree actively territorial does impliedly authorized , suffi companies was among gas ments Policy State Clearly Articulated 1. doctrine. action the state invoke cient 303. Carriers, Id. at the United Motor In Southern groups of two rate sued States bureaus — ANALYSIS II. rates —for set jointly carriers private Southern the antitrust laws. violations (or corporation) violates person A 50, 105S.Ct. Carriers, 471 U.S. power in Motor monopoly (1) possesses he 2 when their submitted The rate bureaus (2) willfully ac- relevant market Co., public service commis- tors. 182 So.2d at 436. proposals rate This rejec- approval statute, interpreted by sions in each state the Florida involved, the four states courts, tion. Id. Of legisla- demonstrates Florida col- explicitly permitting statutes three had displace competition ture’s intent to with a 63, 105 S.Ct. at ratemaking. Id. at lective regulatory Chapter scheme. there- these statutes held that Court fore, prong satisfies the first of Midcal. of Midcal. prong satisfied the first Id. today Court holds that the Florida state, Mississippi, had no stat- The fourth Supreme opinion City Court Gas Co. is ratemaking. Mis- addressing ute collective irrelevant prong under the first of Midcal did, however, sissippi authorize statutes applicability because of federal anti- reg- the State Public Service Commission trust law is an issue of federal law. The prescribe just ulate common carriers to part; Court is correct in the issue of wheth- (citing and reasonable rates. Id. Miss.Code er Midcal is satisfied is one of federal law. 77-7-1, 221). Ann. The Court held that §§ content, however, The of the state law legislature’s made clear the this statute apply federal courts the Midcal by that rates should be determined intent test is determined under state law. See regulatory agency by rather than the mar- Anderson, Cotton States Mut. Ins. Co. v. at 105 at 1730. This ket. Id. S.Ct. 663, (11th Cir.1984). 749 F.2d 667 Accord- held, intent, the was sufficient to Court ingly, apply must Court the Midcal pass prong the first of Midcal. Id. at interpreted by test to the Florida statute as 64-65, 105 S.Ct. at 1730-31. the Florida courts. See Eau of acting pursuant to an private party A Claire, 8, 471 U.S. at 44-45 n. 105 S.Ct. anticompetitive regulatory program need (“Although n. 1719 8 the Wisconsin Su- “point specific, legislative detailed not, course, preme opinion Court’s does challenged for its conduct. authorization” question presented decide the here of the sovereign clearly long As as the state as city’s immunity under the antitrust federal displace competition par- in a intends to laws, question it is instructive on the of the structure, regulatory ticular field with a legislature’s enacting state statutes_” intent in test prong the first of the Midcal (emphasis original)). The satisfied. Supreme concludes that the Florida Court 64, at 1730. The 105 S.Ct. Court Id. should not have the last word on the Court requiring express statutory au- noted that interpretation chapter proper 366 and every agency action that an thorization of critique the district court’s of the endorses implement policy might take to Supreme analysis of the Florida Court’s flexibility agencies and con- diminish the Gas, Florida statute. Consolidated 880 govern- sequently their usefulness state (recounting at 303 district court’s F.2d ments. Id. chapter language). Be- analysis of 366’s case, chapter grants In the 366 Supreme Florida Court is the cause the powers regulate public the FPSC broad authority meaning chapter final on the utilities, including natural distributors. 366, critique. we should not endorse such a reg- 366.05 authorizes the FPSC to Section (“ States, '[sjtate F.2d at 667 Cotton repairs and extensions of facilities. ulate own right courts have a to construe their Claire, Town Hallie v. Eau See statutes,’ by are and federal courts bound 34, 42, 1713, 1718, 471 U.S. 105 S.Ct. (citation interpretation.” omit- that state (statute (1985) authorizing city L.Ed.2d 24 ted)). sewage and to deter- services logically the areas to be served would mine Supervision 2. Active conduct, and, anticompetitive result agreement also holds that the Court legislature must intend- have actively supervised the state. conduct). was not Supreme The Florida ed such prong supervision of Midcal chapter The active interpreted 366 to em- Court recogni- Supreme Court’s authorize stems from power the FPSC to territorial engage in private parties agreements distribu- tion that where between re- reviewed, even actually ties likely to they are conduct anticompetitive hos- regarding decisions peer-review than rather interests in their own act 101, 108 S.Ct. Id. at privileges. Burget, pital v. Patrick state. interests 1663.7 108 S.Ct. supervision active (1988). The L.Ed.2d that the hold I would In the doc- state action ensures prong the territorial actively supervised state particular ac- only the immunize will trine actually reviewed FPSC agreement. that, judg- parties private tivities it. approved agreement the territorial regulatory state, state further ment the au it had First, found the FPSC Patrick, Supreme policies. Id. reject the territorial accept or thority to satisfy the in order stated Court that because stated The Order agreement. the state requirement, supervision active purported to agreement the territorial .im chal- over control "ultimate exercise must authority order the FPSC’s pinge on Id. at conduct.” anticompetitive lenged equip plant and and extensions additions at 1663. Gas, the territori Peoples ment of prong of Mid- supervision The active without valid not be agreement could al state officials requires that test cal Second, the at 1. approval. Order FPSC’s particular to review and exercise agreement; territorial approved Order parties private anticompetitive acts agree territorial found FPSC to accord that fail disapprove those policy state’s with was consistent ment pro- such policy. Absent state with utility essential public for the procuring no realistic there supervision, gram of Accord Id. reasonable costs. services anticom- private party’s that a assurance the active satisfies FPSC’s Order ingly, policy, promotes state conduct petitive Midcal.8 supervision requirement party’s individual merely the rather than interests. III. CONCLUSION Id. scheme regulatory the Florida Because challenged the Patrick, plaintiff Midcal, believe prongs both satisfied hospital after process in peer-review holding that court erred that the district revoke his threatened to panel peer-review is not entitled agreement 97, territorial S.Ct. at Id. at 108 hospital' privileges. immunity. action state that the held Supreme Court The 1661. not entitled was process peer-review there because immunity action dissenting: state TJOFLAT, Judge, Chief Id. by the state. supervision active no rejected The Court at 1662. 108 S.Ct. I. INTRODUCTION the state arguments that defendants’ in- appears to blush, this ease At first process peer-review supervised actively of sec- application straightforward Division, volve State Health through the Act, U.S.C. § the Sherman Examiners, tion 2 of and the of Medical Board State utility,. City Gas gas (1988). A natural the defendants because judiciary state mo- Gas), apparent an (City Company state enti- any of these to show failed (Fla.1966). Florida son, So.2d judiciary was an Court found 7. decision the FPSC's Supreme ex- Court overturned no statute supervisor because inadequate changed privilége showing cir- judicial review no pressly provided for there was because terminations, promul- did not courts state and because when the FPSC cumstances merits for on the (FPSC privilege may,with- terminations review Id. at 339 gated the Order. Patrick, 486 U.S. policy. compliance with state proper only after modify approval draw ’ at 1664-65. showing of upon a hearing, and notice Second, circumstances). in 1972 changed validity of the has reviewed The FPSC approv- and then .reaffirmed FPSC rescinded subsequent occa- agreement two territorial Order agreement. FPSC the territorial al of First, an order entered FPSC sions. Accordingly, active the FPSC’s Nos. territori- approval of the withdrawing part itsof continuing. supervision is Systems, v. Ma- Inc. Peoples Gas agreement. al over, City gas change natural business in south wanted Gas to make this nopoly in the Florida, refused to sell so that Consolidated could itself enter the company, Gas gas to another Consolidated compete retail distribution business and (Consolidated), en- that wanted to Company City thought Gas. And Consolidated gas too. Consol- ter the natural business this, Gas should do not because under sections 4 and 16 brought idated suit competition necessarily benefit natu- Act, 15(a), 26 Clayton 15 U.S.C. §§ gas general, ral consumers in but because (1988),1 refused to claiming that Gas provided the most Gas economical 2 and thus re- deal in violation of section source of wholesale Consolidated. ordering City Gas to questing injunction Consolidated, According to under these cir- gas to supply wholesale natural Consolidat- cumstances, section 2 Sherman Act The district court held damages. ed and required City Gas to do what Consolidated granted the re- favor of Consolidated wanted. quested relief. Unbelievably enough, per- Consolidated case’s inspection, On closer suaded the district court that change. of cer- stripes begin to Because required fundamentally be should pecu- peculiarities factual of this tain case— change operation the nature of its and sell deempha- liarities that the district court wholesale natural so liability theories of un- sized—established compete against that Consolidated could To simply apply. do not der section in the retail distribution business. with, begin operates at the persuaded Consolidated also level of the natural retail distribution not, liability court that established theories of business; company does and never has, under section 2 mandated this result. operated at the wholesale level of that is, City sup- unbelievable, That Gas obtains business. What is even more Consol- region’s only ply court, from the wholesale persuaded sitting idated this has also Compa- Transmission supplier, Florida Gas banc, court, points. en on these same This (FGT), ny and then distributes that therefore, affirms the district court’s deci- and residential customers. commercial sion.2 operate only on that Gas has chosen respect, strongly all I dissent. With due level, natural rates —which are and its view, my In the district court’s decision is Public Service Commis- by set the Florida unsupported by established antitrust law. (FPSC) analysis a detailed based on sion Because the court did not take district ch. operation, see 1989 Fla.Stat. proper the fact that account of specifics 1332-1333—reflect infra selling in the natural was not business operation on the retail level. For of its wholesale, improp- gas the district court City Gas to enter possessed mo- erly concluded that business as well as retail distribution power in market for nopoly the relevant fundamentally change the business would 2. Based on that erro- purposes of section operation nature of its and thus struc- conclusion, court also neous the district Consolidated, its rate base. how- ture of pri- improperly applied to these facts ever, wanted Gas to alter the nature liability 2— mary under section theories operation and enter the wholesale Consolidated, doctrine” namely, “essential facilities gas business. more- relief, any Clayton of the United States Act authorize tive in court 1. These sections of against private parties, Sec- having jurisdiction actions under the antitrust laws. over private 4 authorizes actions for treble dam- damage by tion ages a violation of the loss or threatened laws_” provides pertinent part: “any per- in Id. § antitrust injured his business or son who shall be property by anything in the reason of forbidden adopted today, panel, have and this court 2. The may antitrust laws sue therefor....” 15 U.S.C. findings facts and conclu- the district court’s 15(a). private Section 16 authorizes actions § convenience, sake of sions of law. For the therefore, relief, injunctive provides pertinent for part: throughout this dissent I refer firm, "Any corporation, person, or associa- district court’s decision. injunc- shall be entitled to sue for and have tion demonstrate, of these I none tent test. As court’s The district test.” “intent and the liability here. provides a basis estab- formulas therefore, has no basis decision, Supreme Court I then discuss some recent law. lished antitrust relied on also lower court decisions effect cre- court Instead, district of these decisions None court. district under section liability rule of a new ated either. present case control the court, nor this court district Neither the the district prac- Next, that having considered the established however, has today, Having no established rule. basis of this court’s decision implications tical law, the district so, court could not I the district assume antitrust to do failed this new rule a new rule antitrust applied established court properly have up- VI, practical today’s and, court part if consider Even law present case. re- rule, part I would As of that rule. implications this new holds re- apply, impossible decision shows, court’s be the rule will verse required proceedings produce applied, will for further it can be mand and even if thor- though, a poli- In with the rule. are inconsistent by the results that prac- rule’s new For those laws. ough consideration the antitrust cies behind unavoidably to the leads implications Congress could not reasons, tical I conclude rule should be this new developed to be conclusion such a rule intended apply attempting today down. struck the court 2. Because under section circuit will rule, courts of rule, the district I also dem- upholds this nevertheless in fashion- difficulties face insurmountable failed to the district onstrate effective remedies. implementing ing and case. On properly apply it these diffi- can overcome courts Even if the basis, I vacate doubt, lead rule will culties, I remand case decision and would court’s flatly inconsistent will be results that I describe. proceedings as for further laws. the antitrust behind policies VII, up issue of I then part take points, these fundamental In addition demonstrating immunity, state-action court’s con- from the district dissent protects the doctrine in this immunity doc- the state-action clusion that Finally, I liability. conclude from antitrust Brown, 317 U.S. v. trine of Parker part in VIII. the dissent (1943), pro- did not 307, 87 L.Ed. S.Ct. antitrust liabili- from City conduct tect Gas’ II. BACKGROUND the district as well from ty. I dissent two retail distributors involves This case a 1960 territorial court’s conclusion Consolidated, gas in Florida. natural Peoples City and between Gas agreement case, gas entered in plaintiff Gas), retail dis- Gas, another (Peoples Inc. early and in 1960s business distribution ’ Florida, provided gas in natural tributor gas. LP Consolidated distribute decided to liability under section an alternate basis by or truck from gas LP rail received its it in its and stored own suppliers wholesale organized as follows: in This dissent transported the then Consolidated tanks. background II, the factual part I restate storage tanks to its cus- gas LP from III, I part demonstrate the case. In underground through a series tomers agreement with Peo- City Gas’ territorial Gas, in easements. pipes located liability. provides no ples Gas basis retail entered in this defendant prob- more fundamental then turn to gas an LP as in also gas business decision. district court’s lems with the 1960s, early In the company. for re- gas available became natural IV, court’s when the district part I criticize In began supply Florida, City Gas in sale possessed monop- City Gas conclusion gas differs well. Natural gas as part natural In relevant market. oly transportable it is gas in that from LP determining V, the formulas I discuss addition, unregu- In unlike pipeline. relied: liability on which gas, the Feder- of LP trade lated interstate in- facilities doctrine the essential Regulatory (FERC) Energy beyond al Commission control) event skyrocket- regulates transportation of wholesale ed world prices, including oil price gas through pipelines. gas. natural interstate LP early 1980s, however, Until the pipeline owns the interstate supplying gas FGT natural suppliers were not in much gas in In Florida. order to ac- shape. Although better regulation federal quire gas of natural for resale kept price wholesale rates of natural FGT, therefore, City gas low, Gas had to ob- relatively shortage national authorization, tain FERC which it did. gas severely natural limited availability City Gas also had to pipe build lateral By for resale. things began to connect the pipesystem that it used to change: gas a natural surplus developed. transport gas pipeline.3 LP to FGT’s result, As a LP distributors such as Consol- idated found themselves compete unable to September 1960, In City Gas also entered gas prices; with natural they were forced agreement into a territorial Peoples gas, to convert to natural process Gas, another gas supplier natural retail began early March 1982. agreement, Florida. Pursuant to this hand, On the companies other those such companies two determined which territories City Gas, as which had risked entering the agreed each would serve and not to com- gas business at a time when the pete with one in those another territories. future gas of natural relatively was un- companies requested, received, ap- certain, found position themselves FPSC, proval agreement by of this enjoy the benefits of their initiative. A charged by supervise which was statute to (the combination of historical accident rise utilities, regulate public see Fla.Stat. prices in oil as the result of events (1987).4 subsequent litigation ch. 366 world) (invest- Arab and business initiative companies, between the two the Florida ing trade) gas the natural resulted in Supreme upheld agreement Court companies economic benefits for such as consistent with state antitrust laws and City Gas. held that authority the FPSC had un- Statutes, chapter der the Florida February one month before Con- id., approve agreements. such See conversion, solidated undertook its Peoples Sys., Gas Co. v. 182 So.2d began to gas market its natural (Fla.1965). 435-36 Consolidated’s LP customers. These marketing efforts included When Gas entered the natural door-to-door so- business, licitations, price mailing campaigns, high- newspa- of natural gas, per er than that of LP As but both were advertisements. a result of these efforts, relatively signed low. That remained the case un- several customers (an Embargo til when the previously Arab Oil that Consolidated had served.5 part large-scale well-planned 3. The district court made much of the fact that was and bad— pipe competition FGT assumed the lateral costs. Given the effort to drive out all from gas state gas industry thereby grease uncertain natural market in the natural 1960s, however, 1269, that fact is of large, rumbling monopoly. wheels of its As the infra significance. gas suffered, little Because the natural good guys, mar- naturally Consolidated uncertain, City ket was limited and its future finding unwitting itself the weak and victim of large degree Gas still took of initiative and monopolist. the monstrous devoting assumed substantial risk in its re- unjusti- this characterization was gas sources to natural distribution. objectively, City fied. Viewed Gas’conduct was adopted that of rational business actor. It The statute been amended. See 1989 Fla. aggressive marketing campaign to increase its amended, (codified Laws ch. 89-292 as Fla.Stat. activity epitomizes compe- customer that base— 86, (1989)). ch. 366 See note for a discus- infra that the court tition but district labeled anticom- sion of amendment and its relevance to the petitive competitive because the conduct was a present case. the district court’s success. Consider character- put marketing spin City court The district an unwarranted on ization of Gas’ efforts. The dis- that, Adopting shortly its of these facts. trict court noted before undertak- characterization effort, motif, good-guys/bad-guys ing marketing expansion City the district court good guys City cast Consolidated as the met and considered and City Gas Gas’ Board of Directors acquiring guys. Everything simply as the bad that Gas did Consolidated—which was then 2, 1982, stating April that customers, responded City Gas these to serve

In order gas natural allo would need a Consolidated into pipeline Consolidated’s expanded purchase to from in order FERC cation service area.6 gas that Consol from FGT and to to nat convert undertook Consolidated ap FGT would have to reimburse idated 1982, 9, Consolidated March gas. On ural $250,000.00 cost of con for the proximately that requesting to FGT a letter “wrote suggested necting pipeline. to FGT’s FGT gas, providing it with natural begin FGT arrange to con instead Consolidated pipe 21, necessary May construct the City that FGT On pipesystem. to nect Gas’ v. Gas Co. 1982, applied to FERC line facilities.” Consolidated Consolidated (S.D. connection to 1493, approving its Co., allocation F.Supp. City Gas 21, 1982, City Gas pipeline. On June found, FGT’s FGT court Fla.1987). As the district justified in charac- was the district court Nor company gas consideration struggling LP —a because, terizing a victim as Consolidated anticompetitive conduct. hardly constitutes gas as a market attempting to enter the natural court stated: The district then distributor, City as a face Gas it had to retail pipeline City extensions solicitations Gas’ passages from the competitor. these Consider expan- ordinary simply business were opinion: court's rather, sions, components of basic but were gas deciding LP to natu- convert to from to sell strategy City to Consolidated force Gas' 1982, suddenly found gas in Consolidated ral supported, we is further conclusion out. This think, Gas, City competition with potential itself dupli- City had to by Gas fact giant grown in the south to be a had pipeline in portion Consolidated’s cate a area. Florida eighteen cus- Consolidated order to serve City recently signed. Yet if Gas had it tomers Consequently, was forced Consolidated ... agreement purchase expected to reach had to retain compete Gas order Consolidated, acquired would have it go see them or else its customers not have pipelines and would Consolidated’s gas service. economical Gas for more expense. action of Gas’ had incur notifying pipelines duplicating before Thus, that Consolidat- became crucial ... acquiring the of its interest Consolidated company a cost for as low to natural ed convert designed to to have been seems rates be to offer possible in order to able as price or at a low to sell force Consolidated City Gas competitive with those that were losing certainty cus- face resultant could offer. quickly as as and their tomers value added). City (emphasis F.Supp. at 1505-06 them. could serve foresight the initiative and took had the is, my these events characterization of This view, stage. early at an business the natural enter By Supreme stated in Court As the absurd. develop "growth [and] the result of as Corp., 384 U.S. v. United States Grinnell product, superior consequence of a aas ment 570-71, 16 L.Ed.2d 86 S.Ct. accident,” acumen, Grin historic [and] business (1966), the Sherman violates what nell, 384 U.S. at acquisition or maintenance Act is willful “the posi highly competitive in a found itself growth distinguished [monopoly] guilty. not feel Gas need For tion. that. superior consequence development as a or itself, having jump train failed And acumen, or historic accident." product, business sympathy. no claim can added.) City expan- (Emphasis successful holding circumstances By under these very type clearly the latter: the sion effort laws antitrust invoke the can Consolidated require City competi- development that growth defines Consolidated’s toGas underwrite as anti- the courts were characterize tion. If market, entry court, into every competitive effort businesses conduct today, embarked on affirmed through expand business ad- their undertook Before entirely unprecedented em- course. an barking, facilities, building we would soon vertising and entirely be clear we should competitive crisis. And sure- in a find ourselves law, City Gas has done under established argue not mean to ly court did the district nothing wrong. City legitimately to com- intended Gas because by triggered a lawsuit expansion business—which would effort pete Consolidated’s This Consolidated, prevent injunction seeking as- an of Consolidated’s in turn reduce value utility suddenly laying pipe ease- anti- certain City City conduct became from Gas’ Gas sets— competitive. an claimed ex- legitimately Consolidated of no I can over which think ments successful, granted that, Court right. State Circuit does competitive when conduct clusive injunction but then preliminary competi- adversely a less-successful affect Consolidated it, Appeal af- State Court company captures dissolved when one cola tor’s assets: dissolution, holding that Consolidat- market, cola higher another firmed percentage right easement. had no exclusive slips. ed company’s market share in the applica- City resulting to intervene Gas’ intervention and the petition filed a oppose in order Consol- proceedings tion delay in proceedings, Consolidated’s City allocation. requested Gas idated’s “severely “During business was hurt”: Consolidated’s LP questioned whether proceedings, City began course could operate system distribution providing service to seven of Consolidated’s required gas delivery natural pressures eight commercial customers and the bulk gas supply whether FGT’s natural and also of its residential customers.” Id. at 1510. adequate serve Consolidated as well was Presumably, City provision Gas’ of service 21, 1983, City Gas. On November as to Consolidated’s customers resulted from judge granted law Consol- administrative City marketing Gas’ efforts and the fact application, affirmed on idated’s and FERC (because of historical accident and its ruled, September 1984. FERC how- initiative) own business equipped ever, pay that FGT had to the connection expand natural to those process costs. The entire administrative court, however, customers. The district approximately twenty-eight lasted months. concluded these activities simply “were not City The district court found that Gas’ ordinary rather, expansions, business but proceedings de- intervention FERC components City were basic Gas’ strate- approxi- layed approval process gy to force Consolidated to sell out.” Id. mately year. According one to the district facts, at 1507.7 Based on these intervened, court, City if had not court found that “Consolidated was left process only have taken six to entire if alternative it was to [one] months, nine and Consolidated would have purchase remain business: of natu- temporary allocation within nine- received gas directly City ral Gas.” Id. at days filing application. its The dis- ty that, as a result of 1510.8 trict court further found again applied good- City passed Gas’ 7. The district court Board of Directors had met and guys/bad-guys City acquire characterization to Gas' in- a resolution to "the assets of Consolidat- proceedings. Company steps into the FERC Al- ed Gas and take whatever tervention thereto, City respect they though appropriate.” the district court held that Gas’ as deem facts, F.Supp. a violation Based intervention did not itself constitute on these the dis- suggested that the action trict court concluded of section City motives. was evidence of Gas’ bad This City pipeline Gas' solicitations and exten- "first, Consolidated was was so for two reasons: simply ordinary sions were not business ex- delay severely damaged by the which occurred rather, pansions, components but were basic intervention; and, as a direct result of Gas’ strategy to force Consolidated to second, City opposing Consol- Gas’ reason for supported, sell out. This conclusion is further application protect was to its own do- idated’s think, by we the fact that Gas had to F.Supp. at 1542. Neither the dis- main.” 665 duplicate portion pipeline of Consolidated’s court, else, any indicated trict nor one ever eighteen in order to serve the Consolidated process had committed an abuse of recently signed. customers it had Yet if intervening proceeding. On into the FERC purchase agree- expected Gas had to reach Gas, contrary, City along with some other inter- Consolidated, ment with it would have ac- legitimate vening gas suppliers, had con- quired pipelines and would not Consolidated’s relating requested allo- to Consolidated’s cerns expense. City have had to incur this Gas' business actor cation. a rational duplicating pipelines before action of strong “protect[ing] its own has a interest notifying Consolidated of its interest in ac- Thus, City nothing Gas did domain.” Id. quiring company seems to have been de- wrong intervening proceedings. If signed to sell at a low to force Consolidated request took for an allocation Consolidated’s certainty losing price or face the resultant expected, may longer than Consolidated quickly and their value as its customers fault is cer- harmed Consolidated but the City Gas could serve them. Gas, merely tainly not attributable to at 1507-08. Id. legitimate right petition in a exercised situation, began Faced with this way. Perhaps problem was that Consolidat- gas. convert to natural As the its effort to expectations, which district court seems ed’s deciding "In to convert district court stated: entirely adopted, unreasonable. to have were 1982, gas in Consolidat- from LP to natural potential competi- suddenly ed found itself in Gas, noted, grown shortly be a which had district court before un- tion with

8. As the effort, giant dertaking marketing expansion in south Florida area.” Id. at 1505. and 1272 AGREEMENT THE TERRITORIAL already III. had Consolidated and

City Gas regarding the negotiations into entered the district adopts today court They could purchases. such of possibility territorial holding Gas’ that court’s price acceptable at an however, not, arrive constituted Peoples Gas agreement with initially of- City Gas the transaction. for that disagree with I2. of section violation plus ten resale cost for sell fered to that basis. reverse holding and would five plus at cost and later therm9 per cents in provides Act 2 Sherman of Section rejected the Consolidated per therm. cents who shall person “[ejvery part: pertinent brought suit and unreasonable offers as or monopolize, tu attempt or monopolize, Act, Clayton 16 and of 4 under sections person any other conspire or combine claiming that 26, 15(a), U.S.C. 15 §§ any part of monopolize persons, or to deal a refusal constituted conduct among the several or commerce trade the Sherman 2 of of section in violation nations, shall be foreign States, or with Consol- agreed with court district Act. The 15 U.S.C. felony_” guilty of a deemed offered City Gas’ held and idated stated Supreme Court (1988). theAs §.2 consti- high, thus unreasonably prices were Corp., 384 v. Grinnell States United sec- of in violation 1698, 1704, deal 16 tuting refusal (1966): 2. tion 778 L.Ed.2d 2 of monopoly under § of The offense however, found, court also The district (1) elements: two Act has the Sherman gas at sold before never City Gas had monopoly power possession into entered it had Although wholesale. acqui- (2) the willful market relevant gas to to sell in 1965 contract as power of that or maintenance sition Gas, distributor, Florida retail another develop- growth or distinguished parties by abandoned contract superior aof consequence ment it. Aside under performed never City Gas acumen, historic ac- or product, business con- (and unperformed) isolated from that cident. entirely at the operated tract, .City Gas analyzed territorial court The district retail level. held standard agreement under City Gas vio- claimed Consolidated acquisition” a “willful it constituted by Act both the Sherman section lated prong. the second power under monopoly at un- gas to sell offering below, As I discuss constituted which reasonably high prices, this issue reached never have should possess section under to deal Gas did refusal place because first agreement relevant market. power a territorial monopoly into entering mo- Putting the III, I consider 1275-1283. part Peoples Gas. See infra moment, pro- it issue aside nopoly show agreement and territorial holding court erred liability in the no basis vides on the based under section liable City Gas VI, I then turn through parts IV case. agreement. territorial deal, demon- refusal purported for liabili- no basis of ac- provides strating that no cause provides 2 itself Section VII, I show that Finally part plain- Private plaintiff. either. ty private tion impo- 4 of justifies under bring conduct actions if Gas' such even tiffs pro- 2, City Act, Clayton U.S.C. liability § under section sition “any damages for immunity for treble an action state-action vides under is immune his business injured be who shall person Parker, U.S. at doctrine forbid- anything by reason property S.Ct. at 25-7.003(15). unit thermal A British Ann. regulations Code "Therm," the FPSC’s as defined required course, is, quantity of heat “the heating a unit of chapter "denote[s] pound water one temperature of (100,- raise thousand hundred equivalent to one value 25-7.003(14). Id. at degree Fahrenheit.” one Fla.Admin. 000) units.” thermal British

1273 den in the (1977) antitrust laws.”10 Before a L.Ed.2d 701 (emphasis original); see private plaintiff challenge monopo- can Contractors, Associated Gen. Inc. v. Cali list’s conduct under section 2 of the Sher- State Council Carpenters, 459 fornia Act, satisfy man it must 519, 539-40, 897, 909, 103 S.Ct. 74 requirements Clayton of section 4 of the (1983) L.Ed.2d 723 (refining Brunswick Act.11 test); Blue Shield McCready, v. 457 U.S. Although broadly worded, section 4 is 465, 476-78, 2540, 2546-48, 102 S.Ct. 73 interpreted courts have the section’s “in (1982) (same); L.Ed.2d 149 see also Car jured by language ... reason of” impos gill, Monfort, Inc., Inc. v. 104, 479 U.S. ing a requirement private causation on the 484, 491, 107 S.Ct. 93 L.Ed.2d 427 plaintiff. stated, As this court has (1986) (antitrust injury requirement ap plaintiff must show “a causal relationship plies in injunctive suits for relief under between the antitrust [alleged] violation Act).12 section 16 of Clayton injury and the Cable Hold [sustained].” Video, ings, Inc., Inc. v. Home 825 F.2d Although the injury analysis antitrust is 1559, (11th Cir.1987) (quoting Nation complex, somewhat I do not belabor it here. Indep. Exhibitors, al Theater Inc. v. Bue Consolidated has not satisfied Co., na Vista Distribution 602, 748 F.2d even the basic element of the causation denied, (11th Cir.1984), cert. 471 U.S. requirement respect to the territorial 1056, 2120, (1985)). S.Ct. L.Ed.2d 484 agreement: agreement simply not a satisfy To relationship” this “causal re material cause of injury. Consolidated’s quirement, plaintiff must show that the giving any Without apparent thought of,” Zenith violation is “a material cause requirement, causation Corp. Research, Inc., Radio v. Hazeltine court summarily concluded that the territo- 100, 114 9, 1562, 1571 395 U.S. n. 89 S.Ct. n. agreement rial acqui- constituted a “willful (1969), 23 L.Ed.2d 129 or “materially 9. monopoly power” sition ... of under the to,” Holdings, Cable contributed 825 F.2d of the Grinnell prong second standard injury. Beyond this obvious and, basis, imposed on that liability requirement, plaintiff prove must also Gas under section 2. Whether or not the “antitrust injury, say injury which is to agreement acquisi- constituted a “willful type the antitrust laws were intended standard,13 tion” under the Grinnell prevent and that flows from that which agreement satisfy also had to the causal makes defendants’ acts unlawful.” Bruns Bowl-O-Mat, Inc., Corp. wick v. Pueblo requirement connection of section 4. As I 477, 489, 690, 697, now, 429 U.S. 50 demonstrate it did not do so. Clayton provides attorneys, Section 16 of the Act also several United States spective in their re- firm, "[a]ny districts, person, corporation, or associa- under the direction of the General, injunc- Attorney tion entitled proceedings shall be to sue for and have to institute against damage equity prevent tive relief ... threatened loss or and restrain such viola- by a violation of the antitrust laws.” 15 U.S.C. tions. ... below, I § 26. As discuss at 1272- infra interpreted example, courts have section 16 as im- 12. In the Brunswick posing requirement plaintiff already proved a causation that is similar had that its loss "oc- convenience, purposes [conduct],” ‘by 4’s. For curred reason of the unlawful conduct, requirement refer under section as a material result of that but the applies but the discussion also plaintiff proved Consolidated's Court held that the had not injunctive request for relief under section 16 ‘"by the loss occurred reason of that which request Brunswick, the extent that its is based on the territo- made the unlawful.” [conduct] agreement. short, rial every U.S. at 97 S.Ct. at 697. In injury materially by proscribed caused conduct brings justify recovery the antitrust laws will The Government civil enforcement ac- Act, under those laws. tions under section 4 of the Sherman provides, pertinent part: U.S.C. § below, The several district courts of the United 13. As I discuss the district court was also jurisdiction target pre- attempting

