USA Petroleum Company v. Atlantic Richfield Company

ALARCON, Before NELSON and REINHARDT, Judges. Circuit REINHARDT, Judge: Circuit (USA) USA Petroleum Company sued At- (ARCO) Company lantic Richfield for viola- Act, tions of the Sherman the Robinson- Act, Act, Patman the Cartwright and vari- subsequently ous state laws. USA volun- tarily prejudice withdrew with its claim un- der section of the Sherman Act. ARCO damages because can recover competitor summary judgment on USA’s moved price maintenance resale Act, a maximum the Sherman 1 of section under claim decide we must Specifically, agreement. grant- court district and the 15 U.S.C. § resulting injuries competitor’s whether judgment court entered its ed motion. vertical, non-predatory, maximum 54(b), and Fed.R.Civ.P. under for ARCO category of “an- within the fixing fall reverse. We timely appealed. USA question, This is a difficult injury”. titrust in this circuit. impression one of first and I. spoken not on has Supreme Court The company oil integrated is an ARCO only the courts issue, among the circuit and gas- markets things, which, among other position. See has taken Circuit Seventh It sells States. United in the western oline Corp. v. Morton & Sons Walters Jack directly and both consumers gasoline to (7th Cir.1984), Inc., 737 F.2d 698 Building, dealers. through ARCO-brand indirectly us requires question The discussed below. gas- of marketer independent USA an policies purposes and closely at the to look under oline, at retail it sells which laws, and to deter- antitrust underlying the directly competes USA USA. name brand of of the doctrine application mine which level. the retail dealers at with ARCO implements those injury” best “antitrust conspired with alleges that ARCO USA policies. and purposes selling ARCO- station dealers retail service injury” was “antitrust concept of The at below- prices fix retail gasoline to brand Corp. v. Pueblo in Brunswick put forward “ARCO’s alleges that USA levels. 477, 489, 97 Bowl-O-Mat, independents to eliminate strategy was (1977): 50 L.Ed.2d subsidizing below-market plaintiffs to for hold that therefore We independents’ off the siphoning prices they must damages ... treble recover and that succeeded profits,” volumes and to causally linked injury than prove more USA, many According to strategy. in that Plain- in market. presence illegal an of busi- driven out have been independents which injury, prove antitrust tiffs must tem- consisted subsidies ness. ARCO’s type the antitrust injury of the say is to allowances, temporary com- porary volume prevent and intended to were laws allowances, price allow- other petitive makes defendants’ flows from and deal- its distributors ances extended acts unlawful. ers. argued that Brunswick, plaintiffs district reviewing the purpose For the failing kept alive had merger illegal an order, we must summary judgment court’s viola was that a claim The competitors. correct. to be allegations assume these prevented had antitrust laws tion Navy, Department v. Baker See monopoly profits. obtaining plaintiffs from Cir.1987). F.2d 1381, not sur was decision Court’s as- court ruled The district “[e]ven not be able should plaintiff prising: a vertical establish suming can that [USA] gain unable being damages claim can- prices, low to maintain conspiracy [it] advantage type of position, monopoly require- injury’ ‘antitrust satisfy the prevent. meant to were laws antitrust showing 4, without Act Clayton ment of § id. See predatory. Under to be prices such injury claimed that when the held such ... no here concerned circumstances statute type that ‘the not of “was ” disagree. We made.” showing can be sec forestall,’ damages under intended not be Act would Clayton 4 of the tion II. v.Co. Wyandotte (quoting available. 191, 202, 88 S.Ct. States, United appeal whether question (1967)).1 Or- 19 L.Ed.2d pricing predatory proof in the absence an show plaintiff can holding Even if the violation, summarized 1. One commentator damages treble allow should courts as follows: Brunswick lowered, ion Pictures Syufy Distribution stabilized Enters., (9th Cir.1987) 829 F.2d directly interfering play with the free (no where the places market forces. The Act all claimed was caused a breach of con- beyond such schemes pale pro- tract, alleged antitrust viola- part tects that vital of our economy tion). against any degree of interference. Con- gress has not left with us the determina- III. tion of particular price- whether or not To determine whether the USA unwise, schemes are wise or alleges is of the the antitrust healthy or destructive. prevent, were meant to we must look first Id. at argu- S.Ct. at 843. To the to the price Court’s discussions of prices ment that the had been in fixed such fixing under the antitrust laws. way a market, as to stabilize the the Court Socony-Vacuum United States v. Oil stated: Co., 84 L.Ed. operations terms of market stabiliza- [I]n (1940), a involving case horizontal tion is manipulation. but one form of price fixing, the