States are invested off to fit this case into the acquisition” prong vent and restrain violations of sections 1 to 7 "willful of the Grinnell stan- title; duty part of the and it shall be the dard. See V. infra a nat- inevitably acquires almost in distributor as its injury, stated Consolidated’s area. given monopoly a distribution the economic loss ural complaint, was amended might agreement inability to enter the Although territorial its from followed that retail distribu- gas process aas this market have affected gas natural course, Consolidated, traced have that would of that its absence I doubt tor. Gas, City The district by Gas. City present situation. injury to conduct changed of con- specific forms two in its operating already considered company as the supply to (1) refusal its City Gas: acquired area, probably have duct current (2) Consolidated; and its to gas that monopoly service in over the natural Peoples Gas. agreement not, territorial City Gas had another area, if and liability under of issue Putting aside or have done so. With company would a deal would be to 2,14the refusal section agreement, Consol- the territorial without injury: Consolidated’s of cause material been in same have would still idated gas retail enter the could not Consolidated retail distribu- to enter the trying position: City gas; Gas of a supply without market the control of area under an tion market Consol- supply; a provide such to refused monopolist. a the mar- therefore, not enter idated, could was a agreement if the territorial Even a result. loss as economic suffered and ket acquisition of City of Gas’ cause material exists, how- causal connection No such have not it still would power, monopoly and the injury ever, Consolidated’s between Consolidated’s cause of a material been re- agreement That agreement. territorial monopoly of possession City injury: Gas’ City Gas and competition to between lates injury. cause Consolidated’s power did not of nat- Gas, distributors retail two Peoples City by how Rather, injury caused that was each agreement, to gas. Pursuant ural monopoly power. chose to exercise Gas given distribu- of a took control company had mo- course, City Gas the fact Of compete not to agreed area tion condition important an power nopoly was distribution company’s the other of control power That led case. underlying the whole result causal direct area.15 whole- a request Consolidated City Gas was that agreement, place City in the first from sale with- area in its operate distribution could or whether City the choice gave Peoples Gas. Given competition out place. in the second not sell seriously chal- competitor no other however, alone, did standing power, That of that distribution control City Gas’ lenged injure Consolidated. not may have ensured area, agreement pow- monopoly used its easily just as have monopoly power acquisition Gas’ hurt Consol- as help Consolidated er agree- without area. Even distribution about how decision Gas’ idated. company would single ment, a therefore, de- monopoly power, exercise what control over gained eventually have not Consolidated termined whether initial territory. After an City Gas’ became agreement, Thus, the territorial injured.16 single competition, period competitors at claim, agreement between an only a section raised 14. Consolidated allocate market structure level of the complaint same charging its amended competition. to minimize in order attempt monopo- territories constituted Gas’ conduct usually termed is action concerted Such section 2 of monopolization under lize restraint, in contradistinction presented "horizontal" Consolidated Sherman Act. levels of persons different Act, combinations of the Sherman under section 1 claim structure, e.g., manufacturers part the market distributors, attacking Gas’conduct § U.S.C. re- "vertical” are termed trade. The territori- conspiracy restraint straints. relevant to might been such agreement have al claim. require- 4’s causation respect, section 16.In liability under parallels elements agreement ment claimed 15. stated, monopoly courts 2. As section As the Court division. market was horizontal liability un- Assocs., provides no basis power alone Topco v. explained United States 2; rather, improper exercise of der 31 L.Ed.2d liability. imposition of justifies the (1972), division market a horizontal of Grinnell specifics cause of reflects the if it was a material of that even monopoly power, government was not a kind of a case: the acquisition of could make by proving Gas’ decision on a case that the material cause behind defendant had power improperly acquired monopoly power, or behind that how to exercise i.e., inju- whether or not the actually Consolidated’s defendant had decision’s result — used ry- anticompetitively injure Thus, competitor. government a must improper court’s treatment The district prove, under the of the Grin prong second in agreement this case of the territorial standard, only nell company that the resulted, view, my in from a failure to monopoly power anticompetitively acted in private a an grasp the distinction between general way. A showing a compa that the Clayton 4 of the titrust suit under section in ny engaged “the willful acquisition ... Act, challenges which conduct as violative Grinnell, monopoly power,” 384 at U.S. Act, 2 the Sherman and a of section 1704, 86 at satisfy S.Ct. would brought action di government enforcement requirement in a case like Grinnell.17 Act, supra see rectly the Sherman 1, case, 2, Grinnell private a action under at Id. supplies.” turn practicably can in the power monopoly possession the v. Nash- Tampa Elec. Co. (quoting 1518 acqui- willful (2) the market and relevant 327, S.Ct. 81 Co., U.S. ville 365 Coal power as that or maintenance sition (1961)). Applying 623, 628, 580 5 L.Ed.2d develop- growth or distinguished from definition, court concluded district this the superior of a consequence as a ment was market geographic relevant that the acumen, historic ac- or business product, not limited and was City area service cident. service area. to Consolidated’s con- City Gas’ held court that district The wheth- district next considered The court and elements both of implicated duct possessed monopoly power City Gas er I violation. an antitrust constituted thus de- The court district this market. within discussion court’s district analyze the first ‘power power as “the monopoly fined then, in Part power; monopoly City Gas’ ” id. competition,’ exclude prices or control discussion court’s the district V, I address Grinnell, 384 U.S. at (quoting at 1519 or maintenance” acquisition the “willful that 1704), and stated “[fre- element. prob- the approached quently courts have held, court the and court district product defining first the relevant by lem mo- City possessed Gas agrees, that today comput- then and geographic markets wholesale the in both power nopoly this share market ing defendants’ the agree that I gas markets. natural retail court data," The district id. statistical retail the monopoly power in City had Gas market, wholesale that then found “[i]n however, question I market; gas natural gas natural sold City 100% Gas monopoly power City Gas had whether area.” in its service requested for resale gas market. That natural wholesale court finding, district on this Id. Based power had such City Gas monopoly possessed City Gas held that theories moreover, market, is crucial gas natural the wholesale within power this court court and which this panel adopted appeal, On market. liabili- antitrust City Gas’ based today have Co. Consolidated Gas as well. See holding (11th ty. Co., 300-01 F.2d 880 City Gas v. Cir.1989). analy- power monopoly conducting its standard followed the sis, holding, court district challenged City Gas prod- relevant defining the possibly have approach, first contending that it could not then deter- markets and geographic sold no whole- it monopoly power because uct monop- Rather, City possessed Gas City Gas mining gas whether whatsoever. sale for re- With re- claims, those markets. sells 100% power within FGT oly market, In re- area. product service relevant relevant spect to the sale panel rea- Supreme argument, Court’s to this sponse restated court district had never although City Gas de E.I. DuPont that v. soned holding in States United do so resale, 377, 404, it had Co., S.Ct. sold & Nemours (in a contract into (1956), in fact entered that and had 100 L.Ed. a retail gas for resale 1965) that have products composed of is “market Gas. Florida named gas distributor pur- for the interchangeability reasonable by abandoned contract, That they produced price, are poses — undisputed that and it parties, F.Supp. qualities considered.” use gas at wholesale— actually sold DuPont). Gas never district (quoting anyone else. to to Florida either product the relevant concluded court Putting panel the Florida Gas contract aside for emphasized point (as —but moment, I first demonstrate in section A found) district court itself Gas has possessed Gas could not have chosen not to power. exercise that It has monopoly power in the relevant market de- potential wholesale, to sell but fined because simply yet has not undertaken to exercise actually operated never in that market. I potential. view, my this fact must then consider in section B the abandoned be addressed before the district court can contract and conclude that it has no rele- conclude monopoly power Gas has vance to the issue of whether in the wholesale market. Neither the dis- possessed monopoly power in the wholesale trict court today nor the court has ade- market in this case. quately point, nor, addressed though; they do so. The district A. The Relevant Market. court has simply defined a market suggest monopoly power that the issue support does not exist. of conclu- complicated is more than the district sion, 1,1 in subsection first a consider basic analysis court’s reflects. Consider first the -very important but issue: what is a mar- complexities of the factual situation here. ket? I then show in subsection 2 that the gas Consolidated wants for resale. FGT district court’s construction of the relevant resale, supplies gas for but order to market is inconsistent with basic notion FGT, acquire gas City from must Gas of a market. specifically focus on the $250,000 spend pipe- to construct a lateral regarding district court’s conclusion line and approximately must wait two geographic relevant market in this case. years for a FERC allocation. Gas distributes at retail but also has the

“power” supply gas Concept to for resale 1. The to Consol- of a Market. Gas, however, idated. has never actu- Economists hold that a market exists resale, ally although sold it con- buyers exchange goods when and sellers doing sidered so and even went as far as See, e.g., Dictionary services. The MIT (which entering into a contract to do so (D. 1986) Modern Economics 263 Pearce ed. subsequently per- abandoned and never (market “any is context in which the sale formed, 1282-1283). Now, as- infra purchase goods and services takes suming for the moment that Consolidated' Hanson, place”); Dictionary J. A of Eco really option obtaining did not have the (6th 1986) nomics and Commerce 255 ed. delay from FGT—the cost and involved sense, (“In however, a wider a market can just prohibitive were too —Consolidated any signify buyers area which and sell acquire gas must then or it another_”); ers are contact with one seem, compete. will be unable to It would Gould, Ferguson see also C. & J. Microeco power that Gas has 1975).19 (4th Theory nomic ed. This prices competition control and exclude exchange idea of can also be defined in respect the relevant market. At least with exchange terms of and demand: an Consolidated, City compete Gas does not buyer goods if can occur a wants or .servic any supplier: City other wholesale supply. es that a seller can However de independently can set the fined, exchange price. A is a function of (or price deny entirely) and restrict Consol- buyer’s buy and a desire desire seller’s ability acquire sup- idated’s a wholesale qualified by price: parties to sell are ply. exactly This is the conclusion that the proceed price, desire to at a certain district court reached. This conclusion as- sumes, however, range prices. certain Be or within a that Gas is a whole- yond price, range gas supplier. sale We know that or outside of supply gas prices, parties proceed has the desire to at wholesale— do not definitions, however, These definitions contain a use terms of location that resonance of abstract, historically physical what a market was: a loca- are at once more modern and more goods. referring “any "any tion where merchants sold context" or area.” their The here that the market, action—meant The issue. transaction price transaction is what the then, not determine the mechanism is could as such serves market established. have been. price should history trans- by providing mechanism situation: hypothetical Consider incomplete) in (both complete and actions large firm law at a Partner Senior negotiate their parties of which the context strolls practice respected antitrust awith price.20 Space- Acme Rocket into the office of market, obviously, independent- exists A course, Acme, built ship’s President. given transaction or not ly of whether on the recently landed spacecraft that agree parties whether completed i.e.,— Partner greets Senior President moon. merely failed transaction price. A to a and asks college together) (they went history serves part becomes Partner Senior his mind. what’s on him negotiations. for future the context year for (who billing 3000 hours has been something case, involves he President years) tells thirty-five a failed transaction than entirely different orbiting moon office a branch wants market. in an established spaceship supply a par- like Acme which the no existed market indi- price. Nei- acceptable Partner purpose. reach an Senior ties any company other retail distribu- City Gas nor other ther find no can cates he gas at region ever sold tor spaceship building such capable of The supplier. to another retail do the Acme can says that President him. history case could refer to no in this parties price. a begin to discuss job, and the two (or prices) a for as basis transactions be firm will says that his Partner Senior potential for their price term setting a Presi- million dollars. willing pay five the transaction failed When transaction. suggests gently politely and smiles dent the case, its failure reflected cost would required spaceship the an established market absence design and build. nearly a billion dollars negotiate parties the enabled have could most his at responds that Partner Senior failure, The transaction’s exchange. an million. pay ten manage to firm could came moreover, that no such market meant Senior says that then because President a result of the transac- as into existence friend, pub- and the such an old is Partner Thus, market for of a the absence tion. good, sobe spaceship would licity from the present in the case at issue the transaction price, $500 half it for could build Acme inability of part, at least explains, says he under- Partner Senior million. agree to a and Consolidated City Gas spending the himself to resigns and stands importantly, price. More transaction two-floor corner in his rest of his career for as a context a market —both absence claps him President in New York. trans- or as result office a transaction figure that this The announces top apply 20. This of its head. description well as sale, begins a crowd and where for physical location creature historical market —the has been gather. goatherd, exist- whose interest goods. The hawk their mere A merchants guaran- buy for five drach- physical did the beast piqued, a market not of such offers to ence mysterious mas, The going of a mechanism for a ram. in the sense rate tee a "market” physical meant price. market to sell the uni- negotiating laughs The instead offers figure potential had a goatherd's transaction parties exchange to a entire herd. for the corn crowd, negotia- they conduct their place tions, could along of the where with rest goatherd, The necessarily provide the Clearly, surprise. they it did figure but at looks history in the of transactions parties a buy a before. The unicorn tried never negotiate price. they a crowd, attempts which could context of one but no figure scans the arm, his a sudden wave offer. With through another strolling example, imagine For through crowd opens path figure a day olives, classically ancient agora a beautiful on retsina, quickly as he came. as departs, selling Merchants are Athens. thus, market, stage a provides historical looking fig- Suddenly, mysterious goats. a history transactions in- scene. agora appears in the center ure however, market, are useless corporated in that golden resembling goat, in color but creature arriving price a unicorn. at a rising a basis for single, spiral horn and with back, question head off to the whether a firm could in and the two fact be a “seller” under this definition if firm golf course. operate, operated, does not and has never negotiation suggests, no “mar- As this in the competition” “area of effective spaceships at the private existed ket” for issue. firm properly doubt that a can be True, Partner wanted a time. Senior product labeled wholesale “seller” of a if theoretically spaceship, and Acme product that firm sells that on the is, supply and de- have built one—that Second, retail I question level. whether a private spaceships. But mand existed for wanting firm purchase supplies history price existed for such a no of a “practicably wholesale can turn” to enti- transaction, negotiation obviously ty product that does not deal price one. No existed failed to establish court, however, issue. The district answer- market existed—no mechanism because no questions ed both the affirma- parties potential to this trans- tive, doing developed and in so a new rule price. Following action could establish a' is, liability. given if antitrust That reasoning the district court’s market, purchaser circumstances of a can have to conclude one would “practicably supplies, turn” nowhere for its private spaceships market for did that a justified compel then a court is another addition, and, in exist in 1970 that Acme entity, though even it is not in the power in that market. possessed monopoly issue, business at to enter that business in ludicrous, obviously are These conclusions purchaser order to with its -they necessarily follow from the dis- but supplies. poten- trict court’s definition of a market: bottom, principle underly- At this is the supply. plus potential tial demand ing analysis the district court’s of the mo- nopoly power issue in the ease. Analysis. 2. The District Court’s holding The district court backed into its of the idea of a With this discussion possessed monopoly mind, market in I now consider the district concluding after that Consolidated had no regarding the specific court’s conclusions supply. practicable other source of Not in this case. I focus on relevant market erroneous, only that conclusion itself as I analysis the district court’s of the relevant below, discuss see but infra above, As I discuss geographic market. conclusion, as a result of that the district geo- court defined the relevant district geographic the relevant court constructed effective graphic market as “the area of regional market so as to cut out FGT—the competition in the known line of commerce supplier gas. of natural operates, and to ... in which the seller view, properly constructed wholesale practicably turn purchaser which the can necessarily would in- market this case (quot- supplies.” F.Supp. at 1518 665 in- clude The relevant market must FGT. 327, Electric, 81 ing Tampa 365 U.S. City is not a “sell- clude FGT because Gas 628). definition consists of S.Ct. at This .Thus, Tampa defined in Electric. er” as parts: defining the relevant area first two practicably could not turn to Consolidated sells and then in terms of where the seller City supply. for its Without FGT’s Gas go can to purchaser in terms of where the presence, no wholesale market parts emphasize a mar- purchase. Both This would be the more- would exist. respect to the practical realities: with over, ket’s whether or not Consolidated could seller, the “area of inquiry looks to gas for its natural practicably turn to FGT respect below, however, competition,” and with to supply. suggest As I effective inquiry concluding looks to the area purchaser, court erred that Con- district turn purchaser practicably “can could not have done so. where solidated Electric, U.S. at supplies.” Tampa 365 fact, I discuss findings on its as Based added). (emphasis at 628 81 S.Ct. above, the district court concluded that al- with from the district “Consolidated questions arise .left [one] Two First, ternative if it was to remain business: inquiry. application of this court’s market, the district in that ready operating directly gas from of natural purchase structure have examined 1510. The dis- should F.Supp. at court City Gas.” (entry actually existed as it conclusion based market of the reached trict court structure, cost, time, competi- all). on that Based barriers considerations $250,- court’s ana- then have district court should In the the district tion. pipe- interconnecting actually possessed to FGT’s City cost of whether Gas lyzed barrier to Consol- a substantial in fact posed it had power line and whether monopoly gas market. the natural entry into prevent idated's to Consolidated power used that addition, Consol- until November anti- focus competing. The from neces- allocation the FERC lacked idated anticompetitive prevent is to trust laws with the it interconnect allow to sary to to enable but by monopolists, conduct Thus, fall at all. pipeline FGT or not compete whether entity an is, approximately (that after The an- anticompetitively. monopolist acts approval of the months three-to-six equal designed to create laws are titrust required, ac- have would allocation FERC Charles see competition, opportunity court, City Gas had the district cording to Bill Posters Ramsay Co. v. A. Associated proceedings) the FERC not intervened Canada, & States United Consolidated until November (1923); 167, 168, L.Ed. 368 only from Gas. gas purchased entitlement absolute they create an do not the com- emphasized court The district this dis- successfully. Given compete between Consolidated petition here in tinction, very must be careful we to con- decided When Consolidated Gas. for the responsibility City Gas ascribing to was, gas, as the LP to natural vert from to the retail natural barriers entrance it, compete put “forced district (in terms entry If those barriers business. custom- to retain its in order City Gas simply time, cost, competition) are go Gas for them else ers or compete Consolidated high to enable too service.” Id. at 1505. economical more pos- (independent whether view, as a result of court’s In the used that power or has monopoly sessed crucial that “it became competition, anticompetitively), then gas for natural as convert under- mandate court cannot able in order to be possible low a cost the retail entry into write Consolidated’s competitive that were offer rates market, especially when Id. offer.” City Gas could those under- require mandate these then translated court The its limit operation and level of take a new relevant hypothetical into conclusions expansion. for legitimate opportunities own the district specifically, More market. then, exists, relevant concerning actually the con- findings As it took its court market, effec- “the area necessary to enable Consolidated geographic ditions them as a of com- and used in known line City Gas compete competition with tive (but hypo- operates, and constructing a relevant seller in which the ... basis merce effort thetical) district court’s turn practicably purchaser market. can to which market, however, was constructing (quoting this F.Supp. in at 1518 supplies,” 665 assumption that Consol- Electric, by the propelled at 365 U.S. Tampa by compete. Driven entitled pipeline. idated 628), necessarily FGT’s included at dis- court the district assumption, one, entities where as this In a such case some of of the market features regarded as “line engaged in the actually are exist that by its find- stipulated very conditions issue, the district at of commerce” in entry barriers terms ings namely, compe- the “effective holding that in erred — cost, competition. time, ... in commerce in known line tition of an- operates” consisted seller which the hypothetical structuring a than Rather engaged actually entity that was other terms that would according to the market if that even of commerce" “line in that necessary to enable Consolidated be engaged be hypothetically entity could footing firms al- equal with compete placed if entity strong commerce and even itself in a competitive posi- such plaintiff tion; indeed, the antitrust with accomplished would Gas had economically supply. most feasible that well began before Consolidated even gas. Thus, its conversion to natural demonstrates, As this discussion there- perspective, only prac- Consolidated’s fore, finding court’s tical turning difference between to FGT as possessed a market Gas share 100% opposed for a clearly erroneous. Because the district supply option was that the first would cost court misconceived the nature of the rele- $250,000. Consolidated an additional market, finding regarding City vant meaningless. Gas’ share of that market is appeal record on in this case further market, Within actual wholesale FGT that, light indicates of Consolidated’s share, clearly possessed the inordinate projected profits assets and its and busi- none, possessed virtually any if at opportunities, economically ness it was all. $250,- feasible for Consolidated to cover the expense interconnecting to FGT’s addition, the district court erred pipeline. by I test this conclusion consider- concluding that Consolidated could not whether, ing given the evidence Consolidat- “practicably” turned to for its have FGT presented ed concerning expect- trial court, supply. The district as I discuss in profits ed future gas company as a natural above, supra detail made supply gas, Consolidated could (1) point: findings three on this the FERC feasibly underwriting have obtained for a proceedings, in an order which resulted $250,000 bond issuance the amount of request granting Consolidated’s for an allo- hooking up order to fund the cost of pipeline, cation to interconnect to FGT’s trial, At FGT. Consolidated called an ex- months; twenty-eight approximately lasted witness, Ball, pert Ben to the stand to (2) construction interconnection opinion regarding company’s render an $250,000; (3) would cost Consolidated gas supply. value with a natural compete would was, effect, willing This value what a findings, do not Gas. These facts, buyer, fully informed of all relevant support the conclusion that Consolidated seller, pay willing in- also so practicably could not have turned to FGT formed. Ball assumed that Consolidated gas supply. Taking for a wholesale “competitively indefinitely obtain a account, same factors into the FERC order priced gas,” F.Supp. source of natural 19, 1984, September granted issued operate prof- and could continue to allocation, ap- “the held FGT was 21 itably, gas, twenty with that plicant’s supply.” most feasible source of years.22 He then estimated Consolidated’s restated, As the district court itself profits period, including annual for that that, competi- opined although order FERC profits servic- difficult, that would have made tion with would be Con- ing cap- former that had customers been entry solidated’s into the natural distri- profits, he by City tured Gas. From those supplier— market —with FGT as its bution expenses deducted the that Consolidated economically feasible. When FERC was transforming order, gaining would have incurred in its delay ap- issued its in distribution; operation gas this proval already had oc- to natural of allocation $20,- Similarly, City already approximately had included the curred. Gas deduction below, gas As I discuss 21. That criterion must be satisfied before the wholesale from FGT. text, accompanying 60-61 & that for a market exists that not have dence obviously could the area. geographical given in a product given monopoly possessed City Gas held that pro- contract could Thus, Florida Gas market, did City if Gas even in that power gas natural that a wholesale remains, evidence how- vide The fact wholesale. sell at A, (3d ed. app. tbl. A-4 Managerial Finance present-value and other source of 23. The 1982). Gitman, Principles opinion figures is L. in this market existed if the contract con- area County of Dade than the area in price tained a term. If the contract which operated, reliable Consolidated and Florida term, price did not contain a then it reliable Gas did not expand look to into southwest parties could no County evidence that Dade as did Consolidated. The negotiate a only contract were able to overlap area of between geograph- i.e., price existed. that a ic market areas involved in the Florida Gas con- term — suggest in this case that the district court tract present and in the case would City be implicitly did not found that the contract area, Gas’ service area. Even that how- is, ever, contain That price a reliable term. differs in the two situations. The price term district court did not look to contract with Florida Gas dates back to deciding 1965; in this contract as a basis begin Consolidated did not its efforts price City quoted to Gas Consol- to enter the natural business until unreasonable, constituting idated was thus Between City 1965 and Gas’ deal, setting a refusal to or as a basis for service changed area significantly. As the price City at which had to sell to Gas district court emphasized, itself the size of ordered the district that service area important' is an factor in injunction. fact, defining court’s court, geographic relevant market: decided what a reasonable .never the relevant geographic market should- price would be in the case and encompass all of the service City area delegated instead to the the task of FPSC Gas serves.... The effects of demand setting price for the forced sale. Id. and cost are spread throughout City Gas’ court, 1545. The district there- service through area regulation the rate fore, could not have had much confidence process. Thus, City Gas can cross-subsi- price City term set Gas’ contract prices dize any part costs in one of its surpris- with Florida Gas. And this is not territory with revenues earned in the ing, given that the contract was abandoned. rest of its service area. Because the contract did not contain a reli- F.Supp. purposes 1518. For of es- term, therefore, price pro- able it could not tablishing geographic market, the relevant vide evidence that a wholesale market actu- therefore, City Gas’ area service in 1982 ally City operat- existed—let alone that Gas had no relation to its service area in 1965 ined that market. at the time of the Florida Gas contract. if Even the district court found that the applying Even the factors used term, price contract did contain a reliable district court to geo- define the relevant actually per- indeed even if had Gas graphic market in the it is contract, my formed under the view the apparent that the geographic relevant mar- contract would still be irrelevant ket for the Florida Gas contract entire- possessed monopo- issue whether Gas ly parties if different. Even had not ly in the relevant market. Gas’ contract, abandoned it would have transaction with Florida Gas performed been in a different relevant mar- geographic have occurred in the relevant ket than the one involved here and there- market, accepting for the sake of discus- bearing fore would have had no on the sion the district court’s definition of that question operated whether market here. market, possessed relevant let alone mo- The district court found that the relevant nopoly power in that market. geographic market consisted of reasons, For these the dis- area, area, service Consolidated’s service holding erred in trict court portions and unserved of southwest Dade possessed monopoly power in the wholesale County. Thus, F.Supp. at 1518-19. market. the district court defined relevant area in terms of where Consolidated could look LIABILITY V. UNDER SECTION and where it look Legal background. A. gas. compatible to distribute that area totally in Florida provides Gas’ case would be differ- 2 of the Section Sherman Act operated ent. Florida pertinent part: “Every person a different who shall 1284 impor- emphasized ed.) also The Court monopolize, ... attempt or monopolize, it indi- Griffith, when in among intent tance of or commerce trade of

any part monopoly of possession deemed mere ... shall be cated that States several 2, of 2 a violation felony_” § 15 “itself power U.S.C. § [be] aof guilty purpose or with Supreme coupled has stated: Court provided As (1988). to foreclose power” intent to exercise 2 of of monopoly § The offense 107, at at 68 S.Ct. (1) 334 U.S. competition. elements: Act has two Sherman added). monopoly power (emphasis 945 of possession (2) acqui- willful market and relevant recognized, has As the Court as power of or sition maintenance of unconscious monopolizes monopolist “no develop- or growth distinguished v. Skiing Aspen Co. doing.” he is what superior of a consequence a ment Skiing Corp., 472 U.S. Highlands Aspen acumen, ac- or historic business product, 28, 2847, n. 86 28, 105 2857 585, n. S.Ct. 602 cident. States (quoting United (1985) 467 L.Ed.2d Corp., 384 U.S. v. Grinnell States United 416, Am., 148 F.2d Co. v. Aluminum 1698, 1704, L.Ed.2d 16 563, 570-71, S.Ct. 86 Hand, J.)). ef Cir.1945) (L. (2d 432 2, to violate section (1966). order In 778 competi on conduct a fects of defendant’s mo possess must monopolist on consumers and, importantly, more tors power use that also power must nopoly im general are also competition and on pro 2 does not Section anticompetitively. evaluating whether factors portant monopoly power possession hibit id. anticompetitive. See issue is at conduct con “monopoly itself — of point This 605, at 105 2858-59. S.Ct. v. United Oil Co. Standard crete.” evidentiary that, as an merely suggests 516, 502, 55 1, 62, 31 S.Ct. States, 221 U.S. matter, requisite intent “the [under v. Byars (1911); 619 L.Ed. Bluff a maintains if defendant be inferred can 2] Cir.1979); 843, (6th Co., F.2d 853 News 609 willful business by conscious power his Photo, Kodak v. Inc. Eastman Berkey inevitably re legal, that policies, however Cir.1979) (citing (2d Co., 263, 273 F.2d 603 actual limitation of or the exclusion sult 1093, denied, 444 U.S. Oil), cert. Standard Pro- competition.” Hecht v. potential or (1980). 1061, 783 L.Ed.2d 62 S.Ct. 100 982, (D.C.Cir. Inc., Football, 990 F.2d 570 Griffith, Su- v. United States Co., 148 F.2d 1977) (citing Aluminum requirement preme Court addressed denied, 956, S.Ct. 98 cert. 428-31), 436 U.S. characterized conduct anticompetitive (1978). 3069, 57 L.Ed.2d hov/ever power, monopoly “the use it as con- anticompetitive type of primary A competition, acquired, to foreclose lawfully type of 2 cases —and in section duct advantage, to de- or gain competitive a re- a defendant’s here —is conduct issue 100, 107, 68 stroy competitor.” a potential competitor a to deal with fusal (1948). 945, 941, 92 L.Ed. S.Ct. into to deal fall refusals competitor. Such falls into conduct determining what catego- categories. One general one of two always of intent idea category, Monopo- leveraging. monopoly ry involves in Unit- stated As the Court central. been vertically inte- when leveraging occurs ly Co., 250 U.S. Colgate & v. ed States monopolist grated monopolist i.e., (1919): 63 L.Ed. 307, 39 S.Ct. — of the market— levels operates several create any purpose the absence “[i]n of the on one level monopoly uses its monopoly, A]ct the [Sherman or maintain advantage on competitive gain a market right recognized long restrict does exam- For the market.24 level another in an engaged trader or manufacturer R.R. Terminal States v. ple, in United business, freely to exercise private entirely L.Ed. Ass’n., 224 U.S. parties as to independent discretion his own servicing of railroads (1912), group (Emphasis add- will deal.” whom he market) leverage its (on given monop- level leveraging refers to Monopoly of the market. integrate way level verti- into attempting to another conduct olist’s monopoly power cally, by using its established