Supreme Court held that And manipulation market in its various price-fixing agreements were illegal. se implicitly manifestations is an artificial responded The Court as follows to the ar (or applied stimulus to at times a brake gument fixing prices that the of should be on) prices, a force which distorts legal if prices fixed were reasonable: prices, prevents those a factor which The prices reasonableness of has no prices determination of those free constancy dynamic due to the quality of competition alone. business underlying price facts struc- tures. Those who fixed reasonable prices today perpetuate would unreason- Under the Sherman Act a combination prices tomorrow, able prices since those purpose formed for the and with the subject would not be to continuous ad- effect raising, depressing, fixing, peg- supervision ministrative readjust- ging, or stabilizing of a com- light ment in changed conditions. modity foreign in interstate or commerce

Those prices who controlled the illegal per se. control or effectively dominate the mar- ket. And those who were in that strate-

gic position would have it in power their Price-fixing agreements may may or not destroy to drastically impair or the com- complete be aimed at elimination of petitive system. But the thrust competition. of the group making The those deeper rule is and reaches agreements more than may may or power not have market_ monopoly power. Any combination to control the ec- Whatever tampers which with structures is justification particular onomic price-fix- engaged in an activity. ing agreements unlawful may have, Even thought be to though the members of the price-fixing permit law does not an inquiry into group position in no were to control the their They reasonableness. are all market, raised, to the extent they banned because of poten- their actual or injuries reflecting disruption businesses that otherwise would have failed. plaintiffs in the market. From prices any way. It had not affected The perspective, easy Brunswick was an case. profits" plaintiffs complained "lost plaintiffs may well have shown a viola- very were the result of the situation that the possibility tion of large § 7—the mere that a supposed encourage— laws are to many firm prices active in markets will cut or competition among many free firms as a monopolization use other tactics new support. market can enough market is but to show a § 7 violation— Note, Standing, Injury, "Antitrust Antitrust failed to show that their losses Standard”, the Per Se 93 Yale L.J. 1320 & stemmed possibili- from the realization of this n. 58 ty. merely kept The defendant had afloat correct- was We thmk system nervous central to the Kiefer-Stewart tial threat it. Maxi- adhere to and we ly decided economy. of the fixing may and minimum mum S.Ct. at n. 225-26 many situa- consequences different n. 59. maximum to fix schemes tions. But case later in a Supreme Court perhaps substituting the erro- prices, rule evident thought it for the a seller forces judgment of neous illegal extended per se market, severely may competitive prices. buyers ability upon intrude in that market. and survive compete holding Appeals erred single product, Competition, even in competitors among that an Maximum mold. single in a cast prod their prices of resale fix maximum the deal- too low for fixed Act. Sherman ucts does violate to the essential services er to furnish those less than no agreements, For such for the consumer goods have which value free cripple the prices, minimum to fix and conveniences services to furnish their thereby restrain traders dom of for which consumers desire their with sell in accordance ability price pay. Maximum willing to they are we what We reaffirm judgment. own through may channel distribution fixing Socony-Vac v. States in United said advantaged specifically large or a few 150, 223 S.Ct. Co., [60 uum Oil subject would otherwise dealers who aAct 811, Sherman “Under 844]: competition. nonprice significant and purpose for the formed combination charged un- Moreover, price if the actual depressing, raising, of the effect with nearly is price scheme a der maximum stabilizing price pegging, or fixing, which price, fixed maximum always the foreign or in interstate commodity aof maximum likely as the increasingly is se.” illegal per is commerce cost of the the actual approaches price Seagram E. Joseph v.Co. acquire all dealer, tends to the scheme Kiefer-Stewart 213, 211, Inc., Sons, 340 U.S. & fixing arrangement of an the attributes (1951). L.Ed. 219 view, there- It is our prices. minimum by the formed fore, the combination that a both vertical involved Kiefer-Stewart petitioner to force in this case respondent (maximum resale fixing price maximum the re- price for specified a maintain hori- maintenance) and a agreement price he had newspapers sale to im- among competitors zontal constituted, respondent from purchased 212, 71 Id. price restraint. pose that illegal more, restraint an without the issue vertical When at 260. S.Ct. Act. the