1285 ly power area also owned the on one St. Louis level of the market provided railroad terminal access to maintain power on that by same level their city. The terminal owners used preventing the competing radio from monopoly power over the terminal to over Although majority advertisements. charge other railroads access section 2 category, cases fall into the first thereby gain competitive terminal and important some cases are of this second advantage downstream market See, e.g., Aspen, 472 U.S. at 585, type. majority railroad service St. Louis. Journal, 2847; Lorain at S.Ct. 342 U.S. 2 fall of refusal-to-deal cases 143, 181; Airline 72 S.Ct. Official monopoly-leveraging category. into this Cir.1980), Guides, FTC, Inc. v. (2d 630 F.2d 920 See, e.g., Otter Tail Power Co. v. United denied, rt. 917, 450 U.S. 101 S.Ct. ce States, 366, 1022, 410 U.S. 93 S.Ct. 35 1362, (1981). 67 L.Ed.2d 343 (1973); Associated Press v. L.Ed.2d 359 key categories to both States, of refusal-to- 1, 1416, United 326 U.S. 65 S.Ct. 89 deal they monopoly cases —whether involve Eastman Kodak v.Co. (1945); L.Ed. 2013 Co., leveraging or Southern Photo monopoly power exercises of Materials 273 U.S. 359, 400, (1927); Ter single 47 S.Ct. 71 L.Ed. 684 on a level of the market —is that the R.R., 383, minal 224 U.S. at 32 surrounding S.Ct. circumstances the refusal 507; of Wirtz, Fishman v. Estate 807 F.2d give deal must rise to an inference of anti- (7th Cir.1986); Olympia Equip. Leas 520 competitive rarely intent. Intent is estab- Co., ing v. Co. Western Union Tele. 797 evidence; by lished direct almost invari- denied, (7th Cir.1986), cert. F.2d 370 480 ably, it is established circumstantial evi- 934, 1574, U.S. 107 S.Ct. 94 L.Ed.2d 765 dence: the nature of the defendant’s con- Co., (1987); Washington Energy Catlin v. duct and its effect competition on (9th Cir.1986); Paschall v. market demonstrate that the defendant 791 F.2d 1343 in- Co., Kansas (8th Star 727 F.2d 692 competition tended to foreclose in the rele- denied, cert. Cir.), 872, 469 U.S. vant market. order to decide whether a 222, (1984); MCI Commu 83 152 L.Ed.2d type refusal to deal of either constitutes T, Corp. nications v. AT & 708 F.2d 1081 anticompetitive 2, conduct under section denied, (7th Cir.), 891, cert. 464 U.S. 104 developed courts have two formulas for (1983); Byars, S.Ct. 78 L.Ed.2d 226 analyzing the circumstantial evidence in a Photo, Berkey 843; 609 F.2d at 603 F.2d at (1) given case: the “essential facilities doc- 263; Hecht, Exch., 982; Poster 570 F.2d at (2) trine” the “intent test.” These Corp., Inc. v. National Screen Serv. 431 weighing formulas aid the Cir.1970), denied, (5th rt. F.2d 334 ce evaluating the in a circumstantial evidence U.S. 27 L.Ed.2d 811 S.Ct. given case to determine whether that evi- (1971). yields dence an inference an intent category The second of refusal-to-deal competition. foreclose under section 2 does not involve mo- cases formula, The first the essential facilities nopoly leveraging, but rather involves a doctrine, holds that an antitrust defendant monopolist’s monopoly power use of its if may anticompetitively have acted the cir- one level of the market to maintain or satisfy four-part cumstances of a case expand on that same level of the (1) monopolist in test: the defendant is a in Lorain Journal example, market. For facility control of a or resource States, Co. v. United S.Ct. (2) competitor’s operation; essential (1951), single newspa- L.Ed. 162 practically facility or resource cannot per monopoly in a small town had a over duplicated by competitors; reasonably be newspaper advertising business in that (3) com- monopolist refuses to deal with began town. When local radio station (4) petitors; monopolist could feasi- advertising, newspaper sell radio re- MCI, See bly competitors. deal with advertising space anyone fused to sell 1081; Hecht, If F.2d at 570 F.2d at 982. advertising newspa- on the radio. The sat- per anticompetitively monopo- elements of this standard are thus used its the four 1286 843; 1081; Ber F.2d at Byars, 609 F.2d at anti- of the defendant’s

isfied, inference an Hecht, F.2d at 263; 570 F.2d at justi- 603 key, arise and thus may intent competitive cases, fact, these In the courts liability under of 982.25 imposition fy the the doc stating of the four elements after 2. doctrine’s trine, explain that the generally test, formula, di intent second The mo underlying rationale is a concern about by eval intent issue of addresses rectly court, for ex leveraging. The MCI nopoly deter conduct monopolist’s uating the test, four-part describing the ample, after whether, circumstances under the mining may unlaw “[sjuch a refusal be stated demon issue at case, conduct of the of an monopolist’s control because ful competi destroy illegal intent an strates a ‘bott (sometimes called facility essential infer to an rise gives If the conduct tion. power from monopoly leneck’) extend can intent, mo then the anticompetitive ence of another, and production to stage of liability under section one subject nopolist is F.2d 708 another.” Journal, into at 152- one 342 U.S. market Lorain 2. See Kodak, 273 186; Eastman at at 53, 72 S.Ct. MCI, 404; F.2d 708 at 47 S.Ct. atU.S. the es- feature of distinguishing Another F.2d at 1148-49; Exchange, Poster at that, is before cases facilities sential 339-40. at firm with the to deal refused defendant of limits character defining the In already engaged issue, the defendant understand tests, essential it is these at providing service in the business for evaluat- mechanisms function as their issue, facility at to the or access issue to determine evidence ing circumstantial other, or to itself refused firm to the either i.e., refused the defendant whether acted — Thus, refusing firms. similarly situated anticompetitive intent. deal—with firm, the given defendant awith to deal extent only to the validity The tests That customers. between discriminates determination. such a they enable moreover, discrimination, an anticom- mechan- court, example, could if a Even example, in Ter- For motivation. petitive of the essential elements ically apply the were R.R., owners the terminal minal given if to a doctrine facilities railroads providing business an inference support not would application own- The terminal terminal. access intent, test then the anticompetitive compete did not railroads that allowed ers liability imposition justify not facility a non-ex- at to use Louis in St. analysis of Indeed, anas section 2. owners, terminal charge. The tortionate demonstrates, cases facilities the essential that did com- however, railroads allowed by more supported cases is liability those only at facility use that Louis to pete in St. of the doc- application mechanical than rates. extortionate pos- cases all test. The four-part trine's the test’s (beyond general- certain features facilities cases sess Because essential inference of elements) support an monopoly four these two involve ly features — intent. anticompetitive el- four discrimination—the leveraging and merely provide doctrine ements fa- the essential feature primary One pres- inferring the formula shorthand monop- involve they all is cases cilities the cir- intent when anticompetitive ence of Tail, 410 See, e.g., Otter leveraging. oly pat- a certain a case follow cumstances 1022; at Associated S.Ct. at not follow the case does When 1416; tern. at S.Ct. Press, at 326 U.S. same not involve those does pattern and R.R., 32 S.Ct. 224 U.S. at Terminal facilities however, essential features, MCI, 520; Fishman, 507; F.2d at the case. a discussion Skiing Corp. As Highlands v. Aspen 25. But Circuit, the Su Cir.1984), affirming (10th Tenth Co., Skiing 738 F.2d 1509 pen analyze case under did not Court preme aff’d, 472 U.S. at doctrine. facilities facili essential applied the essential Circuit there Tenth essential as an properly classified not case is deal that did a refusal ties doctrine case. facilities leveraging. See monopoly involve infra analy- competitor potential competitor is not a reliable means of doctrine order gain competitive advantage sis.26 in that same market rather than in another level monopoly-leveraging feature test, of the market. Under the intent cases, moreover, pow such a itself can anticompetitive infer an intent anticompetitive erful indication of intent if, from such example, conduct for the con- frequently have held it to be a that courts represents duct significant departure a basis, independent sufficient of the essen monopolist’s from the pattern normal of doctrine, imposing liability tial facilities business. That was the case in Lorain See, Tail, 2. e.g., under section Otter Journal, 148-50, at U.S. 72 S.Ct. at 1022; S.Ct. Eastman 183-84, newspaper where a in the business 400; Kodak, 273 U.S. at 47 S.Ct. at selling advertising of refused to sell adver- 370; Catlin, Olympia, 797 F.2d at tising space customers; to certain it was 1343; Paschall, 692; F.2d at F.2d at Aspen, 589-93, also the case in 472 U.S. at 263; Berkey, Exchange, 603 F.2d Poster 105 S.Ct. at where an owner of a 431 F.2d at These courts refer to 334. thus Aspen several ski areas in long- decided no “monopoly-leveraging theory” as a participate all-Aspen er to in an ski ticket evaluating anticompeti- third formula years after participating of in the ticket. course, tive intent.27 Of the rationale for test, Because the intent like the essential liability in imposing these eases is the same doctrine, nothing facilities is more than a principal imposing lia as the rationale means evaluating of circumstantial evi- bility under the essential facilities doctrine: dence, however, justifies imposition it monopolist’s a extension of from one liability when, 2 only of under section un- stage provides into another of the market case, der the circumstances of the an anti- strong anticompetitive indication of intent competitive clearly intent is inferable. justifies imposition liability thus of sections, applying following In the I analyze under section 2. The cases “monopoly-leveraging theory” present general legal could also case under as “intent test” framework. conduct be characterized eases: they merely hold that the conduct of mo did not constitute an antitrust violation un- B, I nopoly leveraging is sufficient evidence der section As discuss section illegal justify imposition monopoly-leveraging an intent to this case is not a case: Indeed, liability simply vertically integrat- under section some of Gas is not company; operates only as and ed on one level these cases — such Eastman Kodak generally cited in of the natural market and has never Exchange Poster — are operation attempted connection with the intent test. to extend its into an- level of that market. For this rea- other provides The so-called “intent test” also son, C, distinguish present I appropriate analytical tool in an refusal-to- case from the line of cases in which courts monopoly that do not involve deal cases imposed liability section 2 under the leveraging and to which the essential facili- monopoly-leveraging theory. apply. ties doctrine does not D, cases, monopolist monopoly power In section I then discuss the essential doctrine, apply which not one level of a market refuses to deal with a facilities does note, briefly terminology, Hovenkamp refus- 26. As Areeda and the essen 27. To summarize mechanically ap tial facilities doctrine can be 2 involve two al to deal cases under section range plied conduct, to a broad of situations: "the 'essen monopoly leveraging types or either just epithet describing facility’ tial an non-monopoly leveraging. have devel- Courts something monopolist’s possesses situation: he variety analyzing oped of formulas for plaintiff independent wants. It is not an circumstantial evidence in these refusal-to-deal analysis but a label—a label that tool whether the evi- cases in order to determine beguiles some commentators and courts into anticompeti- gives dence rise to an inference pronouncing duty analyzing to deal without include the essen- tive intent. These formulas implications...’’ the kamp, P. Areeda & H. Hoven test, doctrine, the intent and the tial facilities 736.1a, Law, (Supp. at 701 Antitrust ¶ theory. monopoly-leveraging 1989). simply put, is integration, 1, I Vertical In subsection either. case present or single of two firm inclusion within discussion sake of for the assume and distri- production stages in the apply more doctrine facilities essential inte- A firm end-product. but show bution category when “backward” “upstream” not or grates test still four-part the doctrine’s raw materials produce here. the circumstances it undertakes be satisfied which components the doctrine I show that semi-fabricated or In subsection type by inde- apply supplied or could be have been properly does early integrates end, analyze the A firm producers. pendent To of case. doctrine it un- which the when cases on or “forward” Supreme Court “downstream” the characteris- or distribu- processing discuss and then further is based dertakes developed doctrine have been limits of the products tics and tion basis, I conclude producers independent those cases. On could be sold facilities not an essential case is that this distributors. case. Turner, Law Antitrust D. P. Areeda & the under E, analyze the case I definition, In section I (1978). According to this 723U Supreme I first examine intent test. vertically City of Gas cannot conceive and in Lorain Journal decision Court’s gas busi- company. natural integrated limits of the and the characteristics discuss simple technolo- relatively involves ness from that it derives test as intent so-called production of the far end gy. At theory that this I then demonstrate case. located, stream, are gas reserves natural case. present inapplicable to

is ground. gas pumped from and transported gas is then The natural recent F, more I address two section from the re- pipelines through interstate Aspen and Otter Court Supreme cases — Once new areas for distribution. heavily serves district court which the Tail — on these distribution gas reaches Although nei the natural case. in the present relied pipesystems, areas, applies either it is local expressly transferred ther of these cases pipelines to gas intent from the or the which move the doctrine essential facilities gas thereby supply and understandable the customers test, they are still Thus, three levels discus a retail level. sections’ on preceding context gas moreover, in the natural business: show, case operation neither exist IAs sion. gas for (2) transporting the liability (1) drilling gas, here. imposition justifies the resale, gas to custom- (3) supplying and G, the Sev- I Finally in consider section case, City Gas In the ers at retail. MCI, which decision enth Circuit’s opera- solely in the third level is involved liabili- used as basis court also City isGas supplying gas at retail. tion— (on holding in Although one MCI ty here. compa- integrated vertically not a therefore court, panel, ny.28 holding of relied) another apply, does not actually apply, under had City does case if occasion the MCI Even not consti- retail to other holding, City gas conduct does at wholesale Gas’ natural sold distributors, that would of section 2. whether question a violation I tute into integration vertical have constituted Integration. B. Vertical FGT’s operation. Given level of another market, City in the wholesale liability predominance addressing the issue Before market would in that participation the Gas’ discuss pause City significance: antitrust have lacked which un- integration, concept of vertical market have lacked would still leveraging. monopoly the idea derlies under sec- anticompetitively act power to integration, Aree- subject of vertical On the In addi- supra at 1275-1283. tion See say: this to have da and Turner supra at See Florida Gas. 1282-1283. the irrele detail discussed in above I have contract Gas abandoned vance of tion, surplus gas by might one ers any the sale of some been Consolidated is of supplier to another retail significance retail on the issue of vertical inte- supplier hardly constitute an inte- gration. gration by supplier up- the first into an companies Because these two would be market. one could not stream engaged operations, integrated in identical seriously potential contend Gas’ degree to the same operating at the surplus of its to another retail sales market, same levels this case is supplier integration would constitute into fundamentally different from the monopo- level of the market —the inter- second ly-leveraging cases to which the district transportation level on which FGT state analogized case. operates. Clearly, City would in no simply using Gas is aas way displace operation; FGT’s on the con- monopolist on one level of a market trary, all of the involved in Gas’ expand into, operation maintain its mo- trade would still come from If FGT. in, nopoly competition or force out potential gas for consti- sales of resale another level market. Gas is integration integration, tuted vertical doing nothing competing legit- more than to occur on a sublevel of the would have — imately successfully Consolidat- retail distribution level of the market. —with ed for more business in the retail natural Although integration such into a sublevel gas market. Gas was successful for a occur, theoretically practically it could variety bigger, it is it reasons: has been Any potential could not. sublevels of the longer, in business it has better resources supply operation interrelated would be so (i.e., up pipeline), a imple- hook it FGT’s with each other that it would not be reason , aggressive marketing strategy, mented an to consider them as able severable. See short, prices and its were lower. In Photo, (de e.g., Berkey 603 F.2d at 276-79 customers with better firm”). scribing “integrated features of might say, service than Consolidated. We Although generally a retail distributor has hindsight, with the benefit of that as a up pipesystem, picks sup its own which accidents, result of a series of historical ply gas a wholesale source natural from years Consolidated missed the boat back customers, then to retail distributes it get when it failed to into the natural the distribution at the back end of this, however, supply None of business. supply

process is not severable from impose means that the antitrust laws operation. end process at the front duty City Gas to deal with Consolidated. customers, In order to distribute following why I discuss sections. pipesystem, retail distributor must have a gas in it. pipesystem and the must have

Thus, pipesystem with a must connect Monopoly-Leveraging Theory. C. The gas. of natural Variations in the source I first consider the line of cases stem- source, pipes- nature of the the size of Kodak, ming from Eastman ystem, or even the character of the custom holds mo- 47 S.Ct. at which not, suggest, degree I alter the ers do monopolist’s attempt nopoly leveraging (whether integration vertical of a retail —a monopoly power on one level of to use its wholly merely predominately re retail advantage gain competitive the market tail) supplier gas. In of natural terms level of the market —is evidence on another integration, City level of vertical Gas’ anticompetitive intent and constitutes operation is identical to what Consolidat case, 2. The violation of section operation (hypothetically) ed’s would be. section, however, in the above as discuss possess pipesystems companies Both monopoly leveraging: City does not involve from a that distribute natural only the retail level implicated conduct to their customers. source gas market. This line of of the natural source neither the fact that Consolidated’s provides therefore no basis here might rather cases have been than FGT imposing liability under section 2. nor the fact that one of Gas’ custom- gas supplier at as a nopoly power natural Kodak, operat- plaintiff In Eastman monop- possess It does not level. the retail supplies photographic house ed stock level; nor does the wholesale oly power on supplied the Atlanta, Kodak Georgia. Gas, more- level. operate on that houses stock plaintiff, and other power on over, monopoly used its never supplies. photographic area, with wholesale way leverage its level in order the retail began purchase Kodak, itself Rather, the market. level of into another operation houses, expanding stock power at monopoly has used its if retail level as level into the the wholesale then it has used inall acquired control had By Kodak well. respect to the retail distribution only with plain- Atlanta but the houses in of all stock cir- gas. Given market for and, Kodak refused tiffs, point, at that cumstances, prog- Eastman Kodak at wholesale súpplies plaintiff sell monopoly- here: those control eny do not situation, evaluating the prices. inference under justify leveraging cases no stated: Court “purpose to of a present circumstances no direct evi- was [Although there Kodak, 273 U.S. monopolize,” Eastman could not well there be—that dence—as Nor do the so-called at 404.30 sell to the refusal the defendant’s cases, I discuss “essential facilities” purpose pursuance of a plaintiff section, an infer- justify such in the next that the circum- monopolize, we think ence here. suffi- in the evidence disclosed stances purpose, indicate such ciently tended to Doctrine. D. Facilities Essential reasonable infer- just and as a matter of stated, “the essen- district court As the of this ence, the submission to warrant that, when a teaches tial facilities doctrine jury. question to the facility, it as- controls a scarce business at 404. at 47 273 U.S. S.Ct. competi- obligation sumes an F.2d Exchange, in 431 Similarly, Poster facility.” that access to reasonable tors 334,29 case decided frequently cited at a F.2d (citing Byars, 609 F.Supp. at 1532 court, vertically integrat- a predecessor our doctrine, 856).. rationale behind this The at motion-picture of producer/distributor ed noted, is that the district court “[a] as a advertising refused accessories may un- in be to deal this context refusal held The district court local distributor. monop- it could result lawful because the,defendant “intentionally used vertically from extending olist monopoly power it had at manufactur- at another.” Id. production to one of level plaintiff] aas ing level to eliminate [the mind, in qualification With 1532-33. distributor-jobber level.” competitor at the the four- court then articulated the district Kodak, the Applying Eastman Id. at 339. the doctrine: applying part standard monopo- this use of court held forth four elements law sets case The competi- out level to drive ly “power at one liability under the necessary to establish a violation of at constituted tion another” (1) control of facilities doctrine: essential section 2. Id. (2) monopolist; facility by a the essential or rea- inability practically competitor’s fit this simply does not present case facility; duplicate the essential sonably to possesses mo- pattern. City Gas factual wholesale; movie Prichard, plies Screen sold National City at In v. F.2d Bonner 29. Here, City (en banc), Cir.1981) advertising (11th court accessories wholesale. binding precedent anyone. adopted all decisions sold wholesale Gas never prior Circuit handed down the former Fifth remedy, the district fashioning a October 1981. by City price to no established look court could The district at issue. for the transaction VI, below, part As I discuss infra (a price it task had to set its court own instead difficulties fashion- also involves case FPSC). presents a set task delegated That monopo- ing remedy arise in these do not Regard- explore complications below. that I cases, defen- ly-leveraging In these cases. monopoly- ing problems, providing already engaged dants were guidance. provide no leveraging, cases sup- photographic at issue: Kodak sold service facility facility (3) City the use of the denial of Gas’ control is (4) feasibility competitor; properly labeled “essential” under the doc- facility. Third, providing trine. practically Consolidated could reasonably duplicated MCI, Gas’ (quoting 708 F.2d at 1132— Id. at 1533 pipeline. lateral connection FGT’s 33). Fourth, the district court improperly held This test must be understood for what price offered Gas’ constituted a evaluating merely a mechanism for is: points refusal to deal. I address these given in a case to evidence circumstantial turn. yields that evidence determine whether anticompeti- the defendant’s

inference of application The district court based its considering in subsec- tive intent. Before the essential facilities doctrine on the fol- doctrine as a means tion the limits of this lowing findings. factual Before Consol- evidence, I evaluating circumstantial idated received its FERC allocation 1 the district first examine subsection purchased gas for Consolidated could have the test to the application court’s resale from Gas. After application present case. although Consolidated would have been au- of itself. is erroneous FGT, purchase thorized to it “would prohibitive transporta- have encountered Analysis. 1. The District Court’s problem.” F.Supp. tion That this test Applying is, pipeline construction of con- “[a] lateral court concluded that all four the district necting Consolidated’s facilities to the FGT were satisfied and thus held that elements $250,000.00.” Id. main would have cost 2 for liable under section Gas was “[tjhere is The district court concluded that with Consolidated. See id. refusing to deal grave doubt as to whether Consolidated The district court first held at 1534-35. effectively competed could have Gas, “City monopolist, controlled an expenses.” based on these additional transport facility pipeline that essential —a Id. Id. at 1534. Under gas.” ed test, second element of requires “control test’s first element duplication by held that facility by monopolist.” of the essential facility pipe lateral con —the MCI, 708 F.2d at 1132-33. Based on its City pipesystem to FGT’s necting Gas’ holding City possessed earlier mo- pipeline be “unreasonable ‘due —would market, nopoly power in the wholesale the restriction, delays, regulatory City a court assumed that Gas was district ” Id. (quoting expense required.’ and time monopolist with control over the “essen- Corp. Aspen Aspen Highlands Skiing v. facility presumably, pipeline “a tial” — Cir.1984), Co., (10th F.2d 1521 Skiing 738 F.Supp. gas.” 665 transported wholesale 'd, at at 472 U.S. aff above, supra see I at at 1534. As discuss test, 2847). part the third Applying monop- City possess Gas did not City noted that Gas had the district court market; indeed, oly power in the wholesale for ten offered to sell to Consolidated mar- City operate even Gas did not (City per over cost Gas’ cost of cents therm improperly thus ket. The district court FGT), from purchasing at wholesale monopolist City was a concluded that “essentially held which the district court purposes the first element of to deal at all.” Id. amounted to a refusal doctrine. essential facilities test, part of the Finally, under the fourth City held that Gas could the district court addition, improperly court In the district gas to Consol feasibly have sold wholesale here as facility at issue characterized idated. part of the test. the first “essential” under initially identified the court The district view, misapplied district court pipeline that facility” as “a “essential First, above, see Ias discuss the doctrine. doing, gas.” In so transported wholesale 1275-1283, City Gas is not a mo- supra very a Second, court mischaracterized nopolist in the wholesale market. See, v. Dresser is, Co. e.g., Roland Mach. facility: that this important feature Cir.1984), (7th Indus., F.2d only re- transports pipesystem City Gas’ Enters., F.2d Syufy v. gas.31 United States not wholesale—natural tail—and Cir.1990). (9th principle, This such, essential facility not be this As facilities course, essential applies to the Consolidated operation. to Consolidated’s addresses the doctrine well: doctrine as supplied facility needed leveraging and the monopoly danger supplied facility gas. Because has on com- that it anticompetitive effects Consolidated what do gas, it did not retail princi- Applying this reason, petition general. facili- do. For needed it to system City Gas’ ple “essential” labeled be properly ty cannot not City Gas is in this sense. essential not element. first doctrine’s under the one power its from attempting to extend reason the other for one I also attack Gas, into another. level of the market facility that this conclusion district court’s level, distribution monopolist retail above, supra at As I note is essential. level of only at the retail operates is de- doctrine facilities the essential obviously facility Its gas business. natural a mo- danger to deal signed level, but the on that competition relates will resource scarce in control nopolist extending mechanism for facility is not a vertically from one “extend[] level of power to City Gas’ another to another.” production level of matter, another from for that market —or concern, my This at 1532-33. F.Supp. retail level. of the market onto level “essential.” the term defines also single level of solely on a operates if, in is, essential facility becomes That here, facility the market. that facil- access restricting competitors’ “essential.” properly be cannot labeled competitive advan- gains a ity, monopolist la- facility could be assuming this Even of the market —that level tage in another “essential,” question beled upstream from is, downstream a market that Consolidated facility itself. court’s determination containing the market reasonably have practically or could not again again, have reiterated courts As second duplicated purposes it for competi- protect laws do the antitrust what Consol- test. Consider element of the competition. rather, protect tors; the laws pipeline that (gas FGT’s entered tem general problem, the district As a more pipe) through Gas’ facility pipesystem lateral issue here. Gas’ improperly identified pipesystem. ef- description, According court’s own to the district order to (the pipesystem) fect, therefore, facility access to wanted facility appears to be a Consolidated (the facility operation. in that contained and the resource entire distribution Gas’ court, resale). how- The district piece is not about This case ever, pipe” "City as Gas’ lateral referred to system a whole. system, rather about but pipe facility. connect- This lateral the essential compete in order to claimed that pipeline and City pipesystem to FGT’s ed Gas' Gas, City Gas’ City have access to it had to supply of natural City pump a Gas to enabled gas FGT, gas system. and, needed from Consolidated three pipesystem. Which of its into Consolidated, City according to Gas—with pipe- pipe, gas, lateral or elements—the pipesystem between pipe lateral its —stood facility? system essential itself—constituted Thus, ei- Consolidated and FGT. Consolidated components, together, formed Clearly, three all system City or go Gas’ around ther had to facility did not Consolidated the essential here. going argued through Consolidated it. pipe. City That just Gas’ lateral want access system expensive to be too would around that long Consol- distance from pipe located a effect, (in compete what allow Consolidated Consolidated, pipesystem. idated’s facilities essential element the second just gas: access to it needed than needed more requires). therefore claimed It doctrine obtain pipesystem in order to City entire Gas' City system a facility i.e., Gas’ as access course, access gas. Consolidated wanted — Of Consolidated, there- "essential." whole—was fore, as it contained pipesystem insofar to that Gas’, City but to be customer wanted (through making pipe gas, lateral thus rest of important from the difference with an indispens- gas) acquired an which short, wanted Consolidated Gas’ customers: facility. Con- component of the able price than lower at a Gas to sell pipesys- into wanted to Gas’ solidated hook Consol- charged so that its other customers tem, pipesys- point near Consolidated’s own at a gas. sell could turn around tem, pipesys- idated itself gas from to take in order idated would have had to do in order to This conclusion is also consistent with duplicate facility. Consolidated al existing caselaw, which suggests that du- ready pipesystem place had a from the plication of the facility must high involve a LP days of its distribution. In order to degree of impracticality and infeasibility distribution, change to natural there satisfy before it will facility the essential fore, merely Consolidated had find a MCI, doctrine’s second element. 708 F.2d Buying gas gas. source of wholesale a case on which the district court FGT, regional supplier, re relied, itself illustrates this limit. In that (1) things: quired two allocation from case, brought against AT&T, MCI suit FERC, (2) pipe connecting a lateral claiming that AT&T’s refusal to allow MCI pipesystem pipe Consolidated’s to FGT’s to interconnect with various AT&T facili- applied line. Consolidated for the FERC monopolization ties constituted in violation May allocation on 1982. FERC issued of section jury Sherman Act. A granting its final decision the allocation on billion; awarded MCI $1.8 the Seventh Cir- 19, 1984. September process thus took cuit part, affirmed in part. and reversed in years two and four months. The lateral briefly I state the facts. $250,- pipe would have cost Consolidated Before the telecommunications in- expense 000. These factors of time and dustry existed monopoly. as a lawful support are not sufficient to the conclusion System companies Bell provided local ex- reasonably Consolidated could service, change provided long- AT&T practically directly have connected service, distance which used the Sys- Bell pipeline. FGT’s exchange tem’s facilities to connect with above, supra As discuss at 1281- customers on the local level. AT&T also 1282, given projected Consolidated’s future long-distance used its provide spe- lines to profits company as a with a natural cial point-to-point services such as lines supply, feasibly Consolidated could have (private connecting locations) lines two $250,000 underwriting obtained bond require switching do not through the local pipe. to finance the lateral Based on the exchange system and to other ser- figures presented by expert Consolidated’s foreign (FX) vices such exchange lines witness, company’s profits, annual and common switching arrange- control gas, approxi- would have been (CCSA) require ments switching do $267,000, mately company and the would through system. the local generated profits twenty those began attempt MCI to enter years. $250,- The annual interest rate on a long-distance telephone ap- market. It bond, figured per- at a rate of fifteen plied permission to con- FCC cent, $37,500. Taking would be into ac- operate long-distance system struct and count Consolidated’s tax deduction for providing private-line service between Chi- payments, those interest the real interest cago and St. Louis. That would service $24,750 annually figure repre- be —a require ordinary interconnections to local senting prof- of Consolidated’s annual 9.3% telephone lines the two cities. Bell’s interest, paying its. After Consolidat- exchange system local was all that was $242,250 be left with ed would annual later, years available. after a Six profits, profits. Given those process, long administrative paying would have little trouble off the opposed application, MCI’s AT&T FCC $250,000 principal offering on its bond finally approved request. MCI’s As a re- twenty years. figures the end of As these decision, applications that to demonstrate, sult of similar given profits that Consol- poured into the FCC. The FCC insti- generated MCI’s idated claims it could have for rulemaking procedure tuted a to deal with twenty years, clearly it was feasible for the $250,000 applications. In June FCC company expendi- to undertake a see Establishment decision, issued a pipe give ture on a lateral that would it a of Policies Procedures Consideration FGT, & supply of natural from estab- Applications Specialized to Provide supplier gas. lished wholesale of natural 1294 his- start-up ventures largest of the (Common Carri Servs. Carrier Common F.2d Street.” tory of Wall (1970),and as decision), 24 F.C.C.2d er negoti into to enter completed its result, agreed contrast, AT&T Consolidated In inter local concerning the in FERC before proceedings MCI ations with allocation an interim unwill- months, then reached but was They twenty-eight

connections. pipe. $250,000 because a lateral but spend September ing in to agreement and in terms time process reach of Common Compare that disputed AT&T administrative eleven-year not decision, agreement money did Carrier through and to MCI went its FX proceeding interconnections MCI allow actu- and raised MCI million April $110 Finally, in services. CCSA Moreover, given Consolidat- ally invested. deci earlier of its the reach clarified FCC sup- a natural without worth ed’s net dis provide the to AT&T ordered and sion according $775,000 to ply approximately Shortly before — interconnections. puted fi- easily have experts its own suit. —it its antitrust decision, MCI filed construct $250,000 required nanced telephone enter attempt MCI’s supra pipe. See the lateral invest- substantial involved thus market Consol- account what If take into we spent six capital. MCI and time ments in worth have been it would claims idated proceed- in administrative engaged years mil- $2.25 with a —over adversary, in order as an ings, AT&T witness—its expert according to its lion in 1969 approval $250,- FCC initial gain spend feasibly it could not claim Louis its St. operation prepos- truly and construction pipe becomes a lateral 000 on passed years more Two Chicago line. suggest, in MCI As the facts terous. its Common down handed infeasibil- FCC and impracticality degree before high then another satis- and order to in decision ity be demonstrated Carrier must finally facil- clarified essential the FCC of the until element fy second years three by issu- MCI’s the nature of Given decision of that ities doctrine.32 the effect time, money, and provide terms AT&T requiring investment ing an order significantly initiative, compared to start From interconnections. disputed that Consolidated took investment process smaller finish, approval entire here, has make unwilling to addition, made MCI years. eleven of the element the second satisfied constructing expenditure substantial surely MCI doctrine. facilities essential original Chi- lines. The long-distance own that a proposition for the not stand does a terminal required line cago-to-St. Louis ride to a free duty to has a firm relay towers microwave city and each entrants, is ex- and that market potential con- line to length along the whole by claim- is after actly what Consolidated extended then MCI terminals. nect the pipesystem City Gas' ing that access com- as the points original line from ability to enter to Consolidated’s essential long- a nationwide construct began to pany the market. moreover, venture, This system. distance whether addition, question sys- I also long-distance develop a nationwide to deal AT&T, actually in- refused compete with tem that investment, court found The district case. capital a tremendous volved to sell to offers series order made a risk. In and initiative even more at a of which was Consolidated, the lowest venture, $110 raised MCI to finance City Gas’ (i.e., the cost cost price of underwriting by lead- in loans million FGT) cents plus five gas As wholesale suppliers. equipment ing lenders were prices those held that per therm “one stated, MCI this made the MCI Fishman, terminal); at 520 F.2d railroad that courts the facilities nature 32. The (ski stadium); F.2d at Aspen, (Chicago feasibly be to able practically are held (Robert F. Hecht, mountain); at 982 F.2d cases facilities essential duplicated in other See, e.g., Stadium). Termi- Kennedy my here. supports conclusion 383, (major R.R., at 507 32 S.Ct. atU.S. nal they so unreasonable that constituted 2. The Doctrine’s Limits. refusal to deal under section 2. dis- doctrine, essential facilities as I ex- court, however, trict never determined above, plain see supra 1290- price what a reasonable would have been. 1291, nothing is more than mechanism Indeed, the district court never any set that aids courts in evaluating circumstan-

price whatsoever: in granting Consolidat- tial to evidence determine whether the evi- request injunction ed’s for an ordering City supports dence an inference of anticompeti- Gas to gas, tive intent. Given a certain type of fact price court never set a pattern, for that mandated the doctrine’s four-part test will sale, delegated generally give but rather rise to price-setting such an inference. Absent type task pattern, to the FPSC. fact F.Supp. See 665 if even the facts of the case could 1545. If the be district court found de- never satisfy test, they support would not reasonable, termined what a or “fair”33 an inference of anticompetitive intent. price been, would have question then I Such an depends inference on more than what basis it legitimately have deter- the four test; elements it arises mined that price offered sowas larger from the factual context—the cir- unreasonable that it constituted a refusal cumstantial evidence—of the case as a to deal under section 2. IAs discuss whole. The four elements of the doctrine VI, part more detail in the district court indicate, therefore may by but no means could have made that determination define, the kind of refusal-to-deal cases light of its determination of what which an inference of anticompetitive in- “fair” price is, by would have been—that justified. tent is subsection, In this I un- comparing the price offered to the fair dertake to fully describe more the factual price and deciding that price offered features and the kinds of circumstantial higher so much than price the fair evidence are necessary give rise to it was unreasonable a re- constituted an inference of anticompetitive intent in fusal to deal. determining Without the fair addition to satisfying the essential facilities price, therefore, the district court had no doctrine four-part test. concluding basis for Gas’ offered begin I awith discussion doc price constituted a refusal to deal. The trine’s origin application in two Su prong third of the essential facilities doc- preme Court cases — United v. States Ter trine is thus not satisfied here either. Ass'n., minal R.R. 224 U.S. 32 S.Ct. reasons, For these the district court in 507, (1912), 56 L.Ed. 810 and Associated improperly view applied the essential States, Press v. United 326 U.S. present facilities doctrine As case. (1945). 89 L.Ed. 2013 Based on these suggests, cases, discussion also this case is I describe the factual context neces radically different from the typical sary proper application essen- of the essen tial facilities case. That tial facilities doctrine. I district court consider the then light case in readily so of that discussion apply nevertheless order to demonstrate that case lacks doctrine and also it to controlling— find be certain key features that must be today and that the court would affirm that if the essential facilities justifi doctrine is result —are matters of therefore considera- ably give rise to an inference of anticom- concern me. I ble think it necessary petitive require imposition intent and opportunity take this analyze thor- liability under oughly the and the character limits doctrine, essential facilities and the implica- R.R., frequently Terminal cited as forcing application tions of case original essential facilities such as this one. I undertake to do so in group of railroads that St. serviced Louis following subsection. acquired ownership of a railroad terminal below, explain As I required just in detail compensation clause of the infra 1314-1319, by price, price "fair" mean the fifth amendment. usage fee. the imposing means, other railroads of access sole provided the not, example, owners did The terminal allowed owners The terminal Louis. St. operating railroads higher fee on assess a terminal use the railroads to competing these consider- fee, Based on in East St. Louis. extremely high payment of an only on ations, its instructions the issued Court competitive a arrangement that secured an concerning decree.35 the rail- terminal owners’ advantage to the owners, al- The terminal roads. case to Supreme Court The next seminal to use St. Louis East railroads from lowed in discuss- pointed courts have which lower apparently payment, without terminal the is Asso- facilities doctrine ing the essential Memphis, Tennes- bridge in a toll because case, the government In that Press. ciated! an East St. Louis railroads provided the enjoin en- seeking to brought an action city. As a access to the means alternate by- newspaper association’s of a forcement situation, govern- the federal of this result more consisted That association laws. brought private plaintiff) (and not a ment in the col- involved newspapers than against enforcement action an antitrust news; by- lection distribution owners.34 terminal news or sale of distribution prohibited laws by any of the association’s to nonmembers favor Court held Supreme The government claimed The members. case to remanded the government conspiracy arrangement constituted to enter instructions court with violation, inas Ter- trade —a in restraint of owners requiring the terminal decree R.R., 1 of the of section minal Sherman with access competing all railroads provide monopolize attempt to an Act—as well as reason- “upon just and facility such to the Act. 2 of the of section in violation will, in re- as regulations terms and able that, restraining service, The held character, Court use, cost of spect of competed to nonmembers nearly sale of news upon as every company such place members, bylaws the association’s occupied by the with ... as equal plane an competi- give designed to members were at companies.” 224 U.S. proprietary and thus nonmembers advantage over tive considera- principal Two 32 S.Ct. at the antitrust First, violation of constituted decision. supported the Court’s tions an approved The therefore laws. Court owners that the terminal noted Court also ordering the association injunction Their merely owners. terminal were not nondis- news to nonmembers operating not limited to activities were criminatory terms. 326 U.S. provision of terminal, included the but Press, in Termi- as In Associated at 1425." id. in St. Louis. See railroad services R.R., emphasized that the Court own- nal terminal 32 S.Ct. at 514. The power as a attempted to use its competitive defendant gained a thus ers’ railroads competi- gain by newspaper association service advantage providing railroad newspa- nonmember advantage over tive terminal virtue of their ownership. In addi- monopoly leveraging. pers i.e., monopoly-lever- involved a classic thus case — R.R., tion, the association in Terminal were the terminal owners aging situation: newspapers al- discriminated level of between monopoly power on one using their members, of services: lowing access advantage competitive gain a the market to course, associa- Second, enjoyed the benefits of the market. level on another enjoyed news, nonmembers whereas tion’s between owners discriminated the terminal is the monopolization trade or commerce brought under section 4 government suit 34. The Act, contending prohibitions of the upon § foundation U.S.C. of the Sherman that the ” rest,' arrangement in re- S.Ct. at 515 combination 224 U.S. at statute id. Oil, in violation of straint of trade 31 S.Ct. at (quoting 221 U.S. Standard Act, 1.§id. equal Sherman 523), ac- held that mandating the Court part facility of all railroads on the cess to the request government’s rejected the Court requirements accomplish of the anti- group. Rely- ownership for a dissolution ing " consistently public's trust laws most ‘injury public proposition aon well-operated terminal. railroad in a interest on or prevention restraint undue benefits, bylaws prevented tempts competitors’ cer- no and the to restrain their access newspapers becoming members. tain to the essential facilities at issue became R.R., Finally, as in the element significant Terminal purposes: for antitrust underlying conspiracy formation of the circumstances, gave that conduct rise (or group association of railroads own- anticompetitive to an inference of intent. terminal) ing the influenced the Court’s The merely essential facilities doctrine decision. provides a means to type evaluate this If we are to understand the essential pattern fact in order to determine whether outgrowth of these facilities doctrine as give the facts rise to such an inference of cases, applying the lower courts as question intent. I how far legit- courts can should, suggest then we must doctrine we imately extend the doctrine when the cir- limits of the understand the doctrine as approximate cumstances of a case fail to end, in cases. articulated To that pattern the fact of these two cases. The teachings offer some observations on the guidance cases themselves some on of Terminal R.R. and Associated Press. point. Supreme this As the Court indicated These cases demonstrate three distinct R.R., in Terminal it would have been a First, factual features. the defendants different case if the terminal owners had already engaged were in the business of solely been in the terminal business and not facility providing access to the essential or in the railroad business well. See in resource at issue. The terminal owners S.Ct. at 514. If that in the Terminal R.R. were business were the the terminal owners’ con- providing terminal access to railroads. The charging prices duct in high would not newspaper association in Associated Press anticompetitive have had the overtones gathering was in the business of and dis- the conduct had in the actual case. short, tributing newspapers. news to would monopoly- case not have been a already defendants both cases were leveraging case: the terminal owners selling the essential re- business using monopoly would not have been their source, service, to other entities. Sec- power gain competi- over the terminal to ond, vertically the defendants were inte- advantage supplying tive railroad servic- grated: they operated on another level es; they simply charging would have been market, facility of the or resource higher some railroads a fee use of the operations at issue was essential to their on anticompetitive terminal. The inference of level The terminal owners in as well. intent case did not arise from the ran their own trains into St. Terminal R.R. high charged conduct—the fee for access Louis, required operation and that access itself; rather, the terminal—in and newspapers the terminal. The member the inference arose from the effect newspa- ran their own Associated Press high competi- fee on the terminal owners’ depended pers and on association position in tive the downstream railroad Third, in these their news. the defendants By charging competi- downstream market. cases, in control of essential facilities at fee, higher tors a the terminal owners ob- operations, competed one level of their competitive advantage providing tained a operation the second level of with other railroad service to St. Louis. See id. required entities that also access to the If the 32 S.Ct. at 515. terminal own- facility operate essential order ers had not also been in the business second The terminal owners Ter- level. services, providing high railroad then their competed with other railroads minal R.R. charges produced have no such fee Louis, servicing those other rail- St. advantage not, competitive and would the terminal in required roads access to given have rise to an inference Likewise, city. order to reach anticompetitive intent. newspapers in Associated Press member The circumstances of the Associated newspapers competed nonmember support analysis. case also news. Given Press that needed the association’s factors, refusal to news to non- defendants’ at- association’s these three information web of a vast reporters gave the member newspapers member Assume, fur- city. throughout the advantage in the sources competitive newspapers a publish to undertakes ther, the Post to deal that The refusal market. newspaper en- city, thus in same newspaper daily of anticom- inference rise to an gave thus the Times. competition dif- tering were into association If the intent. petitive re- enough however, an example, as has Post, The ferently constituted —for staff, service, not reporting news-reporting a small for sources independent staff, engaged it not larger newspapers, and a afford it could composed of even if to up refusal to build newspaper years business—its several in the take would newspapers would re- Times’ nonmember deal that network information competi- a Post, association given have there- The developed. not have porters opera- level of on another advantage tive the Times. buy news fore, to wants association, would in that The tion. however, sell refuses to Times, The leveraging, monopoly in engaged have not news its never has sold The Times Post. have not deal would refusal and its otherwise) and (newspapers anyone intent. anticompetitive an signaled so now. starting to do intention has no admits, been no interest it would have has cases Times also two As the These already newspaper had not so rival the defendants news to a supplying if different Indeed, providing access in the compete. business rival been can that the ’ issue, is ex- facility at survive essential Post cannot if the Times case. actly the situation it can unless newspaper market daily however, fun- situation, is so type Times, This is all that from the news obtain pattern fact from the damentally different the Post expected, As would be the better. Press and Associated R.R. of Terminal ends meet. making time a difficult has touch did not cases those the Court lawyers of therefore, hires some Post, The discuss I therefore it. approach on how against suit brings an antitrust its own demonstrate in order case hypothetical ordering injunction Times, seeking an does doctrine facilities the essential to the Post. news to sell the Times situa- type of to this extend properly not deny this must suggest that I fea- factual is, the first absent tion: fa- the essential injunction: for an request four cases, satisfying the two these ture impos- provides no basis doctrine cilities doctrine facilities of the essential elements under these Times on the duty to deal ing a anti- inference an give rise to not will point, preliminary As a circumstances. demonstrate, I also As intent. competitive case such monopoly-leveraging not a this is 2 in liability imposition Press. or Associated R.R. Terminal as practical hypothetical case vertically integrated is not Times The typical not arise do implications re- large its paper assembled entity: cases, typical case. facilities essential information developed its porting staff practical moreover, to foresee fail of, indeed purposes entirely for networks them. address let alone implications, of, newspaper own part its integral an facili- as well, essential as reason For this Press, not, as Associated in this operation result control do not cases ties has The Times for resale. produce news case. hypothetical entity whatso- any other news to sold never newspaper called Assume Post, news to to sell Its refusal ever. percent hundred one possesses Times an as classified therefore, not be could ain market daily newspaper of the share power as “monopoly” use attempt to achieved Times has city. The given its distribution maintain newsgatherer to news and first-rate providing position operation newsgathering monopoly: its The Times years. reporting services operation newspaper of its integral part and, because staff reporting large has a constantly reit- Given time, as whole.36 long for a business been in here either. control I discuss monopoly-leveraging cases above, would therefore supra at erated rationale essential facilities its decision not to deal with the Post mere- against guard doctrine—to the evils of mo- ly follows from policy. that blanket Its nopoly-leveraging hypothetical case decision is not inconsistent. Nor does the —this appear beyond fall would thus the doc- decision relate to the specific Post's status discussion, scope. trine’s For the sake of competitor. pattern Unlike fact assume that the essential facilities doctrine typical Terminal R.R. and other essential theoretically apply non-monop- to this cases, facilities the circum- oly-leveraging In practice, case. hypothetical stances of this give case rise it could not. to no anticompetitive inference of intent. assuming the Even elements of the es- practical The implications imposing sential facilities doctrine were satisfied duty to deal suggest on the Times also i.e., the court finds that the Times here — a inapplicability of section 2 these under monopolist in an control of essential re- hypothetical circumstances. In Terminal reasonably source that the Post cannot or R.R., Press, typical Associated and other practicably duplicate, and the Times has cases, defendants, essential facilities refused to that resource to the Post when ordered to deal with the excluded although feasibly it could do so—under entities, did not have to undertake a new ’ case, circumstances of this con- Times business or They new service. refusing duct in to deal with the does Post merely give had to the excluded entities the give anticompeti- not rise to an inference of same service already being pro- that was tive intent. Because the Times has never Thus, to vided other entities. in response news, inconsistently sold it has not acted in decision, to the Court’s the defendants in refusing to deal with the Post. In the both stop doing cases had to not they what case, contrast, typical essential facilities usually enjoined did. The Court’s decision inconsistently, the defendant does act re- operate normally them to respect with fusing to deal with some entities but not all hypothetical customers. In this R.R., with others. In Terminal for exam- however, if the Times were ordered to deal ple, charged the terminal owners some rail- Post, with the the court’s decree would be roads an exorbitant fee for access to the fundamentally different from the decrees charged terminal and others a reasonable typical essential facilities cases. This typical In fee for the same access. decree would not order the Times to re- cases, moreover, the inconsistent treatment ordinary operation; sume its course of potential relates to customers’ status as rather, it would order the Times to under- competitors: the terminal owners Termi- operation, take a begin new course of R.R., example, only nal refused to deal providing a service that it had never be- competed with railroads that also with the provided. of a kind fore railroads. The terminal owners’ inconsist- fundamentally case is different from the there, coupled ent treatment with the re- typical facilities case.37 Not essential competitors, sig- fused railroads’ status as factually legally is this kind of case in- anticompetitive naled the defendant’s typical inconsistent facilities essential tent. cases, practical implications but the of im- potential If the defendant treats all cus- posing duty to deal under these circum- same, however, if it uni- tomers the even radically than stances are different such all, formly any refuses to deal with implications typical essential facili- give conduct would not rise to an inference Consequently, sim- ties cases. those cases Thus, Times, anticompetitive intent. ply not control here. do owners, unlike the terminal has acted matter, general As a the antitrust laws inconsistently refusing deal with reasons, impose positive duty companies do not on Post. For whatever the Times all, help competitors. its The antitrust laws has chosen not to sell news Indeed, supra it differs refusal-to-deal at 1283-1288. cases general, any analysis. formula of See Under of conduct. in that engage course inhi of conduct types various on focus law, the Times laws, do not this established competition. bit news to impos duty” to sell by “positive no competition has purport facilitate duty kind of exactly the another help that is company But Post. duty on ing ordering it to deal the Seventh injunction As competition. company into Leasing Times. Equip. impose would Olympia the Post stated Circuit Co., 797 F.2d Tele. Union v. Western Co. the antitrust principle legal This —that denied, 480 Cir.1986), (7th cert. 370, 375-76 company duty on a positive no impose laws 94 L.Ed.2d S.Ct. supported competitors help its —is (1987), a firm impo- considerations. strong policy competi- help duty to general no circum- such duty to deal in aof sition between difference “There is a .... tors ineffi- encourage economic stances duties, and the anti- negative positive inequity. order promote ciencies doctrines legal laws, other like trust newspa- success level of achieve tort, generally been sounding in signifi- business, invested Times per latter.” only the impose to understood of period a capital over of cant amounts duty to reduce no monopolist A has ... initiative required investment That time. consumers, ... help order to prices in attempt An significant risks. and involved helping hand a duty to extend no and product a develop company to by any entrants.... new i.e., in a market —re- compete service— Technolo v. Corp. SPS (quoting USM Id. innovation, initiative, and risk-tak- quires Cir.1982), (7th Inc., 512-13 F.2d 694 gies, designed laws are ing. antitrust Our 1107, 103 S.Ct. denied, 462 U.S. rt. ce oppor- company has every ensure (citations (1983)) 1334 L.Ed.2d 77 Our these terms. compete under tunity to omitted). surprising, It is not laws, not mandate do antitrust dis facilities case essential every in this invest- having made company, a court a in which my research by closed and initiative taken this capital in ment deal, the defendant duty to a imposed a free ride into risk, then must dealing at of in the course engaged already competitor every potential new market for at 93 Tail, 410 U.S. E.g., Otter issue. would be policy a along. Such that comes (defendant already in business at 1022 S.Ct. that have made companies those unfair to Press, 326 wheeling Associated power); of moreover, risks; it and taken investments (defendant al 1416 at S.Ct. at 65 U.S. taking discourage businesses would news); Termi selling of in ready business risk, in- making initiative, assuming at 507 32 R.R., S.Ct. 224 U.S. nal A place. first capital in the of vestments operating already business (defendant results is to these lead that would policy Fishman, 807 F.2d terminal); railroad one; view, nor it not, good leas already business (defendant 520 laws. antitrust our policy behind F.2d at stadium); Aspen, 738 Chicago ing rational addition, respect must courts prac already engaged (defendant 1509 If the Times actors. economic decisions ticket), aff'd, ski all-Aspen providing tice of a course undertake not to opted has 2847, L.Ed.2d 467 585, 105S.Ct. others material sell to operation (defendant MCI, F.2d at (1985); —not operation its own develops intercon —the providing already in business second-guessing no business court has exchange net telephone to local nections is in the best itself The Times decision. (defendant at 982 Hecht, F.2d works); into enter whether to evaluate position F. leasing Robert already in business issue, it has dealing course cases, more Stadium). Kennedy the court so. For not to do decided been en over, had defendant fact uphold- effect a decision—in such evaluate dealing at issue: course of gaged deciding whether overturning byit ing or on a imposed never been has duty to deal deal—would duty impose a or not the com rationale that company under of its limits beyond the court push the feasibly could, court’s pany capabilities. administrative If courts were The courts would also face extreme ad- decisions, such question problems to review then the ministrative in imposing effective remedies in entity cases like this hypothetical whether should have undertaken one. If the injunction court issued an dealing ordering course would become an ele- the Times to sell Post, news to the every ment of refusal-to-deal case.38 The obviously have to set a trans- plaintiff would proving bear the burden of price action injunction. typical In the case, this element of the and the courts essential facilities the court can sim- develop legal would have to standard for ply look to the terms set the defendant judging the I suggest evidence. that this in its dealings normal with other custom- “element” of a refusal-to-deal case would ers. Unlike the association in Associated impossible be an prove. one to kind What Press or the terminal owners in Terminal showing of a require would the courts R.R., however, the Times has no estab- plaintiff to plaintiff make? Assume a lished terms for the sale of news to which books, access to a defendant’s to the defen- the court could look in fixing a transaction development, dant’s research and and to price. Thus, the court up must come with plans the defendant’s expansion price on its own. IAs discuss in detail in growth plaintiff could devise a —or part VI, courts would confront severe diffi- approximation reasonable of this informa- in undertaking culties price-setting if, evidence, tion. What based on this task. price must be fair plaintiff could show that the defendant Times;39 the require court cannot it to sell feasibly undertake activity at is- loss, news at a or at the ability cost of its sue, profit indeed would activity: from that compete. hand, On the price other would that a sufficient for a basis must also enable the compete; Post to if hold, law, court to as a matter of that the the Post compete cannot' purchasing after defendant must undertake that course of price, news at that then the court will be conduct? Would it be if sufficient unable remedy to fashion a pro- that will plaintiff stronger could make an even vide event, relief to the Post. In that un- showing showing that the defendant der principles established equity, of —a stay could not in business without under- case must be dismissed: courts cannot en- taking that dealing, course of but that if tertain claims 'that cannot be remedied. it, below, the defendant discuss these issues in did undertake he more detail would millionaire, 1312-1328. a become indeed a billionaire? infra argues What if the defendant in defense of Because the essential facilities cases all its decision not to undertake the course of involve defendants that already are en- dealing that its board of directors and gaged providing issue, the service at objection shareholders had a moral doing foresee, those cases do not let alone ad- dress, so? undertaking Or such an any practical would problems that place would impose additional demands on the arise if the court staff’s were to a time, duty hypothetical to deal in cases like which would conflict compa- with the problems, case. Given these and the fail- ny’s policy emphasizing importance ure pro- of the essential facilities cases to spending quality time outside of the office? any guidance, provides vide that doctrine Or, undertaking simply that the would be liability no basis for under section in this inconsistent company’s plans with the own hypothetical case. expansion? I suggest that the court legal has no forcing party basis for a case, moreover, hypothetical closely This operation undertake an party that the has present resembles the case. For the same not chosen to undertake. hypothetical reasons that the case is not such, That'is, very satisfy As this element would be different it must the fifth amendment's legitimate by a from business reason asserted a (cid:127)just compensation requirement. See infra company plaintiff in its defense after a has 1314-1319. already submitted sufficient evidence to raise an anticompetitive inference of intent. in non-mo- intent inferred have also case, neither Courts facilities an essential properly company cases, where nopoly-leveraging decided case. present one level on power supplying monopoly natu- with the business enter not to maintain in order deciding, it has to deal refuses In so market wholesale. gas at ral same level monopoly its conduct wrong, and nothing done Journal, See, Consol- e.g., Lorain gas to sell wholesale market. refusing to This under conduct at 186-87. anticompetitive is not U.S. at idated nothing do the Nor is of course facilities cases. test” “intent so-called essential these City Gas do duty on courts impose for what fancy laws label than a more antitrust business and case under every virtually refusal-to-deal enter antitrust of anti- Consolidated. gas to evidence direct 2: because sell company duty on positive exists, no courts impose rarely laws competitive intent such Imposing competitors. help its evidence the circumstantial evaluate hypothetical duty gives in this whether case to determine given serious above, create discussed in- anticompetitive case inference an rise to adminis- judicial policy and therefore, problems cases, dem- The intent-test tent. reasons, under For tration. which such from contexts factual onstrate R.R., Associated teachings of Terminal arise. can an inference fa- the essential Press, progeny, their clear, the make sections preceding As the imposi- justify the not does doctrine cilities monopoly (cid:127) involve does case present liability under section tion court, leveraging. The case. illegal intent an inferred not have extend attempt Test." “Intent E. of the mar- level from one monopoly case analyzed the The district above, the discuss As I another. ket test,” which “intent so-called under cases, Exchange Kodak-Poster Eastman circum- whether, considers do not monopoly leveraging, involve conduct case, monopolist’s aof stances If the evidence case. control destroy to illegal intent an demonstrates of to an inference rise give to case is this rise to gives conduct If the competition. therefore, do intent, it must anticompetitive intent, then anticompetitive inference an conduct City Gas’ the basis so on liability under to subject monopolist is the in order level retail on the using its Journal, at U.S. Lorain 2. See section lev- same on that monopoly its to maintain Kodak, 186; Eastman at 72 S.Ct. Journal situation, Lorain el. Given 404; MCI, F.2d at 47 S.Ct. at U.S. case. the relevant becomes at 338. Exchange, 431 F.2d 1148; Poster at in Lo- newspaper generally, these cases Applying that accept paid advertise- a review found, rain, on to “based Ohio refused court pur- advertising real on evidence, [City also parties Gas'] ments record monopoly compete begun its to to maintain was that had here radio station pose held, It advertising at 1540. mar- F.Supp. unlawfully.” 665 newspaper with the constitut- therefore, City brought an enforce- Gas’ conduct government The ket. of section 4 of the Sherman section a violation ed action under ment had acted newspaper Act, claiming that in both approach have used Courts Supreme 2. The of section in violation non-monopoly- monopoly-leveraging injunction approved agreed Court former, In the leveraging cases. accept adver- to newspaper requiring 1289-1290, the supra at above, discuss terms already established on its tisements of mo- conduct held have courts on the advertised parties if the even evidence is sufficient leveraging nopoly newspaper The station. competing radio imposition justify the to illegal intent radio busi- in the involved itself See, was East- e.g., liability under to become any desire ness, nor did it at Kodak, man not, was It business. in that involved at 339. Exchange, F.2d 404; Poster therefore, attempting to monopoly use its competitor nothing means be- power in newspaper advertising busi- cause Gas never sold any to firm at gain a share ness of the radio broadcast- all, regardless of the competitive firm's Rather, ing market. newspaper’s con- status. Lorain Journal is therefore dis- designed duct protect was its own mo- tinguishable on the facts. nopoly newspaper advertising busi- addition, because this case does not That conduct, though, ness. demonstrated involve a business in which City Gas was newspaper’s anticompetitive intent already engaged, poses it prob- remedial competition foreclose in the relevant adver- lems not in Lorain Journal. tising market. There, trial simply could mandate Journal, Lorain like other refusal-to- that the newspaper sell advertising space cases, deal crucial factual feature: parties the excluded on the same terms newspaper provide refused a service newspaper space sold to all other it was already pro- business of remedy advertisers. Such a viding. The newspaper advertising sold parties excluded with relief—advertis- space on established (presumably terms ing space in newspaper the court —and given dollar per inch) amount column easily could impose that remedy within the parties that wanted to advertise. The case limits capabilities. administrative newspaper arose when the refused sell That, however, is not the case here. Be- space such on the same terms to certain not, cause never, does and has parties that also wanted to advertise.40 sold gas wholesale, obviously it present case, course, The lacks this fea- has no established terms such a trans- ture: Gas has not refused to sell what court, action. The district it already selling. the business of not simply mandate that Gas sell Con- buy gas wanted whole- solidated wholesale its already-es- Gas, however, sale. sold only retail Instead, tablished terms. the district court gas, entirely which is an product. different price itself to set a had forced sale. distinction, Because of this factual Lorain so, district court however; did not do Journal does not here control for two rea- rather, delegated task FPSC. sons. Had the district court undertaken to set the First, gave what rise to an inference of price, it would have found task to be anticompetitive intent Lorain Journal impossible, as I part discuss detail in VI was the newspaper’s diversion from es- well, below. For this reason as Lorain course of conduct. newspa- tablished Journal does not control the case. per suddenly advertising. refused to sell As demonstrates, this discussion there- course, Of respect also refused with fore, the provided so-called “intent test” no specific to a class of advertisers —those basis imposing liability here. Unlike also advertising on the competing radio typical the analyzed réfusal-to-deal cases refusal, The coupled station. sudden with test, under this the circumstances in this identity customers, the the refused simply give case did not rise to an infer- clearly signaled anticompetitive an intent. ence anticompetitive intent. I turn now present ease, the not did to a discussion of Supreme two additional change its established course of conduct. Court cases. Rather, it did exactly opposite: the it re- to divert its fused from established course Aspen F. and Tail. Otter of conduct. has never sold at wholesale, and it continued not to do so in The court heavily district also relied on the case. fact that Supreme The two Consolidat- more recent Court case s —As ed, purchaser here, the would-be pen Skiing Aspen Highlands was Co. v. Skiing advertisers, moreover, request These impact did not would not have had an adverse 40. on the terms, advertising space special monetary ability on newspaper’s or to other clients. attract otherwise; Thus, subject the newspaper presumably legit- their advertisements had no unobjectionable; and the imate advertisements business reason for refusal. 1304 finding jury’s support existed to 2847, 86 dence 585, 105 S.Ct. 472 U.S. Corp., or to create an intent Co. had Ski that Tail Power (1985), and Otter 467