Sherman 1 of trade under § directly more price-fixing was 145, 152- Co., 390 U.S. v. Herald that affirmed Albrecht raised, Supreme Court (1968) 873, 869, 19 L.Ed.2d 53, 88 S.Ct. cov- manipulation was that form omitted).2 (footnote fixing. price against rule per se by the ered (1988) 1519, L.Ed.2d 808 S.Ct. per se rule of a 2. The establishment omitted). (internal fixing quotes and citations more than is maximum merely anticompetitive recognition that the assertion, mind, flat the dissent’s With this procompeti- outweigh practice effects (now Judge) Easterbrook’s on based Professor Rather, is a n. 1. at 699 Dissent tive effects. views, ”[m]aximum that economic neo-classical cases [procompetitive] "such recognition that potential anticom- lacks important or sufficiently common are not enough horizontal that maximum petitive effects expense neces justify and the time potential for has, has the in contrast V., v. T. Inc. identify Continental sary them.” simply irrele is competitive creating benefit” Sylvania, GTE Easterbrook, (citing vant. at 700-01 Dissent Indeed, “per 53 L.Ed.2d 2557 n. 886, 890 Fixing, 48 U.Chi.L.Rev. Price Maximum that is conduct appropriate are se rules (1981)). that extent To the n. 20 conduct anticompetitive, manifestly Judge differs issue of this view Court's Easterbrook’s, always to restrict tend always or almost apply the for required to we are output.” Business competition and decrease — U.S. -, mer. Sharp Elecs. Elecs. Maricopa private power. power Distrust of County Arizona v. Medical Society, ground central and common one (1982), 73 L.Ed.2d 48 re support over time has unified for anti- price fixing fused to withdraw maximum Interest of trust statutes. consumers per from the se rule. have been a recurrent concern because argument Our decisions foreclose the perceived consumers have been as vic- agreements escape per at issue power. tims of the abuse of too much se condemnation because are hori- entrepreneurs Interests of and small prices. zontal and fix maximum business have been a recurrent concern Kiefer- place and Albrecht horizontal Stewart independent entrepreneurs agreements to fix maximum seen as been the heart lifeblood of legal the same if not economic— enterprise, —even American free and freedom footing agreements to fix as minimum or activity opportunity of economic has prices. uniform se rule “is thought preservation been central to the grounded price competition on faith in as enterprise system. of the American free policy market force on a [and not] overarching One idea has unified these selling prices low at the of eliminat- (distrust power, three concerns con- ing competition.” consumers, cern for and commitment to (brackets S.Ct. at 2475 opportunity entrepreneurs): competi- Maricopa County) (quoting Rahl, “Price process. tion competition process Competition Fixing Price Rule— preferred governor is the of markets. If Perspective”, Preface and 57 Nw.UL.Rev. impersonal competition, forces of (1962)) (footnote omitted). It is public private power, rather than de- clear that maximum resale mainte outcomes, termine market and behavior nance remains per illegal.3 se power by dispersed, opportu- definition nities and incentives for firms without III. increased, power market are and the re- legislative We also history look to the of are acceptable sults and fair. the guidance. antitrust laws for Professor Fox, “The of A Modernization Antitrust: Eleanor Fox findings has summarized the Equilibrium”, New 66 Cornell L.Rev. of historians as follows: (1981) (footnotes omitted); 1152-54 R. see teaches, history “efficiency” As is not Hofstadter, Happened “What to Anti- the Indeed, the reason for antitrust. those Movement?”, trust Style in The Paranoid efficiency who valued competi- more than Essays American Politics and Other opposed tion grounds antitrust bills on (1965). activity would constrain some might Price-fixing any producer save costs for a kind distorts in a ba- activity way forbid some competitive process that does not inter- sic the the anti- optimal fere with protect. allocation of trust laws resources. were meant to Two standing Rather than efficiency, prominent commentators have described American against price fixing stand as follows: Recently, Spray-Rite impossible Monsanto Co. v. Serv. opin- 9 n. it is almost to read the Corp., 465 U.S. L.Ed.2d lengthy ion's discourse on the benefits of this (1984), the Solicitor General and a number practice saying anything as else. It claims that Supreme of other amici asked the Court to re competitors ARCO’s are not harmed its con- consider the inclusion of resale mainte duct, only and that its consumers will benefit. per nance within the se rule. The Court de Yet, opinion, as discussed in Part III of this clined to do so. Id. at 761-62 n. 104 S.Ct. at Supreme per Court has established se rules 7; 1469-70 n. see Sharp Business Elecs. certain conduct “for conduct that is — U.S. -, Corp., Elecs. manifestly anti-competitive, that is conduct that (1988) (reaffirming per 99 L.Ed.2d 808 se always always or almost tend to restrict illegality price agreements). of vertical competition...." Business Elees. Although taking any po- the dissent disclaims (internal quotes S.Ct. at 1519 ted). and citations omit- sition on whether maximum vertical fix- ing any longer per illegal, should be se dissent at 348,102 (“The S.Ct. at [Successfully maintained vertical grounded price compe- se rule 'is on faith in expression of econom- is often a tition as market imperfections, force on power based on market ic [and not] policy selling prices of low bargaining power, imbalances eliminating ”) Rahl, competition.’ (quoting oligopoly-like presence of some level Competition Fixing “Price and the Price dif- product to trademarks or power due Perspective”, Rule—Preface and such, Nw.U fix- ferentiation. As (1962)). L.Rev. When con- sellers directly with the freedom ing interferes fix spire prices, to the market mechanism competitors to opportunity of retail higher,4 prices may distorted: be driven re- compete usually the merits and on goods may some of- services It higher prices to consumers. sults fered, and sellers succeed or fail for to proponent of a restraint enables the ability respond reasons other than their right property assert an absolute to the demands of the market. Rules competition price, on suppress distributor against price-fixing pre- are thus meant to right independent distrib- denying the vent harm to both consumers and sell- competi- or fail utors to succeed ers. merits. tive Ponsoldt, “Legal Reasoning and Flynn & re injury” “antitrust standard quires plain of Vertical Restraints: us determine Jurisprudence whether injuries disruption Economic resulted The Limitations of Neoclassical tiff’s plaintiff’s Dis in the caused Analysis in the Resolution Antitrust (1987). by antitrust violation. putes”, 62 defendant’s N.Y.U.L.Rev. Note, Standing, generally “Antitrust Anti echo the histo- Court cases Standard”, Injury, and trust the Per Se regarding objectives conclusions rians’ present case Yale L.J. 1309 laws. The Court states the antitrust inquiry straightforward: seems USA’s against price that the rules result, and, injuries claimed were the direct objectives, including protec- number of indeed, allegations accept under the we competitive process. Congress tion of the true, objective, of ARCO’s intended that market forces alone deter- intended USA, According to price-fixing scheme. offered, goods are mine what and services to purpose price-fixing the of ARCO’s is goods are price at these and services what sales, gasoline disrupt the of retail sold, particular sellers succeed and whether disruption of and that is the source USA’s 221, See, e.g., at Socony, or fail. 310 U.S. injuries. 843, 59, 844, n. at 846 USA, 59; argues at that as ARCO’scom- n. ARCO Kiefer-Stewart, conspiracies injury, fixing petitor, cannot claim an antitrust (price at 260-61 S.Ct. the competitors is not and there- “cripple the freedom traders maxi- type against in that the rule ability their to sell accord- restrain Albrecht, price maintenance was meant judgment”); mum resale ance with their own preda- 152-53, (price prevent—at in cases S.Ct. at 873 least where 390 U.S. at argu- “severely tory alleged.5 upon pricing is not ARCO’s fixing conspiracies intrude Supreme the Court’s buyers compete and sur- ment misconceives ability of market”); has not dis- County, analysis. Supreme Court Maricopa in vive [the] consumers," "arguably benefit verti- these restraints contention that maximum The dissent’s 4. added), (emphasis we enumerated some id. also fixing price "less destructive than mini- is cal above, reasons, why the Su we do as generally price fixing in because it results mum price- preme that "maximum Court still holds 700-701, consumers," prices to Dissent at lower price-fix pernicious fixing is minimum as as best, simply any questionable in event at but is ing.” below our views of Id. We discuss per are Both violations classified irrelevant. cites, & Sons Jack Walters other case the dissent Corp. Cir.), resulting competition is because the harm to se Building, 737 F.2d 698 v. Morton Moreover, extremely the Ninth Circuit serious. denied, S.Ct. cert. proposition, North- cites for its case dissent (1984). 83 L.Ed.2d 359 Crumb, Inc. v. 752 F.2d west Publications (9th Cir.1985), say simply does essence, what position the dissent 5. this is also In says Although did note that price it does. we de- dissent “Maximum vertical takes. predatory.” are set structive when the cussed maximum resale maintenance part ARCO relies in Cargill, Inc. separate type violation, as a of antitrust Colorado, v. Inc., 479 U.S. Montfort of but as one fixing. form of S.Ct. 93 L.Ed.2d 427 Arizona v. Maricopa County That reliance misplaced. Medical So In Cargill, ciety, plaintiff, at 2475; large beef-packing firm, S.Ct. at sought Co., injunctive Albrecht v. enjoin Herald 390 U.S. at relief to the merger of the Thus, at proper second and third question largest beef-packing firms industry. is