L.Ed.2d Court Supreme The monopoly. S.Ct. maintain States, 410 U.S. v. United Co. terms, ana in broader case (1973) approached L.Ed.2d — which duty to deal had a 2. Co. Ski section lyzing whether under deal refusals involve the circumstances. both under cite Highlands frequently with courts Although lower firma “even that stated essential-facilities Court first The support as cases duty general as test, has no as well monopoly intent and with doctrine marketing program case neither theory, joint ain engage monopoly-leveraging 600, 105 at formulas S.Ct. at any of these Id. competitor.” applies explicitly with prop cases. in section liability determining elaborated Court The 2856. nevertheless, follow “independent cases, counterpart Both osition early in the his right established to select principles cherished general businessman’s I discuss at cases Id. Court Supreme his and associates.” customers and Aspen I consider course, the Court section. as preceding Of at 2856. S.Ct. theories turn, analyzing the se Tail rights Otter qualified, these quickly —both demon cases liability applied compet not to deal customers lect im supports case neither strating that articu Court absolute. not itors—are City Gas. duty to deal of a position such a when determining key to lated violation: antitrust an constitutes decision Aspen. fairly conduct is challenged “the when Skiing Corp. Highlands Aspen Aspen, ‘exclusionary’ ‘anticom- as characterized ” four ski- one of owned (Highlands), 105 S.Ct. Id. petitive.’ anti- private brought Aspen, ing areas Co.’s conduct. Ski examined then Court Company Skiing Aspen against suit trust feature a crucial identified The Court ar- three other Co.), which owned (Ski to deal: refusal Co.’s Ski High- Co. Ski From eas. decide, must that we case actual In the all-Aspen ticket an offered had lands merely reject a not did monopolist at all four interchangeably use skiers cooperative ain participate offer to novel season, how- 1977-78 In the areas. skiing by a proposed had been venture participate ever, offered Ski Co. Rather, monopolist competitor. were terms only on ticket all-Aspen change in a important to make elected Co. Ski Highlands; unacceptable originat- had of distribution pattern and, counterproposal no consider per- and had market competitive in a ed to deal held, refused in effect years. for several sisted brought a tre- Highlands Highlands. Co.’s Ski at 2858. 603, Id. Co. against Ski damages action ble one demonstrated thus deal refusal Act, claiming that Clayton 4 of R.R. of the Terminal key features ski- the downhill monopolized had Ski Co. to deal refusal cases: Press Associated 2 of of section in violation ing market a new undertake refusal de- was Supreme Court theAs Act. Sherman rather, a refusal was it dealing; course question wheth- scribed, case raised dealing in which a course continue duty ahas monopoly power firm with er “a engaged. already a was rivals in its smaller cooperate feature, order avoid Court arrangement marketing identifying this After Act.” “to Sherman a decision violating 2 of the such even suggested § at 2849. 587, the character change 105 S.Ct. at important make necessarily anticom- is not ... a market court, found jury In the district As the at Id., S.Ct. petitive.” Circuit the Tenth Highlands, favor be “cannot question explained, Court facilities the essential affirmed, relying on effect considering simply by [the] answered Co. Ski holding that for as a basis doctrine Highlands. on Co.’s conduct] The Highlands. [Ski duty to deal had a impact to consider addition, isit relevant evi- sufficient held that also Circuit Tenth on consumers and impaired whether it had the factors articulated by Supreme competition in an unnecessarily restrictive Court Aspen support for the Court’s way.” Id. at 105 S.Ct. at 2859. Based determination that Ski Co.’s conduct was on its consideration of these exclusionary: additional whether the conduct had an factors, the agreed “impact Court that the on evidence consumers and whether it has was support impaired sufficient to finding competition in an unnecessarily adversely “consumers were way.” affected restrictive by Id. at 105 S.Ct. at elimination of the 2859. A ticket.” 4-area at Id. consideration in' factors present S.Ct. at 2859. The Court case also suggests that City noted that Ski refusal “justi- Co.’s conduct was not to deal is not classifiable as by exclusionary. fied any normal purpose.” business Id. 105 S.Ct. at 2860. Because the With respect to the impact conduct’s evidence was sufficient support consumers, the record contains no evidence

jury’s verdict in Highlands, favor of negative of a impact. fact, Court affirmed. court indicated that City Gas’ service was more economical than the service This case support does not Con- imposition provide. solidated could See duty F.Supp. of a to deal on Gas. The decisive 1505. The district court did note feature in Aspen Co.’s decision “to — Ski pass would have to on to its important make an customers change in pattern the costs of extending pipesystem into originated distribution that had in a com Consolidated’s service area. Id. at 1513. petitive market and had persisted for sever court, failed to ac- years,” al id. at 2858 — is count for the price increased that Consol- present in this case. contrary, On the idated would pay have to wholesale City Gas “important made no change in a compared price to the paid FGT: pattern distribution;” indeed, City Gas even if Gas were forced to sell to change, make such a and that refused Consolidated, it would be entitled to sell at refusal is what Consolidated challenges in a rate providing a reasonable rate of return present case. Given this crucial distinc investment, on its supra part VI. As- tion Aspen between present case, and the suming Gas’ distribution and Aspen does not control. operation hook-up efficient, no evi- remedy problem case dence contrary appears, Consolidated also did Aspen. not arise in Although the would up have to make for the difference Supreme Court made no mention of the in its price either charging its damages Aspen, amount awarded in retail customers than City more Gas would long history all-Aspen produc- ticket charge byor streamlining even further its ed an body extensive of evidence on the operation. distribution assuming Even profits division of all-Aspen from the ticket that Consolidated could oper- streamline its between Ski Co. and Highlands. The trial ation, the record contains no evidence that (or jury) in that' easily case could actually would benefit consumers. at a damages figure arrived that Unlike the negative impact on consumers accurately have reflected Ski Co.’s from the abolition of the all-Aspen ticket in economic position while providing relief to Aspen, the benefits to consumers from Highlands. That is not true entry Consolidated’s into the market would case. Because has never sold best, be slightly minimal—at reduced natu- resale, either to Consolidated or anyone ral rates some consumers. Even else, the point district court had no of ref- benefit would come at the ex- calculating erence for hypothetical a trans- pense higher gas of natural rates other for price. action See at for a infra question, moreover, consumers. whether detailed of point. elaboration this this type competition really of would bene- Aside problem from the imposing of a fit the Competition consumer. forces remedy present case, in the the gas district utility natural opera- to streamline its court below also failed to any fact, focus on of might, tion in harm the consumer. to refusal Co.’s Ski in that case present conceiva- competition

Although such in its alteration significant involved gas rates deal decreased slightly in bly result High- dealings of course safe- previous increase customers, might for some provided dealing of course That by pressuring lands. customers all for ty risks damages meaningful to point in order corners cut reference to suppliers gas in dealing exists pressure of of course sort No such That prices. award. their lower refus- Also, the whereas consumers. present case. not benefit the would ski- affected adversely Aspen in to deal al to con- failed court Moreover, district the such no case had in ers, refusal the natural the nature the given sider fact, evi- the consumers. gas on effect that business in business, competition gas exist- continued the suggests that dence only in the consumers benefit likely to is natural expansion and court ence district As the term, all. if at short con- actually benefit might monopoly mo- natural gas possessed stated, City Gas long- to respect sumers, especially is not That area. its service in nopoly gas safety concerns. natural entering the term strange: because expenses the involves supply business arranging hook- pipesystem building a Tail. 2. Otter supplier every virtually customers, to ups holding in area. Court’s supply Supreme in its monopoly the Nor does a natural continue cannot companies Tail, 410 U.S. supply Two Otter Compa- duty area. aof imposition service the the 1022, support same operate gain Tail, the outset an only at In Otter compete case. nies the deal into expand area electrici- produced a service company control power electric the nat- develop. Given they new areas and distributed level ty on the gas natural of the state monopolistic urally in various franchisor a retail electricity as competi- business, benefits the supply engaged company also municipalities. The Competi- limited. are consumer tion to gen- transmitting “wheeling,” or control initial companies tion between its trans- companies over by other erated prices, retail may lower area a service distribution the retail system. On mission sup- one Once term. only in short but ten- Tail granted Otter level, municipalities (and area service control gains plier during that franchises, and twenty-year or in- monopoly), natural develops a thus distribu- the sole served as Tail Otter time ends. pricing retail lower centive given monopolist natural tor—a —in rates monitors course, FPSC (Of certain when case arose The municipality. in- companies. See natural by all set mu- to establish attempted municipalities Moreover, would consumers 1332.) fra their own. systems distribution nicipal competition be- continuing from not benefit distribution local own their Having built single ser- within companies tween Ot- hoped that municipalities systems, by custom- switching Constant area. vice them wholesale wheel sell Tail ter generate companies would between ers however, refused Tail, Otter power. an increase force costs transaction Consequently, service. either addition, customers. to all prices retail enforce- an antitrust brought government companies between competition constant Tail, attempting Otter against action ment as the safety concerns likely undermine with the refusing to deal enjoin it from in order costs try to shave companies circumstances. municipalities Competi- competitiveness. their increase government granted district is, market tion up- Court Supreme injunction, state best means by no decree. held perspective. consumers’ affairs re- opinion Tail Unfortunately, the Otter indicates, does Aspen discussion As support rationale immediate no veals duty to deal aof imposition support Judge East- As action. court’s case is Aspen case. in Fishman iron, his dissent observed erbrook distinguishable immediately Wirtz, v. 807 F.2d Tail, Estate 573-74 Otter competition no such existed in (7th Cir.1986): present case—FGT only was the source study majority opinion A of the for four in region. Thus, in Justices Tail will not competition Otter reveal the absence of on the generating reason; gave only (or wholesale) Court’s result.... level in present case any It did not offer reason other than to means that consumers would not have ben- say Tail that Otter had competi- reduced efitted had Gas not deal, refused to tion_ rely To on Otter Tail col- contrast to Otter Tail where consumers leagues must be able to tease a reason would have benefitted had Otter Tail not of a opinion. out silent refused to addition, deal. In because Judge view, key participated Easterbrook’s never the second level market, the Otter of the Tail decision is the effect that its conduct had no causal Tail’s Otter refusal to deal any had on the connection benefit consumers might electricity-generating level of the market. have derived even if competition had exist- Judge described, As Easterbrook three production ed on the or wholesale levels. markets existed in power the electric indus- Applying Judge Easterbrook’s interpreta- try: power generation market, Tail, then, tion of Otter that case does not market, transmission and the retail distri- control here. market.' bution Otter Tail controlled the possible Another rationale for the Otter market, transmission and its refusal to deal holding Tail is that Otter Tail engaged in occurred on that level. What made that monopoly classic leveraging using its — violation, refusal to deal an antitrust power on the transmission level to increase Judge Easterbrook’s compe- was that its business on the retail distribution level. tition existed on the generating level. That Throughout the Otter opinion, Tail is, municipalities that wanted to enter “ Court indicated that Otter Tail had ‘a retail distribution electricity into strategic dominance in the transmission of advantage taken competition have ” power in most of its service areas’ level, generating which would have re- that Otter Tail used that dominance “to prices sulted lower for consumers potential foreclose entrants into the retail level, retail if Otter Tail would agreed area obtaining from power electric from according wheel. And Judge Easter- outside supply.” sources of Id. at brook, consumer benefit is the primary con- rationale, S.Ct. at 1029. This course, in determining sideration liability. antitrust apply does not case: Aspen, See U.S. at engaged Gas has not in monopoly leverag- 2859; supra Thus, at 1305. Otter Tail’s ing. Otter Tail was clearly vertically conduct clearly anticompetitive. was integrated company; City Gas, Ias discuss interpretation, Given Otter does Tail above, just clearly vertically not control Judge case. East- integrated. description erbrook’s of the three levels of As the stated, district court in Tail power electric Otter industry applies also to “operation Otter Tail’s consists of an gas industry. inte As I describe grated above, power system running gam the full supra the natural production ut from initial gas industry (1) final sale of stages: consists three production; (2) electrical pool combined with transportation interstate ar rangements (3) supply; supply emergency pow and wholesale intrastate er present case, distribution at retail. The reserves.” United States v. Otter Tail Co., distinguishable (D.Minn. Power factually F.Supp. 1971). respects: first, Otter Tail in two Although Otter majori whereas Tail did the participated Otter Tail ty level, on the of its on the transmission business retail it also level, as well as on the level distribution contracted with a number of other electric participated systems on the retail supplementary power, obtain n level; second, distribution compe- whereas which it “regularly” both itself and used tition existed on the generating companies. level wheeled other Id. at 56-57. with Ot- to interconnect approval mission’s approxi- to power wheeled example, it For litigation Tail, that involved process ter to pursuant municipalities eighteen mately forums, at id. in two Tail Otter against Bu- the with contract an interconnection nn. 4 & & at 4 & S.Ct. nn. &371 had entity that Reclamation, the of reau of one power to wholesale supply to

agreed Tail Otter which has at- contrast, with municipalities Consolidated Here, in the Gas, on 57-58. it wanted entry costs: Id. its deal. limit to to refused tempted in the not involved order hand, gas was from its purchase the other to natu- not a competitive it was gas; in the most of market production the initial to enter buy excess expense. it wholesaler; possible did nor least at the posture ral com- to other admin- completed the to distribute Lake Elbow of quantities Whereas engaged Rather, gain Commis- necessary was to it process for resale. istrative panies gas. to Otter interconnection of an approval distribution solely in the retail sion only at- market its not to use attempting Consolidated system, Tail’s not Gas was proceed- delay or whole- of such producer the to avoid tempted as a power delay monop- as that its to neither) pointed maintain ings to but (it was saler pro- to gas. It requiring justification distributor retail oly as a Moreover, gas. operation its wholesale it to maintain choosing vide simply gener- then entire it Lake built level whereas Elbow the retail exclusively on Consolidated expense, operation great that plant refusing ating existed, extend $250,000 to build even Whereas to invest market. the refused level to another con- have would fol- pipeline conduct lateral anticompetitive Tail’s Otter line. to FGT’s pipesystem the al- its integration, nected vertical its lowed from attempting was not short, from Lake Elbow followed here conduct leged violative distribution retail ride into a free integrate vertical- obtain not decision involuntarily Tail forcing Otter by not market reason, Tail does Otter ly. For that Elbow so function a new to undertake control. entry barri- market’s avoid the Lake Ot- between distinction point of Another posi- competitive enjoy an enhanced ers and concerns case Tail ter Con- exactly what is That, suggest, tion. attempting municipalities status impose a do. To attempting solidated in Otter market distribution retail enter circum- City Gas on duty to deal Tail and say that be stances, Lake, example, Elbow For case. deserves entrant market potential any Tail Otter municipalities one possi- market, on best ride into free own constructed had supply, refused of those expense terms, ble ar- had also town The plant. generating mar- already entered have entities power wholesale supply ranged for risk, terms, more difficult more ket on Reclamation, which Bureau from the laws, antitrust greater costs. and at relied area but lines voltage high had a result. support such do wheel companies to other Tail and Otter imposing no basis provides Tail its wholesale Otter lines to bulk from its power for one present case refused, duty El- to deal Tail Otter When customers. the rem- address it fails Power reason: further the Federal applied to Lake bow The Otter here. arises requiring edy problem an order (FPC) for Commission ap- Supreme Court decree, Lake Tail to Elbow to interconnect Tail Otter Tail that Otter proved, El- mandates itself.41 power and sell at whole- selling its own by assumed independently thus had Lake bow —either compa- wheeling other entering sale or barriers and faced the costs estab- have municipalities nies—to Not market. distribution retail into the systems. retail distribution own their lished generat- own built Lake Elbow had regula- addressed Court Supreme Com- gained the facilities, had also ing at whole- and sales ity interconnections company to order not order Although FPC could sale. author- involuntarily, FPC did to wheel

1309 tory decree,42 issues implicated by the 1982), but denied, cert. 464 U.S. conveniently the Court failed to address 234, 78 (1983), L.Ed.2d 226 focusing on an question price: if Otter Tail had to aspect of the Seventh Circuit’s holding how power, then much should it get that, in my view, does control paid? Supreme As the Court concluded, present case demonstrates the ab “the District Court ... in any event has sence liability under section 2 here. As jurisdiction retained to enable parties to I above, discuss supra see at 1293-1294, apply for ‘necessary or appropriate’ relief.” the MCI case arose out of MCI’s effort to 381-82, 410 U.S. at 93 S.Ct. at 1031-32. enter long-distance telephone market— particular Given the circumstances of the an effort that required the district access court on to the Bell remand could presumably up come network’s local a exchange reasonable facilities. As I price term. Otter Tail already power sold above, discuss id., see the Seventh at wholesale and power. Thus, wheeled Circuit held that AT&T duty had a to allow price terms in existing those transac- MCI those,local access to exchange facilit tions provide point a of reference as ies.43 The court reached this conclusion the district court attempted impose to a by applying the essential facilities doctrine. price term for future transactions. In ad- dition, Tail Otter did a portion substantial As the court stated: wheeling of its pursuant to a contract with A monopolist’s refusal to deal under Reclamation, Bureau of major a suppli- governed circumstances is er of power wholesale Many area. so-called essential facilities doctrine. municipalities with which Otter Tail Such a refusal may be unlawful because had refused to deal had themselves ar- monopolist’s control of an essential fa- ranged purchase to power from (sometimes cility called “bottleneck”) the Bureau under the assumption that Ot- ter Tail would can Thus, it. extend monopoly wheel power an even from one more specific point reference existed for stage production another, and from price imposing respect term with many one market Thus, into another. the anti- of the transactions that pursu- would arise imposed trust laws have on control- firms ant to the district court’s decree in Otter an ling facility essential obligation Tail. make the facility on available non-dis- The poses case a different set of criminatory terms. problems. Tail, however, Otter provides 708 F.2d at 1132(citing R.R., Terminal 224 no solution. circumstances, Given these 410-11, U.S. at 515-16). S.Ct. at Ac- Otter certainly Tail most not justify does cording statement, to this imposition concern moti- liability in this case. vating essential facilities doctrine is

G. MCI Revisited. entity with monopoly power on one finally return level of a to MCI market can use power Communications Corp. AT&T, v. (7th 708 F.2d gain Cir. control on another level of a market— 42. question Court faced the of whether the company order an electric to wheel if the com regulatory federal pany scheme limited the voluntarily had not undertaken an obli so, court's gation to fashion a decree. The to do see id. Court S.Ct. Thus, requirement concluded that the 1028-29. approval regulatory FPC the federal scheme impact had posed potential no interconnections on the district court's limit on decree Tail power. Otter wheel Id. decree. Because S.Ct. at decree mandated 1029; FERC, Light Power wholesaling only al, however, Florida 668, & subject Co. v. approv- Commission (5th 660 F.2d 674-76 Cir. Unit B Nov. facts impli- case did not denied, 1981), cert. If, 459 U.S. cate light events, S.Ct. that limit. of future (1983). 74 L.Ed.2d 1003 arise, problem were to the Court indicated that court, jurisdiction, which retained fact, the court held that the evidence could consider the problem then. support was jury’s sufficient to finding Supreme noted, however, Court that the refusal AT&T’s to deal was unlawful. 708 F.2d gave Federal Power authority Act the FPC no at 1132-33. St. Louis C, example from B to In order leveraging. monopoly i.e., by entirely dif- City. This claim Kansas essential occurring, the from

prevent concerning intercon- claim duty to deal ferent imposes doctrine facilities exchange system. local Bell’s nections to monopolist. re- effect, multipoint interconnections refus- to AT&T’s rationale Applying this long-distance own to AT&T’s quired access for interconnections provide local to al exchange local to the than rather system services, supra at see CCSA FX and MCI’s required all that MCI was which system, AT&T’s 1293-1294, characterized court services. FX and CCSA its operate to order monopoly use its to attempt as an refusal interconnections, multipoint The its maintain systems to exchange local over market, the long-distance only the involved Id. services. long-distance monopoly over attempting MCI was in which very market Tail to Otter pointed court The at 1133. that claimed MCI compete with AT&T. to conduct holding that AT&T’s authority for by compete that it could not character- market — The court anticompetitive. was to its custom- service multipoint providing Tail the Otter behind the rationale ized its to access provided AT&T ers—unless “that market as a concern decision was that MCI lines. AT&T contended being own was (transmission) market in one pro- lines to AT&T’s trying to simply use mar- in another monopoly to further used cities where to customers service vide distribution).” (citing Id. Otter (retail ket reach, not could facilities current 1029- MCI’s Tail, 410 U.S. to build authorized MCI was though of even interpretation Otter this 30). Based on those cities. reach that MCI, held facilities court facts in and the Tail anticompetitive. was conduct AT&T’s that claim, rejected MCI’s Circuit The Seventh AT&T on compete with to MCI wanted of interconnections the denial holding that that compete on level, but long-distance could not form multipoint service for exchange level, required access MCI court The at 1149. liability. Id. basis refused level. AT&T the local facilities reasoned access, the court MCI provide pre- to build was primary business MCI’s 2.44 violated refusal held to which facilities type cisely the for support no provides holding That System. Bell sought access case. decision court’s toas explanation no sufficient There was part, throughout maintain As I building hand, was MCI, one on the why here: entirely different situation other, and, network, on its own leverag- monopoly engaged AT& interim to access entitled ing. suf- Thus, jury lacked facilities. T’s opinion, the MCI aspect different A to conclude ficient evidence The MCI here. however, is instructive essential. were interconnections duty to no AT&T had held that continued: The court at 1148. Id. long- to AT&T’s to interconnect MCI allow liability, ... of antitrust aAs matter local (as opposed system distance its actually builds which can an entrant multipoint service. facilities) for exchange Mil- Chicago and facilities between own private line of a consists Multipoint service gain en- thereby waukee, example, for B, City A between a customer far-flung facilities all to use titlement line. Louis Chicago-to-St. as MCI’s such its entitlement Is System? the Bell multipoint interconnections requesting dupli- intention expressed on based access wanted system, MCI AT&T’s System the Bell major portions cate running from line multipoint AT&T’s of sell- level and the local telephone service on ex- to the local merely access wanted 44. MCI long-dis- service ing to that AT&Taccess same terms AT&T change on the facilities Thus, System was Bell operation. System, tance obviously which Bell to them. access had interconnecting the business companies, operating twenty-three consisted switching servic- its local long-distance lines to exchange services. These local provided the es. providing companies in the business were Could it a national basis? claim entitle- the same provided service as (or without) Gas, building any City ment before operated single on a mar- facilities of its own? think We the rami- ket level as a non-vertically integrated enti- multipoint ty, fications of the demand for then Consolidated itself had to con- troubling complex, service are struct operation facilities that such an that under required. the circumstances of this case ..., the denial of interconnections H. Conclusion.

multipoint service cannot form a basis of liability. above, As I discuss supra at 1299- 1300, the antitrust Id. at 1149.45 laws impose do not positive duty help competitor. I suggest holding controls in proscribe antitrust laws conduct that inhi- MCI, case. Like Consolidated competition; laws, however, bits do not claiming had no basis for an entitlement to purport competition to facilitate by impos- buy City from Gas. As in ing duty a company help on a to another MCI, primary Consolidated’s business was company competition. into As the Seventh provide City to the same service as Gas Circuit stated in Olympia, a firm provided. City operated Gas a retail distri- general duty has no help to competi- its system; bution Consolidated wanted to do tors. ..’. “There ais difference between exactly MCI, the same. Like Consolidated positive negative duties, and and the anti- compete claimed that it could not in the laws, trust legal like other doctrines retail distribution market unless it had ac- tort, sounding in generally have been MCI, system. cess to in Gas’ As Con- impose understood to only the latter.” solidated wanted sys- access to monopolist ... A duty has no to reduce provide tem so that it could the same ser- prices consumers, its in help order to ... provided vice that compete Gas and duty and no helping to extend a hand to same, only, on the and level new entrants.... operated. of the market on which Consolidated, MCI, every right like had (quoting 797 F.2d at 375-76 SPS Technolo- issue, City gies, compete 512-13) (citations omitted). the market at and 694 F.2d at Gas, AT&T, nothing pre- like could do especially This is true duty when such a competing. vent from require As the would company to undertake a indicated, however, City MCI dealing course of it which does not al- duty help had no ready engage providing Consolidated enter into intercon- —such AT&T, competition against selling gas it. Like which nections or at wholesale where not in providing normally the business of inter- it respect does not. Courts must long-distance connections for other services rational decisions of economic actors. If (as compared companies, entity to the local Bell opted has not to undertake a providing operation, which were business of course of courts have no busi- long-distance systems), second-guessing interconnections for ness decision. ad- dition, selling not in imposition duty Gas was the business of of a to deal in encourage at wholesale. The refusal to deal in such circumstances would eco- case, like AT&T’s promote inequity. refusal nomic inefficiencies and MCI, provide multipoint attempt by any company develop interconnections An a i.e., single product compete related to a level of market or in a service — initiative, innovation, operation attempt requires and involved no to lever- market — risk-taking. age Following into market level. another Our antitrust laws are de- MCI, if signed every company the rule Consolidated wanted to to ensure that has 45. The court reached this conclusion based on ent if the FCC had authorized or mandated that application principles. of antitrust It con- provide AT&T the interconnections. Without principles independently sidered those order, however, an FCC the antitrust laws such regulatory regarding effect that a determination imposed duty no on AT&Tto the inter- might such interconnections admitted, have. As the court connections. See id. at 1149. might conclusion been differ- con- conduct, not does City Gas’ compete opportunity of section violation stitute a company require terms, not to but capital investment made AMENDMENT FIFTH THE VI. provide a risk initiative taken this demonstrates, case is part V As every poten- market into ride free typi- case. refusal-to-deal typical along. Such comes competitor that tial partici- a defendant cal refusal-to-deal companies to those unfair be would policy issue, selling prod- market at pates taken investments made that have directly plaintiff to a either or service uct discourage busi- moreover, it would risks; transactions) cus- or to other (in previous assuming initiative, taking nesses attempts to then The defendant tomers. capital in making investments risk, and higher price than plaintiff charge the results with these policy place. A first simply refuses customers charges other one. good not, be a As plaintiff. outright to deal with policy that not the it is importantly, More brings suit under result, plaintiff46 pro- designed 15, 26, were contend- Act, antitrust laws our 15 U.S.C. Clayton §§ has violated the defendant ing mote. by refusing to Act Sherman demonstrate, no sections As the above plaintiff and at issue product the City Gas to requiring for exists legal basis ordering defen- the injunction seeking an supply business the wholesale enter on the same product the to dant circum- The factual gas. Consolidated given to the defendant’s those terms as fundamentally dif- are case stances seeking dam- also other customers cases, typical refusal-to-deal from ferent that the the court concludes If ages.47 here, City the circumstances given 2 of the section has violated defendant no infer- gives rise to to deal plaintiff refusal charging Gas' by the Act Sherman any deal anticompetitive refusing outright intent to ence of or higher prices the court orders to evaluate then the by plaintiff, courts with the approaches used to plaintiff and with the to deal I defendant Finally, as dis- evidence. circumstantial that the defendant price the same do so at part, in the next detail in more cuss custom- dealings with other in its has set administra- extreme presents case present ers. imposition of ef- problems for tive has never City Gas Congress In that remedy problems fective — In decid- anyone.48 gas for resale to sold to solve. courts have intended wholesale, (emphasis at F.2d gas bring sell at a civil might en- government also

46. The that is not original), evidence but contract the Sher- 4 of under section action forcement actually As sell at City did wholesale. ever Act, enjoin Gas the defendant to § 15 U.S.C. man IV, City might have part Gas that discuss in of section 2. refusing in violation to deal is nei- power sell at wholesale possessed to note 11. See infra rather, there; significant what is nor ther here below, see I elaborate 47. As infra legitimately to exercise City chose not Gas is that seek, may addition plaintiff private Consolidated, Flor- selling to making to —not profits damages lost be- for injunction, to an Gas, any firm. And or to other ida date of final deal and to the refusal tween wrong. choice, nothing City did Gas pro- or, injunctive would not if relief judgment; IV, part contract discuss in I also As to deal forced remedy the refusal because vide parties had if the even not be relevant would business, then the go out of plaintiff to in- contract would it: the not abandoned going damages its may for loss of plaintiff seek geographic than market different volved profits damages lost in value and concern the interim. Perhaps present case. involved market irrelevance, contract’s of this best evidence court never the district though, fact that is the panel made much of court 48. selling establishing a "had, fact, as a to it basis looked entered into City Gas the fact City requiring Gas injunctive order price its party to Gas] third [Florida with a a contract gas to Consolidated. supply wholesale gas 880 F.2d resale.” sell establishing a delegated task of contract, court district selling price This F.Supp. at 1510. F.Supp. at See the FPSC. performed. City executory: Gas merely never doing, court In claimed, so no doubt panel this contract As the be Gas contract implicitly found Florida "power” City Gas had provides evidence Consolidated, ing supply gas City not to Congress could not have against Gas did not discriminate Consol- intended section of the Sherman Act to mandate such a by attempting charge result. ap- idated Consolidat- This becomes parent when one practical than considers the higher price City charged ed a Gas implications enforcement, of the rule’s by entirely denying other customers court, which the district as well as this a service City provid- Consolidated today, court has entirely failed to do. As ed to other customers. Under these cir- implications those suggest, the rule will be cumstances, the district court could not impossible apply. The district courts of by conclude Gas violated section 2 this circuit will confront severe difficulties treating differently than in fashioning remedies under the rule. Gas treated its other customers. Nor addition, the application rule’s will frus- require could the district Gas to very trate the purposes behind the anti- gas sell wholesale to Consolidated at the I develop trust laws. points price gas same Gas sold to its following analyzing how a court other customers. Such a decree would be apply this new rule to the facts of meaningless since Gas has never sold case. any any price. firm at I first introduce the idea that this rule typical cases, Under the refusal-to-deal implicates the fifth takings amendment therefore, City nothing wrong. did It above, clause. As I note because merely operated as a retail distributor has never sold at wholesale and has in its established service area and decided therefore price established no for such not to deal all on the wholesale level. sales, the court under these circumstances court, however, developed The district selling price must set a require if it is to new rule of law: it held that 2 of City Gas to sell to Consolidated. That imposed positive duty the Sherman Act price satisfy must the fifth amendment’s change on toGas the nature of its just compensation requirement.50 I then operation and sell wholesale to Consol- finding just consider what compensa- idated that so Consolidated could enter the requires tion clause present under the retail market and compete distribution Next, I impli- facts. discuss some further applied Gas.49 The district court amendment, cations of the fifth sug- which present portion rule in the case to take a of gest impossible that the rule is apply gas supply give and it to Consol- and leads to results that are inconsistent requires City idated. This new rule thus purposes with the behind the antitrust company nothing Gas—a that has done discussion, laws. Based on this I conclude wrong undertake opera- a new level of Congress could not have intended sec- —to engage tion in a and forced sale of whole- support rule, tion 2 to such a rule. The sale to Consolidated. should be struck down. today upholds, as unreliable evidence of Gas’ wholesale court which the section 2 would gas price. Gas, impose positive duty seem to requiring it to sell at wholesale to Consolidated law, articulating

49. this new rule of the dis- compete, though so that Consolidated can even distinguished body trict court should have voluntarily Gas has never sold wholesale of antitrust cases in which courts have held that any Although grounds firm. I see no duties, impose positive the antitrust laws no but case, distinguishing present these cases from the See, only negative e.g., Aspen, duties. 472 U.S. purposes I assume for of discussion that their 600-01, 2856-57; 105 S.Ct. at Co., United States v. inapplicability case could be ex- 300, 307, 465, Colgate & U.S. 250 39 S.Ct. plained. 468, (1919); Olympia, 63 L.Ed. 992 F.2d at 797 (7th Cir.1986); Fuels, 376 Florida v. Inc. Belcher typical Co., 1528, 50. In the refusal-to-deal (S.D.Fla.1989). fifth F.Supp. Oil 717 1532 poses problem: amendment no the court re- company duty These cases teach that a has no quires already-estab- competition competitor the defendant to sell at its foster aid a but selling price, applying company may anything presumption prohibit lished that competition not do prevent price company the defendant set the or to from com- it must rule, peting. just compensation. Under the district court’s new receive in order to obtain 1314 v.Co. (1942); Tenoco Oil 1037 L.Ed. up- 86 today nevertheless our Because Affairs, 876 Consumer Department rule, sec- analyze impossible

holds Cir.1989); Jersey Cent. (1st 1013, 1020 attempt- F.2d errors court’s tion B F.2d FERC, 810 v. Co. Light & Power judg- it conclude apply ing to line of (D.C.Cir.1987). This 1168, 1175 re- the case vacated be should ment fifth amendment that the indicates cases I de- as proceedings for further manded regulation rate proscribe not does scribe. regulation rate rather, itself; proscribes Rule. compensation. Enforcing just denies Implications price that A. at a articu- has therefore Supreme The Court Amendment. Fifth 1. The cost ba- “historical a standard —the lated perti- provides amendment fifth The to de- regulations reviewing rate sis”—for be property private shall part: “nor nent constitu- satisfy this they whether termine compen- use, just without public taken Barasch, U.S. 489 See mandate. tional 5. Courts Const.Amend. U.S. sation.” 616-17; Hope v. FPC 309, S.Ct. 109 amendment the fifth held long 603-05, 591, 64 Co., 320 U.S. Natural Gas by federal set utility rates applies (1944).51 288-89, 333 281, 88 L.Ed. S.Ct. to satis- in order agencies: regulatory state case, a Assuming the facts clause, must rates compensation just fy the involved. category regulation different confiscatory,” to be ‘unjust’ as “so not be ratemak- goes beyond regulation here Barasch, U.S. 488 v. Light Co. Duquesne a service City Gas to require ing to 615, L.Ed.2d 609, 102 299, 307, 109 S.Ct. If admin- normally provide. it did Permian Basin See, In re e.g., (1989). 646 implicates regulation price 770, 747, istrative 88 Cases, 390 Area Rate amendment, intrusive more then this (1968); fifth 1361, L.Ed.2d S.Ct. obviously implicates regulation Am., category Pipeline Co. Natural v. FPC Thus, if well.52 742-43, amendment the fifth 315 U.S. denied, Cir.), (11th 479 U.S. cert. as a cost approved historical Hope Court (1986). rule, just L.Ed.2d S.Ct. calculating Under this rates. basis en- provided “[r]ates compensation is takings cases also established successfully, Application of operate company to able [a] the In capi- this conclusion. integrity, supports attract this to its financial maintain tal, 51, rationale, supra note the risks see "compact” for its investors compensate to and 605, subject to voluntarily at themselves 64 S.Ct. at Hope, U.S. utilities 320 assumed.” benefits, does for certain regulation in return 289. Rather, group rule, regulated is ... judge "the as one apply. this not behind rationale The implementing [by court stated, regulation required a federal is that has regulated compact participate in original between to Act] part Sherman was is, 972, regulation in and courts Whitney, F.2d at industry,” Rate 780 the state. investors theory, competition. The im- compulsion be an to for substitute such have considered were, shoes, taking. of com- as it amendment a in fifth portant stands indication state petitors, utility within bounds if the keeping be regulation enforced could still Such by forces in compensation. market Be- just drawn be provided would company that non-monopolistic economi- Whether compulsion, market. how- company acts under cause the ever, not, regulation utility in rate submitting regu- cally voluntarily sound to than rather concerns. cases, constitutional no ratemaking raises itself the court lation as J., (Starr, con- Central, 1190 F.2d Jersey 810 just rigorous for standard apply a more should rule, this principle behind curring). therefore, crucial A relatively "zone broad compensation than utility companies idea is the developed under standard reasonableness” reg- operate in voluntarily undertaken just question of turning to the Hope. Before natu- of a enjoying industry, the benefits ulated analyze case under this first compensation, I submitting rea- monopoly return ral takings principles. established corollary a As rates. regulation of their sonable emphasized, "[t]he Supreme Court has As the may, company utility principle, the to this traditionally been con- has power to exclude industry course, participate in choose strands most treasured one sidered regulations limit although the longer: any rights.” v. Loretto property bundle owner’s court rates, regulations, as this those companies’ Corp., 458 U.S. CATV Teleprompter Manhattan regulat- observed, require “the do not itself 3176, 3164, 435, 868 419, 73 L.Ed.2d 102 S.Ct. regulated participate group ... ed industry.” Coastal 963, (1982); v. see Nollan Heckler, 780 F.2d California Whitney v.

1315 view, my over them and their installation. In Comm'n, 825, 830-32, 3141, 483 U.S. 107 S.Ct. factually the invasion in the case is (1987); L.Ed.2d 97 677 Kaiser Aetna v. Loretto, similar. As in the district court’s man- States, 164, 179-80, United 444 U.S. 100 S.Ct. requires permanent, physical date intrusion 383, 393, (1979); 62 L.Ed.2d 332 also FCC v. City property. per- onto Gas’ The intrusion is 245, 251-53, Corp., Florida Power 480 U.S. 107 first, ways: manent pipe in two must be 1107, 1112, fact, (1987). S.Ct. 94 L.Ed.2d 282 permanently constructed City to attach Gas’ permanent physical the Court has held that a occupation pipesystem pipesystem; to Consolidated’s property by government con- second, interconnecting pipe perma- will See, Loretto, per taking. e.g., a 434-36, se stitutes 458 nently City drain pipesys- 3175-76; U.S. at 102 S.Ct. at see also pipesystem. tem and into Consolidated’s As the 251-53, Corp., Florida Power 480 U.S. at 107 held, previously Court has such a continuous severity S.Ct. at 1112. The of such an invasion arrangement "permanent physical constitutes a requiring warrants this conclusion without occupation" purposes of the Loretto rule. analysis inquiry general- under the "multifactor Notion, See 483 U.S. at 107 S.Ct. 3145 ly governmental applicable nonpossessory ac- (easement giving "permanent individuals Loretto, tivity.” U.S. at S.Ct. fro, right pass continuous to and so that the 3178-79; Transp. City see Penn Central Co. v. traversed"). property may continuously real be York, 104, 124, 2646, 2659, New U.S. Gas, I also think that like the landlord in (1978) (describing 57 L.Ed.2d 631 multifactor Loretto, lacks control over this invasion. inquiry); (applying inquiry see also infra Gas has no control over the case). invasion in that present sized, however, Supreme empha- The Court has gas. Gas cannot refuse to But permanent-physical-oc- that this See, also lacks cupation "very control over the invasion in a e.g., rule second- narrow.” Flor- Power, 251-53, 1112; ary sense that the ida U.S. at Loretto Court also held S.Ct. at to be Loretto, important. 458 U.S. at 102 S.Ct. at The Court there referred to the presents question this case a close "placement, landlord’s lack of control over the concerning applicability. manner, use, the Loretto rule’s Lor- possibly disposition regulation required etto a state involved suggested installation” and the outcome companies landlords to allow cable television might have been different if landlord had property. install cable their facilities on n.19, such control. 458 U.S. at 440 102 S.Ct. at per- Court found that the installation involved a Nollan, Similarly, 3179 n.19. the Court noted manent, physical attachment and thus held that property inability regulate owner’s Loretto, per taking. it constituted a se property. continuous flow of traffic across his at subsequently 102 S.Ct. at As the Court has Here, See 483 U.S. at City 107 S.Ct. at 3145. indicated, key rationale behind supply gas according Gas will have to holding was the fact that the statute re- terms mandated amounts, the district court: in set quired landlords to allow cable installation. On times, prices. at set and at set basis, the Court in Florida Power distin- pipesystem fact that Gas owns its own is of statute, guished a federal the Pole Attachments court, significance. no Gas, The district and not Act, (1982), 47 U.S.C. 224 which authorized § arrangement. decrees the terms of the regulate the FCC to the terms of contracts be- think, that Loretto controls: if utility companies operators tween and cable requires City section 2 of the Sherman Act utility poles, the attachment of cable to from the circumstances, to deal under these that consti- regulation in Loretto. As the Florida Power taking. per tutes a se discussed, control, Even if Loretto does not this forced while the statute we considered Loretto taking constitutes a under the Penn Cen- specifically required permit per- landlords to inquiry. inquiry tral multifactor (1) That looks to occupation property by manent of their cable (2) impact regulation, the economic of the companies, nothing in the Pole Attachments the it extent to which interferes with invest- interpreted by Act as the FCC in these cases (3) expectations, ment-backed the character gives companies any right occupy cable to Central, governmental of the action. See Penn utility prohibits space poles, utility on com- 124, Imposing 438 U.S. at duty 98 S.Ct. at a refusing panies from to enter into attachment significant to deal will have economic agreements operators. with cable impact Gas. With an investment of 251, 480 U.S. at 107 S.Ct. at 1112. The Court in money, City time Gas will have to divert stated, however, expressly Florida Power that it gas supply some of its own to Consolidated and application did "not decide ... what the process supplying also administer the actual ... would be if the FCC in a future case Loretto required renew, addition, gas by enabling In Consolidated. utilities, into, objection, over to enter having compete Consolidated to without to un- terminating pole or refrain from attach- entry dertake the costs with into the associated n.6, agreements." ment Id. at 251 107 S.Ct. at business, gas supply duty to deal natural might 1112 n.6. case seems to change force Gas to its retail distri- exactly question, this and to the extent that the losing bution in order to avoid cus- business: compulsion explains the rule element of etto, in Lor- Consolidated, City might (subject Gas tomers to apply that rule should here. approval) retail key to the FPSC's have to lower its Another factor in the decision Loretto invasion; loosening permanence prices, if it can do so without the nature of the safety might operation; have to the facilities and the landlord’s lack of control controls of its it 1316 whether to evaluate also injunction, but mus- pass “taking” is to constitutional

this duty to deal its City Gas confronting these facts violated ter, a court then place. first injuction pro- in its price must set just compensation for with City Gas vides price addition, fifth amendment In gas.53 its determination the court’s controls inju- satisfy the can Consolidated requirement means whether amendment The fifth 4 and 16 of sections ry-in-fact requirements court’s it also though: controls more below, I Act. As discuss Clayton violated of whether Gas determination injury, or 1321, prove in order at new imposed under this duty to deal infra purposes injury, likelihood City the protects fifth amendment rule. 16, must show 4 and price at a sections having to sell its by pur- a profit have turned that it could price. compensation just than lower City Gas at gas from chasing wholesale duty to deal Thus, its City Gas violated If price. Consolidat- amendment to deal if it refused only 2 section fifth after profit not have turned a ed could The court price.54 amendment the fifth City Gas’ price, gas at then compar purchasing this determination must make Consolidated, injure did not selling refusal deal price to the amendment ing the fifth standing under the has no and Consolidated by City and eval actually offered price as a point to that conduct Clayton Act to price was un uating offered whether 2. In order liability under section constituting a refus basis reasonably high, thus however, issue, properly decide 2. The in violation of al to deal find the fifth amendment must first the fifth amend set therefore court must application I now consider price. fashion its price in order ment addition, "taking" satisfy the fifth must requirement. That marketing “public use” aggressive strate- amendment’s a more undertake interpreted operating requirement, has been its gy, costs; would in turn increase op- Supreme in Ha- might potential broadly. business stated also lose Court As 229, 240, ability Midkiff, extend its servic- portunities e.g., the U.S. Housing Auth. v. 467 waii — occupied by 2321, 2329, (1984), territory Consol- es to customers L.Ed.2d 186 81 104 S.Ct. shortage, more- the event of a idated. over, requirement is ... cotermi- ‘public use' ”[t]he delivery might to curtail sovereign’s police pow- scope of a nous supply- in order to continue 26, customers Parker, its own U.S. v. See Berman ers.” 32-33, also ing Consolidated. 102, (1954). 98, L.Ed. 75 S.Ct. duty suggest, the considerations As these Thus, extremely nar- “‘an conduct the courts ” City Gas' invest- interfere deal will legislature's judgment as to of "a row’ review By changing expectations. ment-backed use,” Midkiff, public 467 U.S. what constitutes altering regulatory structure market’s Berman): 240, (quoting "the 104 S.Ct. at 2328 market, duty competition in that nature of judgment for a not substitute Court ... will expecta- significantly affect will to deal judgment constitutes legislature’s as to what tions. palpably without public the use be use ‘unless Finally, the district court’s the character of foundation,’” id. at 104 S.Ct. reasonable taking. suggests is not a This action invasive Gettysburg Elec. (quoting v. United States merely regulation re- government case where Co., R. Rather, property. case use of stricts the assume, (1896)). the sake of L.Ed. 576 discussion, physical Gas' actual invasion involves property: taking present case pipesystem removed from requirement. satisfy this pipesystem. transferred to Consolidated's inquiry, the multifactor Even under effect, already reflects doctrine In antitrust 54. taking. a involves this case party by holding a is not liable idea a valid deal if 2 for a refusal to under section course, case, deciding the court In 53. party’s supports deci justification business just compensation ain question of faces the See, Sys. e.g., Mid-Texas Communications sion. it would in procedural than context different Cir.), 1372, (5th AT&T, F.2d 1388-89 v. 615 ratemaking cite above. that I cases the standard 286, 912, denied, 66 S.Ct. U.S. 101 cert. 449 agency’s reviewing or federal a state Rather than (1980); Exchange, F.2d 431 Poster L.Ed.2d passes whether it rate decide determination 339; Gamco, & Pro Fruit Inc. v. Providence court, muster, explain I as constitutional 484, (1st Cir.), Inc., cert. Bldg., 194 F.2d below, duce denied, just compensa- itself must set the text 97 L.Ed. 73 S.Ct. 344 U.S. issue price determine the in order to tion (1952). liability in the case. requirements price57 these fifth amendment and therefore constituted a refusal present facts. to deal section 2.58 I next consider how Consolidated can just establish the Finding Fifth Price.

2. a Amendment compensation price. case, Assuming present the facts of the just A compensation price provides initial- City court finds follows: Gas property owner with a reasonable rate of plus ten ly gas at cost55 offered sell return on its investment. In typical tak- eventually per cents therm. Consolidated ings example govern- where the gas at cost buy made counter offer ment procedure institutes a condemnation per therm. cents plus two and one-half and takes Blackacre so that the interstate low, the offer as too but City rejected highway wider, can become two lanes price plus initial to cost then lowered its government compensates the owner per therm. later seven cents Consolidated value, Blackacre’s fair market or “what a proposed price plus per of cost five cents willing buyer pay in willing cash to a parties agreement reached no therm. Miller, See seller.” United v. States negotiations and the ceased. F.Supp at 1510.56 276, 280, 87 L.Ed. 336 (1943).59 facts, present do Now, prove in order to its case under the typical takings not describe a case. Rather rule, new must make two than the taking one-shot of Blackacre to (1) showings: selling it must establish a highway, widen the interstate Gas; price justly compensate City that will involve a continuous taking facts of a (2) City price prove Gas’ of cost portion City Gas’ The fair-mar- plus per therm was substantial- assets. seven cents higher just compensation ket-value ly obviously pro- than standard does not figure, City price 55. In its “cost" the district court below 57. Consolidated must show that Gas’ price City paid price by for its included exceeded the fifth amendment a sub- City point fairly and not the overall costs that stantial amount. If that debata- ble, gas operation. City retail See 665 subject liability. Gas incurred in its then Gas will not be F.Supp. at 1511. suggest might that Consolidated also have to show that its counter offer was reasonable in above, supra As I discuss notes 5 & the 56. light price. of the fifth amendment If Consol- facts, put spin on these district court below characterizing City price, indicating idated offered a that it would guys Gas as bad gas, pay no more for the and the fifth amend- good guys. The district Consolidated as the substantially price ment exceeded Consolidat- suggested City initial Gas knew its price, ed’s offered then Consolidated has no plus per of cost ten cents therm was too offer high claim under section approve FPSC would never it. and that the addition, pointed to testimo- the district court proof 58. Consolidated bears the burden of on ny by City Gas' Vice President that "he made no point. arranging proof, this however, the order of attempt price a reasonable for di- to ascertain might apply presumption the court Consolidated, he came rect sales to and that requiring City Gas to come forward with all of plus up ten cents terms 'out of the with the cost evidence, ground that the evidence is F.Supp. air.’” 665 at 1510. exclusively possession in its and that fairness This characterization assumes proceed requires City Gas to first. Gas will duty to enter the had a to enable Consolidated demonstrating then have to evidence possible at as little cost as business price quoted Consolidated was that the effectively compete with so that it could most necessary just compensation. See want, Gas. Because Gas did not for a discussion infra this, seriously attempt, the court did not to do showing. relevant to such a The bur- factors its behavior as bad. This charac- characterized den, however, will then shift to Consolidated to counterintuitive. Gas did ex- terization is actly compensation price. just rebut any expect what one would rational busi- operating ness firm to do: it continued as it did, market value can be deter- Blackacre’s fair normally doing nothing illegal to obstruct a selling price comparable mined based on the competitor’s potential the market entrance into comparable pieces property. sales Even if no doing nothing its entrance but also to facilitate market, the value can be type have occurred in the into the market. To characterize this of by constructing hypothetical a mar- adopt position totally determined as to a at conduct bad is n regarding taking expert testimony practices in this ket and with normal business odds price. country. Blackacre’s best-use on based price fifth amendment calculating lish the for formula acceptable an vide costs, in effect is which actual City Gas’ in case involv- a return of rate reasonable a the basis See taking. the historical-cost continuous type ing this supra note (“The cases. See at 287 Hope-Barasch 64 S.Ct. at Hope, U.S. be cannot that rates text. accompanying matter of the & heart the when upon ‘fair value’ depend made to must Consolidated inquiry, Under on depends enterprise going the value of example: factors, for variety of a establish an- may be rates whatever under earnings pur- itself City Gas price at (1) the therefore must Consolidated ticipated.”) operating (2) City Gas’ gas; the chases establishing a for basis alternative find gas; delivering the purchasing costs in price. fifth amendment purchasing in costs (3) fixed City Gas’ might Consolidated possibility, As one (4) any business gas; and delivering the by a set gas price a wholesale point to a lose as City might Gas that opportunities Gas, City to similarly situated company Consolidated.62 to selling result of will price claiming that present the faced with addition, a court has company That compensation. just as- the risks into take account facts must City Gas to identical virtually to be The court investors. City Gas’ by sumed company a the factors terms to com- needed the return must determine setting wholesale its account into takes risk, and for that investors those pensate compa- example, For price, see infra. the rate risk, higher greater and whole- retail in both the deal ny must evalu- must court has be.63 return un- exists company No such markets. sale and, adopting evidence ate all Nor case.60 facts of der the that en- ratemaker, price a set aof role exist- any other point can Consolidated prof- a reasonable to sell at City Gas ables here, aas facts ing operation, prove then must it. Consolidated compensation just calculating the basis unreasonable.64 price was offered has estab- Instead, Consolidated price.61 a return reasonable to receive In order ation. existed in company had If such 60. investment, City Gas must below, fashioning on its then the district charges. price than FGT charge different Gas sell requiring that injunction its Consolidated, delegate to have had not would selling price. See setting a factor, the task the FPSC the court last evaluate this 62. In order Instead, 1545. F.Supp. at mar- considers, changes in the probable part, company’s to that other looked could have stock. of Consolidated’s ket value just City Gas' gas price as evidence wholesale price. compensation Hope Court stated: As found, its be company if such Even legitimate controlling. con- has be interest probably not investor selling price [T]he would compa- company, integrity of the regulated be a the financial company would cern That by regulated. approved being From gas at rates are ny selling wholesale whose rates impor- such, vol- it is company point company of view As FPSC. investor ain enough to sell wholesale untarily revenue undertaken be that there tant market, capital subjecting FPSC's itself regulated also for but operating expenses operating in the benefits service return These include rates in regulated of the business. costs That supra note 51. industry. See the stock.... on dividends the debt and on fair to presumptively equity be price own- would not the return By standard voluntarily Gas, under- has not company that returns be commensurate er should FPSC-approved rates. those having to deal at enterprises taken corre- other investments moreover, return, That sponding risks. point to obviously could not 61. Consolidated confidence assure FGT, be sufficient should as a like charged wholesalers price enterprise, so integrity of the financial price. compensation just basis for capital. attract and to market, credit to maintain the to sell in opted not in- market the retail resources to applying its distributor, City Gas’ fixed As a retail stead. prove is, must Consolidated 64. That entirely different are costs operating sub- offered price City Gas’invest- FGT: like a wholesaler those of amendment the fifth higher than stantially variety expendi- to a are committed ments supra note 57. price. See oper- unnecessary for a wholesale are tures that addition, determine, pur- the court must Changed 3. Circumstances.

poses of injury-in-fact requirement Assume City by Gas abides Act, sections 4 Clayton and 16 of the court’s decree begins and supplying gas for whether profit Consolidated can turn a resale to Consolidated. A few months la- price. the fifth amendment ter, the supplying cost of gas to Consolidat- result, ed increases. As a price by set enough Courts have a difficult time inter- the court in longer its decree no justly preting applying test the historical-cost compensates Gas, City City Gas moves See, reviewing capacity. Jersey in a e.g., for a modification of the decree to increase Central, suppose, 810 F.2d at 1175.65 I selling price. opposes Consolidated agency if an administrative point, court, increase. At that which by taking can establish a rate evidence jurisdiction, again retained has to as- factors, concerning these the court then regulator sume the role of and undertake adopt regulator can the role of a and do so inquiry extensive into the facts to deter- course, just compensation too. Of mine price whether a justified. increase is price by the court established under the City increase in Gas’ costs can result satisfy a stringent facts must more any City several factors: pur- Gas’ applies standard than the standard that price might increase; chase City from FGT by regulatory agency. id.; rates set Cf delivery might increase; or, Gas’ own costs supra note 51.66 City might Gas make some business deci- Congress In order to demonstrate that sions that operating increase its costs. As- sup- could not have intended section 2 to City sume here that Gas decides that port place, such a rule in I the first contin- spend money must advertising more on analysis assume, ue with this for the compete order to with Consolidated: after discussion, all, sake of that Consolidated man- Consolidated entered the market in or- (1) Gas, ages compete City to establish the fifth der to amendment which is exactly what the price case, (2) injunction district court’s City breach- Gas designed to achieve. duty by offering ed its price unreasonably high light that was hearing, At the ar- (3) price, of the fifth amendment gues just compensation price that the must actually damages suffered legitimate expenses include the compet- a result of Gas’ refusal to deal. ing with Consolidated. If the fifth amend- assume further that the court orders price ment expenses, does not reflect these toGas to Consolidat- contends, company then the will price. ed at the fifth amendment As I eventually pass have to them off to its section, however, describe in the next (as- by increasing price customers its retail suming matter would not end there. approve the FPSC will such a rate context, moreover, below, develop In that the courts’ task is 66. As I see infra by high proof eased burden initial the district court in this case did not find a fifth utility company to show that the rate is unrea- price, amendment let alone evaluate applies. sonable before the test even tion, In addi- price light offered of that fifth amendment apply the courts a broad rea- standard of court, therefore, price. prop- never district reviewing by regulators. sonableness In rates set whether, erly light decided of the fifth part, that standard reflects institutional con- price, City actually amendment refused to agen- cerns and ensures the courts’ deference to addition, having deal under section 2. In failed cies' determinations. That standard also re- price, to find a fifth amendment compact utility flects the nature of the between properly court did not determine whether Con- companies voluntarily regu- that have entered a actually injury solidated suffered as a result of state, regulates lated market and the Finally, to deal. Gas’ refusal because of supra market. See note In the price, this failure to find fifth amendment however, City voluntarily Gas has not entered remedies fashioned the district court were compact. price might such a tory A be satisfac- below, id., prop- also erroneous: as I discuss context, therefore, regulatory will er remedies in this case must be based on the necessarily provide City Gas with a reason- price. fifth amendment able rate of return on its investment here. a forced territory. Such company’s rate other the increase).67 the court denies If the allocation, however, afoul of would run Gas, that will increase, according City City restricting Gas’ competitive by ad- amendment fifth decisive give Consolidated pur- expand, if not compete defeat the ability therefore and will vantage en- injunction i.e., distribu- actually limiting City the court’s Gas’ pose behind — equal compete on companies abling both tion area. of the that denial argues City Gas terms. in- the rate denies Finally, if the court ride a free give Consolidated will increase City Gas’- crease, when it do what will fifth the expense and City Gas’ more customers, pay have to who will it surely protects amendment the case intervene in gas, seek to their result. in- decision the court’s ground that the hand, argues Consolidated, other on the (by im- them rights accorded fringes upon selling price, the increases if the court If the laws? the antitrust plication) ad- competitive gain City Gas will then increase, then Con- grants the instead court marketplace. Consolidat- vantage in City Gas’ than customers rather solidated’s turn, will, increase; it will ed’s costs short, intervene. will seek customers its custom- costs off to those pass have to ques- court way decides whichever result, 67; it as a ers, supra note harmed. tion, will be consumers City Gas’ compete with unable will be intended clearly could not have Congress result, says Con- That prices. lower retail of liabili- support this new rule 2 to section policies solidated, inconsistent is rule, demon- discussion ty. That laws. antitrust behind adopt the role strates, courts forces the in such a situa- to do is the court What charged, agency agency, an regulatory of a does, it it suggest whatever I tion? and fac- moreover, impossible task with an purposes of antitrust serve cannot never-ending problems. ing a set satisfying the the same time laws while purposes addition, the frustrates the rule Whether requirements. fifth amendment’s situa- laws: creates the antitrust behind re- City Gas’ or denies grants the court rules, con- which, a court however tions selling price, increase quest for A that leads rule will be harmed. sumers segment or an- one harm will its decision Con- not consistent with results is to such If the gas consumers. other of passing intent gress' increase, then Consolidat- grants court eventually will bear ed’s consumers Application Court’s B. The District costs. increased of Consolidated’s burden Rule Below. increase, then denies If the court nevertheless, upholds today, the burden will bear court Gas’ consumers This Congress rule, Surely this increased costs. Even under impossible rule. Gas’ rule create court’s however, have intended could not vacate district harm to consumers: inevitably harms for further the case and remand judgment Congress de- exactly what consumers failed to court The district proceedings. prevent. laws to antitrust signed the price in the a fifth amendment find reversible case, created and that failure attempt to avoid might The court (1) district grounds: on three error compe- on the by placing controls dilemma whether, giv- decided properly never court and Consolidated. tition between City Gas price, en the fifth amendment parts court could allocate example, the For 2; (2) deal under section actually refused to competi- territory the area within of the wheth- determine failed to prohibit companies of the tion to each 16 of er, of sections purposes for control competing them from them- the burden assume will initially shareholders absorb will City Gas’ shareholders eventually go depletion Gas’ will through In that expenses selves. (when pass are exhaust- them resources will off but then of business resources out ed). through If the FPSC increases. rate customers increases, approve rate does not 1982). Act, Clayton any suffered in- Similarly, section 16 of Clayton refusal; Act, jury in fact as a result private authorizes suits for in- (3) the of the fifth junctive relief, absence amendment requires private plaintiff price also infected the remedies fashioned to show a injury. likelihood of 15 See by 26; the district court. Cargill, U.S.C. Monfort, Inc., Inc. v. § 104, 111-15, 479 484, 490-91, U.S. 107 S.Ct. instruct I would thus the district court 93 (1986). L.Ed.2d 427 to find the remand first fifth amendment above, price, in the manner I sec- describe Because the district court failed to find City ond to decide whether Gas breached the fifth price, amendment it prop- did not duty to deal under the court’s district erly decide whether Consolidated suffered rule, new third to determine whether Con- injury. remand, On prove order to inju- injury solidated suffered as a of result ry fact, Consolidated would have to show deal, fourth, Gas’ refusal to to revisit it could have profit turned a after the remedies I issues. now more purchasing gas from Gas at the fifth particular instruction on two these last price. amendment If Consolidated can points. show that it could have turned profit, a that showing prove would that it suffered Injury in Fact. injury as a result of Gas’ refusal to principle It is an established of law that deal. showing satisfy damno, injuria absque injury or an with injury-in-fact 4’s requirement and would damage, right remedy. out creates no to a probably also demonstrate a likelihood of See Shumate & Co. v. National Ass’n injury future purposes of section 26 of of Dealers, Inc., 147, (5th Secs. 509 F.2d 152 Clayton If, Act as well. on the other Cir.1975) (“injury qua is sine non for hand, Consolidated cannot show that it stating action”). a cause of 4 Section could have profit, turned a then Gas’ Clayton expressly incorporates Act refusal to deal caused no injury: Consol- principle by creating private suit for tre gone idated would have out of business damages only “any person ble who regardless of event, the refusal.68 In that injured property shall be in his business Consolidated would be unable to show that anything reason of forbidden suffered, likely suffer, or was injury (em (1988) antitrust laws.” 15 U.S.C. 15§ in fact and thus would be unable to make added); phasis see Associated Gen. Con out a case under sections 4 or 26 of the tractors, Inc. v. State Council I Clayton Act. next discuss the remedies California 519, Carpenters, 897, 459 U.S. 103 S.Ct. issues. (1983); 74 L.Ed.2d 723 Blue Shield v. 465, 476-78, McCready, 457 102 S.Ct. 2. Available Remedies. 2540, 2546-48, (1982); 73 L.Ed.2d 149 Corp. Bowl-O-Mat, Brunswick v. availability Pueblo of remedies in this Inc., 477, 489, 690, 697, 429 U.S. 97 assuming City S.Ct. Gas violated section case— (1977); L.Ed.2d 701 Holdings, upon Cable Inc. depends assumption v. that Con- 2— Video, Inc., Home 825 F.2d 1561-62 profit could have turned a with a solidated Cir.1987); (11th Indep. National Theatre supply of natural at the fifth amend- Exhibitors, Inc. v. above, Buena Vista Distribu price. injury As discuss ment Co., (11th Cir.1984), tion 748 F.2d liability an element sections denied, cert. 471 U.S. principle Act. The Clayton (1985); damno, 85 L.Ed.2d 484 absque though, impli- McClure v. injuria Under Indus., (11th sea 671 F.2d availability Cir. In the cates the remedies. Congress surely design Congress did cerely not the antitrust doubt that intended the anti- merely prevent companies going laws up trust laws tie courtroom for months for out of business where the defendant has done awarding damages purpose of nominal nothing company’s ability to undercut merely punish company such as compete. Congress provide liqui- Nor did selling gas price. for not at the fifth amendment laws, damages dated in the antitrust and I sin- have could past, profit if Consolidated if the profit future gas, turned profit with turned a provided injunction granted I also court remedy. no As entitled then it is price Consolidated amendment above, fifth discuss dam- requested thus gas.69 Consolidated as well. Con- question injury controls date from the profits lost for its ages profit, and thus to turn a ability solidated’s final date of to deal refusal fifth depends upon the injury, prove en- injunction permanent judgment and that the extent To the price. amendment in the future operate to abling Consolidated changes, price amendment fifth awith gas distributor retail natural ques- as and the profitability, Consolidated’s reme- of This combination gas. supply change. With also injury, will of tion of whole, with Consolidated would make specif- dies mind, turn to I now in principles any losses for compensating damages Depending here. raised issues ic remedies in- and the injunction before oper- can incurred not Consolidated upon whether future operate to enabling it junction gas distribu- a natural as ate future gas. supply of natural a company with schemes, as a tor, remedial one of two b, and will a in subsections in turn discuss damages calculating Consolidated’s In in subsec- IAs demonstrate relief. scheme, remedial profits under this lost for incon- are c, the two schemes tion following in- undertake a court must d, In subsection another. one with sistent price, amendment fifth based quiry: court’s errors consider I then what Consolidat- determine court must under both relief Consolidated granting if it had a been profits would have ed’s proceed how to it on and instruct schemes course, if Consol- gas supply. Of on remand. then profit, a turned not have could idated addition, In damages.70 to is not entitled it is al- price amendment scheme. the fifth remedial because The a. first must the court change, to ways subject complaint, Consolidated amended its fifth amendment whether determine relief injunctive permanent sought both the time fixed from price remained first under the profits lost damages for judg- time of final until the to refusal deal request Consolidated’s scheme.

remedial price fifth amendment If ment. implied that relief injunctive permanent for reassess must the court changed, then deal, and to of Gas’ refusal time at the a have turned Consolidated could whether com- the amended date of until the at least prices. changing of interval profit at each a have turned could Consolidated plaint, injunc- grant to decides If the court gas at wholesale purchasing profit after gas supply to tion, City Gas requires request price. fifth amendment the court must price, that, fifth amendment implied injunction further an for case and jurisdiction over retain to turn a then ability on Consolidated’s based out, profits. As it turned twenty years future request a not Curiously, did Consolidated its lost Consolidated awarded the district court abili- injunction. Consolidated's preliminary If value) (reduced as their profits future supplier operate a natural ty to as —and requiring injunction permanent as a hook-up well upon profit. depended at a so do City — price with supply Consolidated Gas to Gas, presumably Consolidated then injunctive granting of by FPSC. The be set as hook-up soon it as wanted the dam- patently inconsistent relief ages Nevertheless, ap- not reasons for one. obtain below, award, I discuss issue that record, not decided Consolidated parent in the 1324-1325, 1327. Instead, injunction. it preliminary request a infra remedy it was specify the until trial waited injury past for show cannot There, If Consolidated claimed that seeking. Consolidated award, damages Consol- then purposes gas, Gas, supply had refusing show be unable to probably will idated Consol- business. taken Consolidated’s effect injury purposes of in- of future likelihood damages the form of sought therefore idated one, a such junctive case relief. going value business. concern future proves Ball, generally a likelihood witness, plaintiff Consol- Through expert Ben injury. showing past injury on a based deprived had asserted idated modify damages entertain Gas’ motions to going the net concern value of any injunction light subsequent company, gas, just prior to its (2) changed circumstances or to dismiss the damages demise and in the amount of profits case in the event that Consolidated can no lost from the date of the refusal to above, longer profit. As I turn a discuss deal to the date of its demise.71 price subject the fifth amendment principle damages behind the change, constant as are Consolidated’s own loss of going Consolidated’s concern value Thus, jurisdic- costs. the court must retain is that Gas’ refusal to deal eventually tion over the to redetermine demise, resulted Consolidated’s in effect price light the fifth amendment of suc- taking (less of its business the assets that circumstances, cessively changing but also is, kept). That as a result of to redetermine whether Consolidated can City deal, Gas’ continued refusal to Consol- profit still turn a at the modified fifth idated could longer operate no as a natural price. any subsequent amendment If at gas distributor even if it had a longer time Consolidated can no turn a gas. natural The damages go- for loss of profit price, at the fifth amendment then ing concern value compen- would therefore injunction the court must vacate the and sate Consolidated for the difference be- dismiss the case. tween what Consolidated would have been damages supplied worth had gas

This combination of for lost Gas and what it was injunctive supply worth without a profits gas just and relief would make of prior to its demise.72 damages Consolidated whole. The would compensate it for whatever loss it suffered calculating In damages, these a court prior as a result of the refusal to deal following must undertake the analysis: the judgment, injunc- the date of final and the court must first determine Consolidated’s operate tion would enable it to in the fu- or, fair market hypothetical what a value— company ture a gas sup- as a with natural willing buyer, fully informed of all relevant ply- facts, pay hypothetical would willing sell- er, fully facts, informed of all relevant

b. second remedial scheme. gas for compared Consolidated—with above, suggest implication I gas. As of without supply gas, Without a of request injunctive salvage Consolidated’s for relief Consolidated would be worth the Consolidated, (its was that which plant equipment pipes- had been shut value of its is, gas supply, down for want of a natural ystem), hypothetical buyer that what a operation acquired pay could resume if it company gas a would for the without gas supply. This just prior say, outlook could to its for the sake demise— course, if, trial, change, prior discussion, $750,000. supply of of aWith put gas, effects of the refusal to deal Consol- Consolidated would still not be worth business, permanently any idated out of salvage thus more than its value it unless rendering injunctive relief profit supply useless. that could have turned a awith event, trial, (1) gas price. Consolidated would seek at the fifth If amendment Con- Conceivably, operation portion Consolidated could have lost a of its in Blackacre—the of its part going prior of its concern value to its total operation that was lost before the demise. Of Assume, example, demise. for that Consolidat- course, going when the court determined the (as distributor) gas ed LP an serviced Whiteacre operation concern value of Consolidated’s entire that, and Blackacre and soon after the refusal to demise, just prior operation would to the deal, City Gas took control of Blackacre. At longer operation no Consolidated’s include demise, point, preceded general (discussing Blackacre. note 76 loss of Cf. infra ability go Consolidated lost the back into partial going concern value in relation to in- operation in Blackacre even if it could have relief). junctive gas acquired supply general before its de- In that Consolidated mise. would still Gas was Consolidated’s assume damages company’s going seek for the concern i.e., gas hooking supplier, up demise, feasible just prior value as well as dam- demise; pipeline expensive ages profits prior to FGT’s was too for Consol- for lost it would damages going also seek concern value idated. must court The district at 1323. supra See profit have turned solidated changes in the any into account also take determine must then the

gas, period during that price fifth amendment deal by the refusal damages caused operation. hypothetical will- of eyes through the seller. buyer ing inconsistency. two c. The schemes’ the court finds Assume that indicates, two these discussion As this following deal: strike buyer and seller theoretically incon- are schemes remedial long Consolidat dickering about how after above, Consolidated explain IAs sistent. supply on a count can ed going loss of its damages for can recover can long Consolidated how about trial, it can if, time value concern fifth amendment profit turn gas distribu- a natural operate as longer no compro reach buyer and seller price, damages, measure tor. Under buyer then de points. mise pays in effect invest willing to it is how much cides that Consolidated profits value over profits Consolidated’s obtain order ($250,000 future have made The seller time.73 period of established exam- my hypothetical twenty years accept, will amount it what decides contrast, gas. sold ple) had They con compromise. reach another two gas, supply of Consol- if, acquired a having with a that Consolidated clude as natu- operate future can idated $250,000 in generate probably will distributor, will then it seek ral twenty years.74 Given per year profits injunction Thus, permanent injunction. risks, the the investment of nature operate as a can that Consolidated means return percent annual a ten expects buyer distributor, award whereas gas willing pay thus and is its investment on value going concern for of damages loss of present $2,128,500, or the approximately operate as cannot that means Consolidated $250,000 over profits of of annual value If Consolidated gas distributor. a natural buyer will in The twenty years. of period court orders operate, the can continue annuity that twenty-year purchase effect gas to supply wholesale Consol- City toGas thus finds $250,000 year. The court pays continue If cannot Consolidated idated. concern going loss Consolidated’s order does not the court operate, between $1,353,500 difference value — the gas but instead supply the City Gas val fair market (Consolidated’s $2,128,500 equivalent damages Consolidated awards $775,000 (Consolidated’s gas) and with ue that it profits of the present to the value gas). value without market fair supplied it City had have made would damages for also seeks Consolidated gas. with City after operation while in it profits lost Now, Consolidated awards if the court of its the time until to deal refusal Gas’ for loss of damages injunction both an those determine court must The demise.75 (i.e., concern value going profits that Consol- damages on the based profits that Consolidated value purchased if it had have made idated would supplied it City had have made would price. amendment City Gas’ fifth gas at equipment self-con- plant and buyer assets—its suming and seller dickering process, the In the —are end of at the worthless buyer and will be The the investment. assess the risk twenty years. will possibility that Consolidated emphasizes the term, taking only a short profits generate for oc- unlikely the demise event that 75.In changes in the likelihood of into account refusal, City Gas’ curred the moment Obviously, more price. amendment fifth have deal, it could still show could Consolidated might picture profit uncertain Consolidated’s not refused profit had turned willing pay. be, buyer is less the obviously dam- cannot seek then Consolidated damages past: profits discussion, ages lost I assume the sake 74. For of the calculated as profits will be loss future $250,000 represents Consol- profits in annual all include thus and will of the refusal gross moment profits: revenues operating net idated's generated profits Consolidated depre- delivery reserve for gas with no costs less not occurred. had the refusal fixed that Consolidated’s assume I also ciation. gas), are the remedies theo- reached figure profits based on the retically injunction inconsistent—the imply- that City Gas in servicing made Consolidat ing can oper- that Consolidated continue to ed’s former customers. The district court gas distributor, ate as a natural and the determined City profits Gas’ net sub implying damages tracting City Consolidated cannot gas Gas’ wholesale costs from operate continue to as a gross distributor —but revenues. 665 F.Supp. at provides award above, however, 1515. As I show ’ is, recovery. a double That profit picture Consolidated Gas has no relevance to profits recovers future twice: once what profit picture Consolidated’s damages equivalent the form the have been. supra at See 1317-1319.

present value of twenty-years worth of Gas’ wholesale cost—the cost of from profits, again in the form profits FGT—has no relation to the fifth amend generates it twenty over the same price ment Consolidated would have that. years by operating its business.76 paid for wholesale from Gas. The court, district therefore, improperly calcu models, With these remedial and the in- lated damages figure. remand, On them, mind, consistencies between I now would instruct the district court instead to consider what the court actually district did damages award based showing by on a case and instruction Consolidated of profits what its would have proceed it how would assuming case purchased been had Gas at were remanded. the fifth price. amendment granted d. Remedies below and The similarly district court erred in fash- instructions remand. ioning injunction in this case. Assum- improperly ap- district court below ing that on remand Consolidated could plied first remedial model. show the likelihood of future injury, see damages awarded for lost profits supra court, under its $83,090.15, amount covered liability, new rule of grant should an in- period the of time junction from the to ordering City refusal supply Gas to whole- deal77 until the date of trial. gas The district sale to injunction, Consolidated. The court, however, figure did not arrive at though, may require City Gas to by calculating profits what gas only Consolidated’s price. the amendment fifth during been, Because, that time would have below, based on in proceedings the the dis- the amendment price, fifth natural a trict court set never the fifth amendment Rather, gas supply. the price, district court it price could include no term in its addition, 76. These judgment two remedial schemes would be con- final in the case. In the recovery sistent and would not involve a double Company court awards A the fair market value company permanently ain where a case loses operation opportunity of its Blackacre in and its part its assets as a a of result of refusal to deal expand Beyondacre (these op- to into business enough but retains of its assets to continue portunities having court, forever). been lost If the operating gains once access to needed the so, doing necessary in made the factual Assume, example, Company resource. that findings as what the fifth amendment —such operated A in Whiteacre and and had Blackacre X, price Company was for whether resource A expand Beyondacre. opportunity an to into As profit given could turn a that fifth amendment Company a of B’s result refusal to resource sell price, degree uncertainty and what the of con- (which Company X to A would constitute cerning Company profitability A’s was—these of violation under the district court’s proper. remedies be would rule, though Company new even B has never companies), Company sold X to resource other 77. The district below court found that Gas longer operate A no can Blackacre and has February refused to deal as of 1982—the opportunity expand Bey- lost the forever into date when Gas’ Board of Directors met and ondacre; Company operation, although A’s still acquiring first considered Consolidated. In Thus, profitable, is now limited to Whiteacre. finding clearly erroneous. The grants injunction ordering Compa- an court deal, ny refusal could have occurred until Gas B to not Company which allows A to con- Whiteacre, negotiations operation tinue its and Consolidated entered into the court damages profits also awards for lost between Gas to deal at the fifth amendment refused Company price. of time B’s refusal to and the deal Ball then pipesystem. up to ing result, delegated the and, aas injunction buyer would hypothetical FPSC, opined that 665- task price-setting his invest- ten-percent return on remand, expect On 1534, 1545.78 F.Supp. at rate, reduced and, he ment, using that include have court would twenty years during the profits net injunc- annual term the price fifth amendment He concluded value. present their addition, district court would tion. today as a natural “value case Consolidated’s over jurisdiction retain have to 1515, was F.Supp. firm,” below), entertaining gas do (which it did $2,275,130. modify by City made any motions changed circum- light of injunction $771,- subtracted figure, Ball From that if Consolidat- the case to dismiss stances of salvage value Consolidated’s 155—the profit. longer turn can no ed gas. Ball arrived without assets City price that on the damages figure based also awarded court The district all as- pay Consolidated offered going concern loss of Consolidated’s negotiations of their sets, course first $1,503,975. I amount value supply. As the wholesale regarding in calcu- error court’s consider represented figure suggested, that having Ball found figure without lating this as a assets of Consolidated’s salvage value I then discuss price. fifth amendment gas supply a natural company without to award decision inconsistency of its —the possessed. still injunction. assets an grant well as damages as left figure, Ball was subtracting this After for loss damages awarded The court repre- $1,503,975, which figure amount value going concern diminution Consolidated’s sented “[t]he testimony by Consol- $1,503,975 based on as a company result as a natural value witness, Ball. Consol- Ben expert idated’s is, actions,” id. at City Gas’ to render to the stand Ball called idated that Con- profits present value concerning Consolidated’s opinion next made over would solidated company with as a value refused had not if twenty years will- effect, hypothetical awhat supply—in salvage deal, less Consolidated’s all relevant fully buyer, informed ing value. sell- willing hypothetical facts, pay a erred, rely- The district facts. relevant all er, fully informed the extent figures to profit Ball’s ing on assumed Ball opinion, formulating his not based figures those were indefinitely obtain that Consolidated Although er- price. fifth amendment of natural priced source “competitively a of Con- calculation infect Ball’s ror did not fore- and then F.Supp. at gas,” (i.e., its sal- value without-gas solidated’s gas, Consol- that, of with this cast his infect calcula- value), did the error vage profitably operate continue idated could (i.e., with-gas value Consolidated’s tion of the com- He estimated twenty years. for stream twenty-year aof present value in- period, profits for pany’s annual basing figures his than Rather profits). would Consolidated profits that cluding the Ball con- price, fifth amendment on servicing former customers by have made priced source “competitively a From sidered City Gas. lost to now that were above, detail I As discuss gas.” natural he deducted profits, combined those source priced “competitively no in- would that Consolidated expenses 60, 61, & supra notes existed. See gas” distribu- from LP changing curred Presumably, Ball accompanying text. in hook- distribution to natural tion happen if the FPSC’s thought should repair to what directing parties to improperly 78. In That satisfy fifth amendment. price the whole- did not determination to the FPSC jurisdiction to is, case not retain court in court did price, district the district sale implied would, price without that the price the event the FPSC's FPSC's review the court, oper- just district com- consideration .Gas further price failed to term) injunc- (the price provision ate as pensation. gave apparently no court tion. The figure price on FGT’s would have made over the twenty based his next Gas, has no relevance to the fifth years gas company, as a permanent in- price amendment here. See id. addi- junction duplicates then in effect tion, determining what rather than Consol- injunction award. The gives Consolidated have been if idated’s rates would Consol- gas twenty years for the next and thus the bought gas at Gas’ fifth amend- idated profits damages that the award assumed price, “City looked to rates” ment Ball Gas’ during Consolidated would have made above, As I to its customers. also discuss time had Gas not refused to deal.80 rates were irrelevant to Consol- injunction, Armed with the Consolidated idated’s rate structure. See id. For these “going can sell its concern” for the same reasons, figures provided support Ball’s no price present-value going reflected in the award; court, damages for the the district damages concern award. Consolidated therefore, improperly fig- relied on those twenty-years profits thus earns worth of calculating damages ures in award. decision, twice. Under district court’s remand, have to On obviously Consolidated has re- recalculate the award a manner consist- remand, recovery. ceived a double On Con- ent the fifth amendment. solidated would have to elect rem- between problem, this award of As a more serious edies. going damages for loss of Consolidated’s addition, if, remand, on Consolidated perma- inconsistent with concern value is damages were to elect going loss of gives injunctive nent relief and Consolidat- value, concern then the district court would above, recovery.79 ed a As discuss double have to find the date of Consolidated’s de- 1324-1325, the remedies are supra begin damages mise and calculation as permanent theoretically inconsistent: well, of that date. Based on that date as injunction implies op- that Consolidated can the district court would have to determine (for profitable twenty years) erate as a any whether Consolidated should recover gas company damages whereas damages profits prior lost to the date of (in award the form of the value of expert figures its demise. The profits) implies whose twenty-year stream of longer operate district court can no as relied indicated that he Consolidated gas company. ei- a natural today had calculated “Consolidated’s value operate gas company or it ther can as (empha- firm.” as a natural Id. at 1515 such; cannot, however, it operate cannot added). court, however, sis The district did Depending on which course Con- do both. “today” specify which date was— elects, solidated it will be entitled either to refusal, whether it was the date of the injunction damages or to for loss of complaint, amended date Consolidated’s value; cannot, however, going concern trial, the date of or some other interim receive both. date, course, That must date. be point demise—the date Consolidated’s remedies, both To award Consolidated op- time at which Consolidated’s continued moreover, recovery. constitutes double gas company eration as a natural became for the compensating After Consolidated impracticable. The district court would by awarding going of its concern value loss damages it to calculate the for loss of present profits the value of the that have it accepting testimony) testimony taking an entire of Ben Ball’s Ball’s assumed —that gas. company supplied period as a with Consolidated’s business have for that at a would Thus, treating provided the record no basis for testimony sup- "competitive price.” If Ball’s situation, supra partial-taking this case as a see that, finding ported with a of the 76, damages for of notes 71 & in which loss Gas, operat- could have from Consolidated might going with concern value be consistent twenty years, profitably then that testimo- ed for injunctive relief. force, supported, equal ny certainly the with (implicit court’s conclusion in its award district damages awarding in the Consolidated In relief) injunc- permanent injunctive that an of profits present-day value of the that form of the operate prof- would enable Consolidated to tion twenty years, the next it would have made over twenty years. itably for (by implicitly court found—albeit the district Peoples with agreement territorial (in form value going concern (nei- its refusal to with Consolidated worth deal twenty-years’ of value present-day shown, which, I have would point forward ther of as as of profits) future liability anyway) damages provide grounds for to calculate have and would —un- backward point der this doctrine. profits for lost to deal. refusal the date of A. Midcal Test. The however, court, explic- never district

The not or Consolidated’s correctly stated whether district court itly decided one, alone when its ruined—let when such as the a case business Instead, immunity have might occurred. party claims private demise doctrine, implied party that Consolidated immunity court state-action remand, stayed alive. On articu parts of the test satisfy died both must both have address Supreme district court would Court by the lated California First, re- have to it would v. Midcal problem. Liquor Dealers Ass’n Retail “First, challenged elect between these Aluminum, Inc.:81 quire Depending clearly schemes. ‘one articulated remedial must two restraint be future, poli Consolidat- state ability operate affirmatively expressed relief, injunctive second, ‘actively policy must be could elect either cy’; ed past, or it profits lost itself.” 445 U.S. damages supervised’ by for the State going 937, 943, con- damages 105, for loss may 97, elect 63 L.Ed.2d 100 S.Ct. profits lost in value, damages Louisi (1980) City Lafayette v. (quoting cern 410, 389, the dis- Co., past. In either 435 U.S. Light Power & ana damages 1135, (1978) 1123, lost award 55 L.Ed.2d 364 court’s trict 98 S.Ct. $83,090.15, Brennan, J.)). which in the amount discuss what profits (opinion of refusal from the period require of time in turn. prongs covered these two trial, not be the date until did court not award:

proper Prong. Clearly Articulated 1. The fifth amendment on the the award base Carriers Rate Motor Con- Southern determined the properly and never price 48, States, 471 U.S. v. United ference 77, refusal, supra note dates (1985), L.Ed.2d 36 Su- S.Ct. demise. of Consolidated’s prong the first preme Court considered upholds Thus, today's even if case, the United States this test. by the district rule fashioned impossible challenge against the brought an antitrust court, has still failed to the district court bu- ratemaking practices of rate collective case. For apply properly common carriers composed of motor reaus reason, vacate the district I would procedures autho- in the southeast. Under remand further decision and court’s rized, by the compelled, not states but Ias describe. proceedings operated, the rate bu- the carriers joint proposals rate reaus submitted IMMUNITY VII. STATE-ACTION in each state. public service commission Supreme at 1723. 105 S.Ct. held to Id. could be Even if prong did first held that Midcal’s view it Court section which violated compel the chal- require the state im not violated, would still be City Gas “The federal antitrust lenged conduct: liability under from federal antitrust mune adopt the States laws do not forbid immunity doctrine of Par state-action compel, permit, but do not Brown, policies v. ker pri- by regulated anticompetitive conduct (1943). I discuss the Par first 315 L.Ed. 60, 105 at 1728 at S.Ct. parties.” Id. private parties. vate application to doctrine’s ker original). (emphasis City conduct—both its analyze I then 46-47, 34, Claire, City 471 U.S. parties, private Hallie v. Eau Municipalities, must unlike of 1713, 1720, (1985). requirement L.Ed.2d 24 in or- 85 satisfy the first Midcal 105 S.Ct. immunity. Town See der have Parker of

1329 The Court then considered whether the statute, Parker based on a state “in prong first would be satisfied granted ab- city authority develop sew- “ expressly permitting of statute sence a age systems and to ‘describe with reason- 63,105 challenged conduct.” at Id. S.Ct. at particularity able to be ” Carriers, 1730. In Motor Southern stat- 41, Id. at 105 S.Ct. at 1717 [served].’ Carolina, Georgia, utes in North and Ten- (quoting 62.18(1) (1981-1982)). Wis.Stat. § explicitly permitted nessee collective rate- The Court considered whether that statute making; Mississippi motor carrier stat- requirement satisfied the clearly of a artic- ute, however, expressly permit not did such policy. ulated state applied The Court ratemaking, Ann. see Miss.Code 77-7-1 § foreseeability test: it observed that “the (1972 Rather, Supp.1984). seq. et & clearly contemplate statutes city that a public statute authorized the service com- may engage in anticompetitive conduct. prescribe “just mission to and reasonable” Such conduct is a foreseeable result of intrastate rates. The by encouraging rates for intrastate reasoned that the statute sion, held that the details of the and the commission Court details of that commission clearly J.). Light ture, satisfied. clearly tive authorization” for its duct. ^[1123] anticompetitive regulatory program need particular A legislature’s rather than the “point concluded, private party acting pursuant As articulated the first Co., Lafayette at 1138 intends to long the statute satisfied Midcal’s 435 U.S. itself. The to a field with a process collective prong as the State as rate-setting process intent that (opinion specific, requirement. v. Louisiana Power & displace competition transportation exercised ^[389] of the Midcal test is legislature market, ratemaking. regulatory clearly Supreme detailed challenged 415, the commis- BRENNAN, commission, would set The Court sovereign authority indicated 98 S.Ct. left the but legisla- to the struc- Court con- left Id. at Motor Carriers Louisiana Power & of’ plainly templated the eas statutes authorized the age services and also to determine the ar- satisfy the ‘clear articulation’ ette, at 1718 389, 415, not Court held that “it is sufficient that the to have stated explicitly unannexed areas.” Id. at empowering S.Ct. at 1718. 1329). 1718. The Court then stated that necessary (1978) be served.” 471 anticompetitive showed that In the Court’s (same passage showing 98 S.Ct. (opinion engage S.Ct. ... for the state Citing kind of action that was “sufficient to holding, at 1719 1123, 1138, in conduct that would “ Light ‘the effects.” atU.S. serve to refuse to 98 S.Ct. at cited in Southern Brennan, that it 42, (quoting legislature Co., Lafayette v. the statutes 42,105 105 S.Ct. at 55 L.Ed.2d complained legislature supra ... 435 U.S. expected Id., J.), Lafay- “[i]t 1138). test.” S.Ct. sew- con- 105 471 U.S. at 105 S.Ct. at 1730. Both Southern Motor Carriers Hal lie thus derive from the Court’s earlier application of the first Midcal re- pronouncements in Lafayette and stand for quirement by private parties to conduct that, proposition under the first Midcal under par- Southern Motor Carriers thus requirement, a legislature state need not requirement’s application allels the to con- (and expressly permit clearly need not com by municipalities duct under Town Hal- issue; rather, pel) if the conduct at Claire, lie v. Eau 471 U.S. legislature, by displacing competition in a 1713, 1718-19, 85 L.Ed.2d regulatory (1985), given field with a broad struc a case handed down the same ture, contemplated that such conduct day as Motor Southern Carriers. occur, Hallie, might satisfy “clearly will township challenged Town city’s requirement. in gaining monopoly conduct over articulated” See also Execu sewage tying provision Country treatment and tive Town & Servs. v. Atlanta, (11th sewage collection services F.2d to its treatment Cir. 1986). course, city immunity Supreme services. The claimed Of as the Court 1330 fail to that disapprove those parties Community Communications stated Id., at 108 S.Ct. policy.” state 40, 55, with Boulder, accord 102 455 U.S. v.Co. (1982), 1663. the 843, 810 835, 70 L.Ed.2d

S.Ct. the when not satisfied “is Patrick, requirement the this formula Applying neutrality of mere is position one actively State’s not did a state held that Court challenged as actions the ... respecting process. peer-review physician supervise Thus, the Consti when anticompetitive.” the peer- had mandated the Although state cities “the full granted Colorado tution of state place, that in the first process review local both self-government right peer-re- authority over ultimate lacked 1, S.Ct. matters,” 43 n. 102 id. at municipal neither decisions: actual view committee’s provi that the 1, held Court bod- at 837 n. administrative any of its nor state policy a state clearly articulate au- not had sion did decisions or specific reviewed ies regulation competition in accord- displace not decisions thority to overturn industry: 102-04, the constitu id. at See television policy. the cable state ance with do nothing Court, at all to had provision tional 1664.82 S.Ct. at 108 55, Id. at regulation. supervised actively television actor cable that no state held Bolt v. 843; see also the feder- process and that at peer-review 102 S.Ct. Halifax 810, Center, F.2d 825 891 at Id. applied. Hosp. Medical laws al antitrust Shahawy v. 1665; must have foreseen Cir.) (11th (legislature at S.Ct. 108 (11th 1529, al Harrison, conduct anticompetitive F.2d 1535-36 type 875 specific — U.S. -, denied, hospi- Cir.1989) (applying Patrick public case), cert. leged (1990). 1960, procedure). 322 peer-review 109 L.Ed.2d tal 110 S.Ct. Corp. Duffy, v. Liquor Similarly, in 324 Prong. Supervision Active

2. The 720, 335, L.Ed.2d 667 S.Ct. 93 U.S. 107 479 that New held (1987), Supreme Court active requirement of Midcal’s second did not liquor-pricing scheme explained in Hal- York State’s the Court as supervision, prong. supervision satisfy Midcal’s active “[wjhere a lie, concern reflects satisfy Midcal’s scheme, did That engaging anticom- private party . liquor prong, required clear articulation danger a real activity, there is petitive price bottle post a wholesale interests, wholesalers his own acting further he is selling prohibited retailers then governmental interests rather than posted price. at less than Hallie, 471 U.S. at 105 112% the State.” whole effect, though, scheme allowed re- supervision 1720. active at S.Ct. Although the prices. retail to set salers “designed ensure thus quirement is posted bottle on the price was based retail will shelter doctrine action the state liquor to generally sold price, wholesalers pri- acts of anticompetitive particular lower, price. case posted at a retailers that, judgment parties vate based on addition, price retail pol- regulatory state State, actually further wholesal price; posted current bottle Burget, v. icies.” Patrick price and posted at a low thus sell 1658, 1663, 100 L.Ed.2d ers 100-01, 108 S.Ct. price in order to posted increase the supervision, then active (1988). The crux of higher price. at a Patrick, sell retailers allow is “that stated as the Court 6, 107 at 725-26 & n. S.Ct. id. at 342-46 See control over ultimate exercise State result, the Court found Id., 6. As & n. conduct.” anticompetitive challenged not did actually prices, set state did must there- The state at 108 S.Ct. of established review reasonableness power to review and exercise fore “have monitor the generally did not prices, private acts of anticompetitive particular Ltd., Health, F.2d v. Summit review Pinhas conducted no the state courts 82. Because question), Cir.1989) (also avoiding (9th decisions, Patrick specific committee granted, - U.S. -, unnecessary decide broad "the it court found cert. (1990). ques I consider L.Ed.2d 660 private judicial con- review question whether below, See applies case. supervision." tion active infra can constitute duct ever 1664-65; see also S.Ct. 486 U.S. 1331 charges pricing program, the FPSC with administrative re- market or reexamine the 345-46, Chapter 726. The sponsibility. 107 25-7 of the Florida id. at S.Ct. See did not state regulations therefore held that the Court Administrative Code contains system.83 pricing actively supervise promulgated by gas the FPSC for utilities. 1986 Fla.Admin.Code Ann. ch. 25-7 See then, hold, the state As these two cases (FPSC regulations promulgated under authority over the possess must ultimate 366). chapter The state regulatory issue. scheme authority to ensure exercise this must also today adopts The court as the state intend

that the scheme works provisions court’s conclusion that these did If scheme breaks down ed it to work. satisfy clearly articulated re- Midcal’s to act private parties however and allows quirement. The district court based its want, Liquor, they then under Mid- 324 chapter conclusion on the fact that 366 requirement supervision cal ’s active expressly grants power ap- FPSC state must satisfied: the exercise not be prove agreements involving territorial elec- “particular anti- authority by disapproving utilities, chapters tric and that other do the that fail to competitive acts ... accord water, respect telephone, same with Patrick, 101, 108 486 policy.” state utilities, sewage legislature but that course, if the scheme S.Ct. at 1663. Of grant expressly power failed to the requir operates effectively, automatically respect gas to natural utilities. FPSC ing private actors to act accord with In the district court’s omission nothing policy, the state would have state clearly legislature that the indicates did not supervision active disapprove, and the approve intend to authorize FPSC to Liquor, prong would be satisfied. See 324 agreements territorial between natural 6,n. 107 at 725 n. 6. 479 U.S. at 344 S.Ct. indication, utilities. Given this clear apply I test now the Midcal persuaded court was not otherwise case, present considering in turn Gas' by Supreme opinion Florida Court’s agreement territorial and its refusal Peoples Sys., 182 City Gas Co. v. deal. (Fla.1965), addressed So.2d which agreement very territorial at issue here Midcal. Applying B. chapter implicitly grants and held that authority approve agree- the FPSC such Agreement. 1. The Territorial ments. above, City territorial As I discuss Peoples provided no agreement with inter- disagree with the district court’s liability for antitrust basis legislative intent pretation of the behind Nevertheless, assuming for the sake case. interpretation overem- chapter 366. That agreement might of discussion that express grant phasized the absence of an liability, City Gas is still provide basis approve agreements territorial under the state action doctrine. immune and, as a re- between natural utilities sult, incon- reached a conclusion that was policy. Clearly articulated state a. general structure of the sistent with by chapter 366 regulatory scheme created agreement protect- is City Gas’ territorial gas industry and with the the natural clearly state pursuant to a articulated ed that scheme. The of the FPSC within Chapter role policy. policy expressed That legislature has created Statutes, scheme that ch. of the Florida Fla.Stat. approve terri- requires the FPSC to (1987),84 effect prescribes which the duties pre- exercising agreements utility in Florida and torial companies chapter Fla. simple has been amended suggest "mini- 84. This Court did that a 83. The expressly the statute, to authorize Laws ch. required markup” retailers mum agreements approve and re- territorial FPSC to cost, charge of their actual wholesale 112% disputes between solve territorial might satisfy prong. second See 479 Midcal's ef- the amendment’s I consider below utilities. n.6, at 725 n.6. U.S. at 344 note fect on the infra the jurisdiction, its under public utilities the Given ratemaking functions. scribed give to consid- is authorized commission the scheme, if of nature effi- things, to the eration, among other that the FPSC had intended legislature the adequacy of sufficiency, and ciency, it would agreements, then such approve ren- services and the provided facilities expressly provision include had to have service such providing dered; cost of the and doing so the FPSC prohibiting the service to such value of and the could accom- the FPSC how explaining also im- utility to ability of the the public; ratemaking statutorily mandated its plish facilities; and and service prove such In power.85 that without responsibility use efficient the and energy conservation regulatory and the view, chapter resources; provid- energy alternative of demonstrate clearly it creates that scheme denied be utility shall public no ed that compe- displace “to intent legislature’s the rate upon its return of rate reasonable regu- awith gas] field natural in tition [the to pursuant any entered order base Carri- Motor structure,” latory Southern proceedings. such 1730. Un- ers, 471 U.S. in South- the decision rate-fix- addresses Court’s further Supreme the The FPSC der chapter satisfies Carriers, that intent regulations in its process Motor ing ern id., 25-7.033(2) regulations test. See of the the Midcal prong of first the 366. Section chapter review the Com- I first “file with utility to each requires S.Ct. at regulatory all containing kind schedules the to determine tariffs mission 25-7,033(3) role FPSC’s and the charges.” Section it creates and rates scheme the or consider rates I then “schedules scheme. no within then states inter- court’s revisions or inconsistency of the modifications charges, or until filed same, this scheme. effective be pretation with shall the provid- as by Commission approved and as empowers, 366, the state chapter In has addition, FPSC by law.” ed power of police exercise “an existing to monitor procedures established utili- public regulate state,” FPSC just fair and they are rates ensure ad- 366.03 Section Fla.Stat. 366.01. § ties. as of return rate a reasonable provide and public utili- duties of general dresses the Florida 366.041 section specified furnish utility shall public “Each ties: 366.07 statute. Sections Public Utilities reasonably therefore applying person each procedures also through 366.072 efficient service and sufficient, adequate, adjustments. rate by the commis- required terms upon function, describes rate-setting then 366.04 Section sion.” In addition shall gen- “the commission reach the utilities’ powers FPSC: the FPSC’s duties supervise provides: and regulate As 366.05 jurisdiction section eral assets. have rates respect to its ... power to utility have shall public each “the commission additions, sale of and issuance improvements, and the repairs, require service and provides equipment Thus, 366.05 plant section and securities.” extensions and pre- reasonably nec- have utility “shall FPSC when any public and rates wel- and and reasonable convenience essary fair promote scribe public by adequate each ser- observed secure public to be and charges ... fare reasonably enti- rates based fixes these those FPSC utility.” The facilities vice or added.) Under (Emphasis 366.041: section described the factors tled thereto.” jurisdic- 366.04, the FPSC reasonable, com- and just, fixing the public each supervise and tolls, regulate fares, “to tion rates, charges, pensatory to,... issuance respect utility with charged for be observed rentals to securities.” of its sale any all by state service within utilities. disputes between rial Indeed, case in this panel’s decision once what, explicit as I legislature made Florida thus position, the adopted inconsistent provi- adding observed, implicit the old already lan- legislature effect overruled ap- the FPSC expressly authorizes guage that sion. resolve territo- agreements and prove territorial ing capital. Chapter part 366 thus establishes a full-scale As I in detail in discuss VI, regulatory grants structure and the FPSC degree competition with other regulatory supervisory powers gas companies broad significantly will also affect Not within that structure. does utility’s company cost structure: process fix utilities’ rates —a FPSC must invest compete, resources order to engages in-depth in an and con- FPSC an investment that utility’s increases the virtually every aspect tinuous review of costs. That investment in competition, operation the utilities’ the also FPSC moreover, might general affect the struc- —but supervisory respect power has direct utility’s ture of the If assets. the FPSC to the utilities’ use of their own assets. utility does not allow the to recover those regulate jurisdiction The FPSC has to utili- through increase, costs a rate then the issuances, require repairs ties’ stock to to utility must cover them from its own as- facilities, the utilities’ and also to mandate sets, might in turn utility force the additions and extensions of those facili- safety to cut corners on or on research and undertakings that would substantial- development energy ties— of alternative sources ly affect utilities’ assets. might simply or which force utility the out obviously of business—concerns that fall True, explicitly the statute does not directly within jurisdiction. the FPSC’s grant power approve territori- FPSC agreements al and resolve territorial dis- indicates, utility’s As this discussion putes gas companies, natural between operating territory is of central concern to grant pow- the statute whereas does such regulatory the FPSC’s function and undeni respect ers with to electric utilities. ably purview: falls within the FPSC’s light powers of the the statute does ex- utility’s territory directly nature of the in FPSC, however, pressly grant fluences the rates set for consumers. To general regulatory structure that the think, therefore, legisla that the Florida creates, statute I find this omission to be ture did approve not intend the FPSC to insignificant. legislature The Florida clear- agreements territorial or not the —whether ly displace competition in the intended to legislature explicitly ap authorized such gas industry system regu- natural with a proval utterly inconsistent with the —-is regulatory my lation. As review of this regulatory overall structure of the scheme shows, moreover, the nature of a structure legislature impose that the Florida did size, utility’s operating territory —its granted powers expressly that it density consumers, compe- degree the nature of this scheme as FPSC. Given companies tition with other a crucial —is created, actually legislature had the intend rate-fixing process. In order factor approve agree ed the FPSC not to such utility with a “reasonable ments, legislature would have had applied rate of return” —the standard un- provision expressly prohibiting the add a obviously der the statute —the FPSC will doing explaining so and also FPSC utility’s consider the distribution area and accomplish how the FPSC could its statuto degree competition in that area. ratemaking functions rily mandated with utility’s operating The size of a area will power. Motor out that Under Southern larger area affect its cost structure: Carriers, regulatory comprehensive might utility’s oper- increase the fixed and prong scheme satisfies the first of Mid costs; ating might require greater also cal test.86 equipment gas sup- investment in and in a turn, however, ply; larger area supervision prong. Active b. might utility larger enable the to sell a chapter regula- gas, generating higher volume of thus review of 366’s As demonstrates, the FPSC gross perhaps operat- tory revenues and more scheme noted, although support panel finds the Florida 880 F.2d at This conclusion Supreme holding Peoples inquiry, Gas case dispositive Court's it is decision is not of this chapter implicitly grants pow- the FPSC relevant. agreements. approve er to territorial As the utility with a provide the will rates the terri- control” over “ultimate exercises existing given return rate of reasonable The FPSC agreement. “ha[s] torial To the extent that review allocations. territorial [territorial exercise[s] utility utilities] between that allow agreements sets rates the FPSC fail to accord is, those that disapprove (that operate at a operate continue Patrick, policy.” with state approves the necessarily profit), the FPSC Patrick, at 1663. Under FPSC, allocation. existing territorial satis- prong is second Midcal’s utility’s moreover, continually reviews fied as well. reg- FPSC’s 25-7.024 rates: § a rate of ulations, utility su- file holding that the active must panel, satisfied, month, was not based on requirement report every pervision return by the in a decision language pointed continually monitors which the FPSC “expres- it as an and, FPSC characterized necessarily, its territori- utility’s rates authority as to ... sion doubt addition, dis- if the FPSC al allocation. to resolve or territories exclusive establish allocation, it has ulti- of such an approves gas between natural disputes territorial utility authority to mandate mate (citing In re: F.2d at 303 880 utilities.” reasonably area its distribution “when alter 10:205, Gas, FPSC Miller 85 filed Tariff the convenience necessary promote 1985)).87 then (Oct. 18, The panel at 5-6 adequate public and secure welfare of specific approved the that the FPSC noted reasonably facilities for those service or but, here, in at issue agreement territorial 366.05(1). Fla. thereto.” Stat. entitled § panel passage, the seemed confusing authority— to exercise that choosing not that, the Com- “[sjimply because conclude so in the chosen not to do and it has occasion, 15 to 25 some has on mission ap- implicitly FPSC thus present case—the agreement does at this years ago, looked existing allocation. territorial proves it federal automatically immunize from not moreover, like is not a That iso- This scrutiny.” Id. at 303. antitrust regu- the state establishes review, opinion, Liquor where panel’s lated private merely enforces summarily latory re- panel also scheme sufficient. Rather, Su- assumes that the Florida FPSC argument arrangements. jected agreement regulatory review of the under this preme very Court’s active role supervi- active scheme, utility’s pro- Peoples initially approving satisfied so, prong. rates, and, undertaking doing sion posed of a vari- investigation and consideration view, is im- panel’s approach, chapter ety factors as mandated regu- failed to consider proper in that it 366.041, is this a case .06. Nor id. See §§ supervisory functions latory supervises a Patrick, the state where like rate-fixing continuous FPSC exercises proce- general peer-review committee’s suggest, I satisfies process, process. That committee’s review the does not dures but As I requirement. supervision the active Here, the decisions. specific, substantive above, continually takes the FPSC describe general prescribe than does more in FPSC existing territorial allocations account rates; actually filing it con- procedures sets setting rates. The FPSC the course moreover, might expressed, has not effect- quoted passage have relevant 87. The district approving territorial actions in decision: ed FPSC's FPSC’s Also, expression agreements, I discuss. has the clear that this It is not Commission nothing with the active statutory authority exclu- to either establish doubt has do rather, issue; merely expression utilities territories for natural supervision sive service (as telephone, water and sewer clearly does has artic- whether the state on comments utilities) disputes be- resolve territorial agree- policy territorial in favor ulated (as specifically au- utilities tween natural above, state has indeed I show ments. As However, utilities). our electric thorized for doubt regardless of whatever done so— necessary question is not resolution of authority (an judicial agency without FPSC finding.... [other] view of our intent) may expressed. legislative interpret "expression F.Supp. of doubt” 1530. This clearly FPSC Whatever doubt the is dictum. itself, Thus, setting rate-fixing process Supreme based on the Florida ducts the both continually monitoring Peoples initial rates and Gas and on the Court’s decision in them. supervisory powers in FPSC’s the rate-fix- ing process, supervision prong the active furthermore, ease, In this the Florida Midcal, satisfied. Under directly reviewed the Supreme Court immune liability Gas is from antitrust Although agreement at issue. territorial agreement of its basis territorial Supreme yet has not occa Court had Peoples Gas. question to decide the whether such sion supervision re

review satisfies the active Patrick, quirement, U.S. 2. The Refusal to Deal. (state 108 S.Ct. at 1664-65 courts conduct I reach the same respect conclusion with specific ed insufficient review of committee Gas’ refusal to sell wholesale decisions, necessary thus not to decide Consolidated,89 apply prongs the two question whether such review could broad the Midcal test in turn. satisfy supervision require ever active Health, Pinhas v. ment); see also Summit

Ltd., 894 F.2d (9th Cir.1989) Clearly a. articulated policy. state — (same), -, granted, cert. public utility Section 366.03 states: “No 3212, 110 (1990), S.Ct. L.Ed.2d 660 the Flor required electricity shall be to furnish or is, agreement here ida courts' review of the ” gas provision explic- for resale .... This view, my satisfy in the active sufficient itly affirmatively expresses pol- a state Gas, Peoples supervision requirement. icy require not to utilities to sell at whole- Supreme carefully con the Florida Court Indeed, sale. I could think of no more agreement sidered Gas’ territorial explicit expression policy. of this Peoples approved agree with course, compel gas policy, does not utili- See 182 So.2d chapter 366. at ment wholesale; merely to sell at ties not judicial 436. review conducted Unlike permits selling them to refrain from Patrick, supra see by the courts in note Motor Carri- Southern wholesale. Under merely procedures considered ers, Midcal’s though, clearly articulated through peer-review which the committee’s prong require compel does not the state to decision was reached but not the decision’s conduct; anticompetitive the state need merits, Supreme specifi the Florida Court conduct, only permit such as it does in agreement cally reviewed the territorial it dispute, my beyond section 366.03. It is approved self and it as consistent with view, review, view, statutory provision that this satisfies policy. That con state Midcal prong of the test.90 supervision.88 stituted active the first clear, gas Supreme who would 88. As the Court has made a state sales of for resale to landlords gas re-meter the for further distribution to their court’s determination that conduct is consistent therefore, legislature, necessarily that the did insu- tenants and with some state law does not contemplate specifically wholesale sales to late that conduct from federal antitrust law. Parker, gas Although legisla- other natural utilities. See 317 U.S. at 63 S.Ct. at 314 landlords, States, in mind (citing v. ture no doubt had sales Northern Sec. Co. United 197, 344-47, 436, 459-61, provides that fact no basis for court’s 48 L.Ed. Here, however, (1904)). provision apply conclusion that this does not the Florida Su- utilities. preme approved wholesale sales to other Court has that conduct as con- reading compe- inconsistent with the policy displace Not is that with the state’s sistent plain language, industry. provision’s which refers in in the natural Such a deci- tition generally, exactly immunity. broad terms to sales of for resale what invokes Parker sion legis- district court’s construction of the but the extremely Curiously, panel crabbed. Wholesale lature’s intent is noted that Gas chal- gas companies place lenged holding to other natural the district court’s that Parker sales deal, immunity burden on the FPSC alter- apply an administrative did not to its refusal to industry ing competition in the the structure of F.2d at but nevertheless failed to ad- assets, increasing utility’s thus or of dress the issue. ratemaking process. complexity See su- legisla- pra court’s too nar- claimed that the at 1332-1333. The district 90. The district court ture, legislature’s drafting provision, intent is had in mind row construction of discretion, utility would utility’s te supervision. b. Active acting accordance with necessarily be prong of Mid- supervision The active or not it decided policy whether the state Two reasons here. also satisfied test is cal would Either decision be sell at wholesale. First, by virtue this conclusion. support and neither state policy, consistent function, regu- the FPSC rate-setting pol- could be inconsistent decision to sell at wholesale. utility’s decision lates state, would never icy. The at whole- to sell utility were decide If a disapprove a power to to exercise its its ratemak- sale, exercise the FPSC would with state that failed to accord decision to the wholesale respect ing function with In this so fail. policy: no decision could base its therefore utility price. situation, the active the concerns behind wholesale, not to sell whether decision automatically are requirement supervision that the the likelihood part, at least on super- the state regardless of how satisfied rates that approve FPSC would P. decisionmaking process. See vises the utility to high to allow the sufficiently were Hovenkamp, Antitrust Law H.& invest- Areeda return recover a reasonable ¶ 212.7, For this above, (Supp.1989). at 168-69 the economic As I describe ment. well, prong of may be the second selling at wholesale implications of reason affecting the structure in this case. quite test is satisfied Midcal broad— and thus marketplace competition in the C. Conclusion. deploy- utility forcing to reconsider supra at See its own resources. ment of shows, foregoing discussion even As the rate-fixing process, The FPSC’s impo- justify the conduct could if adequately might not utility’s liability under sition of implications. all of these take into account Act, City is immune from Sherman least, uncertain Or, utility might be immunity state-action under the liability rate-fixing cal- FPSC’s or not the whether of Parker. doctrine adequately consider culation would to the FPSC Unless were implications. VIII. CONCLUSION dealing expressly regulations promulgate complicated history been This case’s sales, wholesale rate calculations extremely important, long. The case is not, FPSC would continue it has which of first it involves issues through its sales discourage wholesale to limits of anti- impression and tests the ratemak- process. The FPSC’s rate-fixing view, the district court my trust laws. therefore, by of its function, ing virtue imposing improperly, case lia- decided or utility’s decision whether on a effects 2 of the City Gas under section bility on wholesale, gas satisfies to sell not today this court Act. Because Sherman requirement. supervision active decision, I am upholds the district court's ratemaking function if the Even FPSC’s dissent. compelled to utility's decision not so affect did issue, City territo- preliminary As a wholesale, the gas at not to sell or whether Peoples provided Gas agreement rial sat- prong would still be supervision active agreement liability That here. no basis explained in Pat- As Court here. isfied relationship to Consolidated’s had no causal rick, supervision active purpose Consolidated, has no injury. ensure that the state requirement is “to Act, Clayton au- standing under only particu- shelter doctrine will action under the antitrust private actions thorizes parties private anticompetitive acts lar agree- laws, territorial challenge the to state, that, actually judgment of the ment. policies.” regulatory state further City not sell did Gas’ decision Nor at 1663. Because atU.S. con- gas gas wholesale concerning sales of policy state in violation refusal entirely stitute a deal such decisions is to leave wholesale by chapter tory regula- created the nature of the scheme thus inconsistent with so, moreover, City problem, City Gas Gas must do not be 2. As an initial monopoly power undertaking in the rele- cause that will con possess benefit did not First, competition gener the relevant market sumers enhance market. vant court did not exist. al—it will do neither —but because the un defined exist, Second, even if market did dertaking will enable Consolidated to en level operated never the wholesale gas Gas ter the natural market as a retail dis market; gas operated the natural possi tributor on the most favorable terms gas. distributor of natural is, retail requires ble. That this new rule Moreover, unper- Gas’ abandoned give potential competitors Gas to a free Florida does formed contract with Gas ride into the natural market. Third, even if suggest otherwise. is, This new extraordi- rule wholesaler, operated had as a natural inefficiencies, narily promotes bad law. It pow- possessed monopoly it would not have undermines business firms’ rational deci- had a tremendous er in that market. FGT sions, flatly and leads to results that are Consolidated, market, and share of that purposes inconsistent with the behind it could given projections profits addition, antitrust laws. this new rule prac- gas company, could make as a natural impossible apply. will be The district for a ticably have turned to FGT courts of this circuit will face an adminis- gas. supply of natural nightmare attempting fashion trative has never the fact that Given under this rule. Given these remedies wholesaler, no as a natural operated Congress surely practical implications, to deal require basis existed sup- could not have intended section law, Under established with Consolidated. port such a rule. This new rule should 2 when liable under section a defendant is therefore be struck down. surrounding its refusal the circumstances rule, impossible Even under this how- inference of anticom- give to deal rise to an ever, today upholds, which this developed var- petitive intent. Courts district court’s decision was erroneous. facili- as the essential ious formulas—such properly apply The district court failed doctrine, monopoly-leveraging theo- ties reason, rule. I would its own new For evaluating the ry, the intent test—for the decision and remand the case for vacate given case in evidence in a circumstantial rule im- proceedings. further Because the evidence determine whether the order to amendment, proper ap- a plicates the fifth intent. The cir- justifies an inference of depends on a determi- plication of the rule here, however, to no give rise cumstances price the fifth amendment for the nation of anticompetitive intent under inference of court, gas here. The district forced sale of exist- any formulas. Nor does the of these fifth amendment did not find the justify ing under section caselaw result, As a it price case. City imposition liability Gas. whether, (1) giv- properly did not determine duty implications imposing practical price, amendment en the fifth present category of case deal 2; of section refused to deal violation 2 does that section support conclusion for, (2) whether, Clay- purposes of short, present case sim- apply. In not Act, any injury suffered ton Consolidated type of refusal to ply did not involve the conduct. a result of Gas’ fact as deal that violates section addition, failure to the district court’s duty to deal imposing nevertheless price infected set a fifth amendment 2 in the under section First, remedies it awarded Consolidated. new rule of court thus created a district properly calculate court did not / the district today court liability, which this antitrust damages must damages awards: those rule, new Gas—a upholds. Under this price. the fifth amendment be based on wrong un company nothing that has done Second, unable to set district court was an law—must undertake der established City Gas injunction requiring price in its operation and submit entirely new level of instead, Consolidated; del- gas to to sell sale of to Consolidated. to a forced 307, 313-14, 87 L.Ed. task to the FPSC. price-setting egated the (1943). awarding Third, court erred in well as injunction an as both

Consolidated going concern for the loss of

damages those two remedies Not are

value. inconsistent, by awarding

theoretically but remedies, the district

Consolidated both recovery. gave a double reasons, impos- under this even

For these rule, court’s decision sible new HUFFORD, A. Huf Richard Marcia J. vacated, ease must be and the must be Penticoff, minor, ford, James Joshua can the district court remanded so that Cross-Appellants, Plaintiffs-Appellees, these issues. properly address v. court could Finally, even if the district RODGERS, Roy of Gilchrist Sheriff new rule that under its properly determine Holt, County, individu Thomas 2, my conduct violated Cross-Ap al, Defendants-Appellants, liability immune from is still pellees. of Parker. the state-action doctrine entering into a City Gas’ conduct—both No. 88-3994. agreement Peoples Gas and territorial Appeals, States Court United refusing to sell to Consolidated— Eleventh Circuit. clearly articulated was consistent policy affirmatively expressed state Sept. actively supervised by the state. discussion, I re- foregoing Based on strongly, dissent from this

spectfully, but today. decision

court’s

ANDERSON, dissenting: Judge, Circuit Judge and V of Chief join Parts IV opinion, in which he concludes

Tjoflat’s monopolist the whole- was not to deal did and that its refusal

sale market fa- liability under the essential trigger or the intent test.

cilities doctrine A. B.l. of Part join subparts

I also Tjoflat’s opinion, in Judge of Chief

VII that state action immu- he concludes respect to

nity would shield join Judge agreement.

the territorial of state ac- dissent on issue

Johnson’s immunity respect to the territorial

tion

agreement.

EDMONDSON, Judge, Circuit

dissenting: Judge Tjoflat, stated

For the reasons or not

I think that Gas — whether immune from otherwise be liable — is immunity the state-action

liability under Brown, 317 U.S. of Parker v.

doctrine notes 10-11. section how- ever, government showing action. such a example, involved would not be suffi- court, however, Grinnell prove liability, cited cient to compa- The district unless the Grinnell) (and only proposition ny’s acquisition” directly “willful for the caused plaintiff’s injury. market satisfy that “if as result of horizontal order to company monopoly pow requirement section 4’s causation in acquires division case, therefore, er, 2 Act.” it ... violates of the Sherman Consolidated would § Grinnell, relationship have to a causal F.Supp. (citing at 1523 384 show between 665 576, 1706-07). agreement injury.18 Because territorial and its 86 S.Ct. at U.S. Because Consolidated has made no such government enforce Grinnell involved showing, action, nor view could it make such support applica ment it does not showing, I would reverse the district rule to the which tion of this holding agree- court’s the territorial private govern of course is a action. provided imposing liability ment basis for directly Grinnell brought ment in suit un Gas under section 2. 2 and did not need to der section therefore prove injury causally that an related to IV. MONOPOLY POWER merely needed the defendant’s conduct. It Putting in and of aside the issue of the territorial prove an antitrust violation today adopts the acquisition” component agreement, The “willful the court itself. 15, See, Co., e.g., Byars properly v. F.2d note characterized the News 609 Bluff 843, Cir.1979); Photo, agreement (6th Berkey as a "horizontal market division.” A Inc. v. 853 can, course, Co., 263, pro (2d horizontal market division Eastman Kodak 603 F.2d Cir. 273 liability States, under section 1 of the 1979) vide the basis for (citing Co. v. Standard Oil United 596, See, e.g., Topco, 1, 62, 502, 516, Sherman Act. 405 U.S. 221 U.S. (1911)), 31 S.Ct. 55 L.Ed. 619 support S.Ct. at 1126. I have found no denied, 1093, cert. proposition that a horizontal market divi (1980); 62 L.Ed.2d 783 see at 1284. infra liability provide un could also a basis for sion court here did not der section 2. The district passage from Grinnell cited 17. As the merely point; that "a terri stated address indicates, however, the district court restrictive agreement, regulated utili even between torial ties, agreement in that case was one of the per the Sherman Act” is a se violation of exclusionary practices supporting govern- "has violated 2 of § concluded that Grinnell, 384 U.S. at ment’s case. See F.Supp. at 1532. In Sherman Act.” 665 agreement, Whether S.Ct. at 1706-07. support proposition, of this alone, standing provided would have an inde- which territorial cited three cases in liability pendent even in Grinnell basis for re- agreements were held to violate section mains uncertain. Act. These sec of the Sherman section cases, my do not control in tion 1 Thus, satisfy injury holding 18. Even if Consolidated could district court’s 2 case. respect agreement provided requirement a basis territorial territorial that the agreement agreement, liability 2—even if Consolidat that the under section doubt Clayton liability satisfy causation re under section 2 Act’s a basis for ed could above, authority. supporting supra quirement Act. As I note the Sherman —lacks did gas and to natural was limited market re- holding that court’s district prohibi- because LP not include of section deal violation fused de- court then expense. The tive Supreme as the Again, Act. Sherman market geographic the relevant fined 570- Grinnell, 384 U.S. stated Court competition of effective “the area at 1704: S.Ct. ... line of commerce known 2 of monopoly under § The offense purchaser to which operates, and seller (1) elements: Act two Sherman

Notes

FERC can order an allocation under section see notes infra Act, 717f(a) 7(a) figure provided improper of the Natural Gas U.S.C. basis for calculat- § (1988), requires ing profits which that the allocation be future Consolidated Consolidated’s if "necessary figures, public purchased gas or desirable in the interest” Gas. These from hand, proper a basis standard. the other would profits calculating future for Consolidated’s if FGT, priced purchased gas "competitively is 22. Ball based his source Consolidated from my gas” figure price City paid here. the focus of discussion of on the Gas for never sold natural ever, City Gas that pipesys- up to hooking cost then, essence, the issue In at wholesale. hypothetical that Ball assumed tem. practicably could Consolidated return on whether ten-percent a expect buyer would FGT from rate, purchased and, using he have investment, this its sources Whatever case. this projected irrelevant to value of the found found, not may have may or twenty-year peri- Consolidated over profits stream City Gas them. $2,275,130. not one Id. at Gas was figure was od: relevant participate simply that Consol- did figures, it follows these From profits annual generate market. would idated willing buy- $267,000 (i.e., a approximately Gas Contract. Florida B. The ten-percent $2,275,130, at pay would er annuity twenty-year rate, interest Flor- addition, contract City Gas’ In $267,000 year).23 paying for the issue significance no has Gas ida with, con- begin power. To monopoly issues a Now, that Consolidated assume abandoned, never Gas was twenty years, tract bond, mature $250,000 acknowledged that panel performed. rate, say fifteen high at a pays interest un- any gas actually sold never rate, “City Gas Consol- annually. Given that percent “it that stressed agreement” but der payments interest annual nominal idated’s at 301 880 F.2d do so.” power to had the $37,500. Because be would The fact agree. original). (emphasis payments interest those deduct could to sell at power had the thirty- that rate of corporate paid aat its taxes— wholesale, not mean does 11(b)(1)(1988)— I.R.C. percent, § four see mar- power the wholesale monopoly $24,750 had be expense would interest its real actually in the wholesale ket, (which it was amount paying this annually. After even market, a wholesale market or of Consolidat- a mere 9.3% represent would no contract abandoned $267,000), existed. Consolidat- profits ed’s annual contrary, On the these issues. profits relevance generate annual still would ed abandoned, the contract fact that $242,250, and its the amount agreed, indicates court the district $242,250in as generating company aas value wholesale, actually sold at never City Gas twenty years the next profits over annual exer- reason not rate) choosing whatever interest ten-percent (assuming a in the wholesale power addition, hypothetical its In cise $2,060,000. roughly be would significant is the market. projected future the amount given decided legitimately point: that expect Consolidated would one profits, selling to $250,- not to exercise paying back difficulty in have little —not Gas, any Consolidated, to Florida twenty years. end of principal 000 decision, City firm. Pursuant other suggest, reasonable figures these As a wholesale operate as did not found obviously have underwriter supplier. in- to be safe bonds hypothetical pro- addition, contract the abandoned underwritten and would vestment mar- the wholesale therefore, no evidence have vided Consolidated, them. court, was ket, as defined for a to FGT turned” “practicably IAs dis- hypothetical. than anything result, more As a gas. of wholesale 1277-1279,a mar- above, supra at cuss excluding FGT from the erred establishing price; market, is mechanism FGT ket if geographic relevant evi- provides price, market, a wholesale relevant included had been

Case Details

Case Name: Consolidated Gas Company of Florida, Inc. v. City Gas Company of Florida, a Florida Corporation

Court Name: Court of Appeals for the Eleventh Circuit

Date Published: Sep 19, 1990

Citation: 912 F.2d 1262

Docket Number: 87-6108

Court Abbreviation: 11th Cir.