not what injuries plaintiff against rule asserted that the defendant maximum resale would be maintenance able to lower its prices due to prevent, “multiplant meant to what kind efficiencies”. injuries but Id. 107 S.Ct. at against price require would plain rules This were meant to tiff turn prevent. prices, to lower its Supreme thus lower has indicated ing profits. its at Id. 492. The se rule price-fixing is Court held that long-term aimed at did not consti as well as the short- tute “antitrust injury”; the term Court relied in practices effects such have in the part on plaintiff the fact market, had not merely and not the immediate con shown that the engaged defendant had sequences prices. See Business Elecs. — engage in unlawful or predatory Corp. Sharp U.S. -, Elecs. pricing. words, In 492-94. other 1515, 1519-20, 99 L.Ed.2d 808 Cargill plaintiff failed to show that the (1988) (characterizing competi interbrand pricing practices claimed was caus tion as the primary concern of antitrust ing or would injuries cause its illegal.6 were law, listing “the creation and mainte fact, the Court termed the defendant’s nance of small businesses” as one of its pricing policies “vigorous competition” and objectives). The removal some elements said that the protect small markets, distorts the businesses “only against profits the loss of participants: harms all the those retail practices from forbidden laws.” [those] ers which have their ability lost to set present case, Id. at 492. In plaintiff’s prices, the other retailers the same mar injuries directly result pricing practic ket who are by the harmed distorted mar (for es that defendants purpose admit ket, and the consumers. Even if we were appeal) of this are forbidden the anti analyze question at the specific more trust laws and are illegal.7 therefore level of fixing, given resale long-term consequences practice of that In Cargill, Brunswick, as in the connec- we would reach the same result for similar tion between the antitrust violation and the reasons. activity which alleged caused the injury is (citing Dissent at 335.2(i), (1987 Matsushita Electric Indus Antitrust Sup- Law ¶ 277 n. 56 Corporation, trial Co. v. Zenith plement). Radio However, 106 S.Ct. 1354-55. the single practices Court in 6. For a pricing Matsushita not firm’s did comment on wheth to violate laws, er maximum vertical the antitrust engaged maintenance that firm is de must be in predatory predatory pricing (the structive in the pricing. discriminatory pricing absence or Act, simply 13(a)). That issue was not before the Robinson ever, Court or Patman 15 U.S.C. § How- by considered it. much less need be shown to assert that the pricing practices of two or more firms have position preclude The dissent’s would a find- violated the laws: it need antitrust ing of a violation of the antitrust laws in the conspired shown that those have firms to fix majority case of the vast of unlawful maximum prices. generally Hovenkamp, See H. Econom- price agreements i.e., resale those not accom- — 92-124, 159-61, ics and Federal Law Antitrust panied by one, predatory except conduct. No 172-73, (1985). Here, price-fixing a and, Department an unenthusiastic of Justice agreement circumstances, between and ARCO its dealers is al- under certain the dealers who leged. parties are to the resale maintenance agreement, standing bring would have to suit to challenge undeniably why Cargill conduct 7. There is which is another forbid- reason is not by virtually dispositive. against den the monopoly antitrust This laws. The law involved has, finding Act, Cargill, Clayton amount to a that Brunswick in attempts sub section 7 the

silentio, Albrecht, Kiefer-Stewart, prevent overruled and to structures which the com- Maricopa County, Hovencamp, P. & petitive process Areeda H. is to vulnerable distortion. The comp decreases cases, rather than nance increases the In those indirect. attenuated resale mainte acquisition, Maximum an merger or awas violation etition.9 lower, higher. If not pricing brings prices nance because of injury occurred the fail, they are not it is legal.8 competitors themselves were practices charged by the the low held, to match injuries derived able As the Court necessarily retail price maintenance are not maximum resale practices legal pricing (cid:127) competition, certain typical a cost of injuries rules ers. This is type of the ARCO, for acquisitions problem were not a according to mergers types of Cargill, heavily S.Ct. at on relies policy. ARCO prevent. antitrust meant Brunswick, 492-93; laws were argument that the antitrust the competition, protection at 696-97. “the enacted for Shoe competitors.” Brown Co. not IV. States, United However, (1962). 1502, 1521, L.Ed.2d 510 not have that USA does claims ARCO problems the discussed we earlier injury” stan- standing under “antitrust aphorism: misreading that with price mainte- resale dard because motion) summary judgment con- pose of the price-fixing only potential. In is distortion cases, contrast, estab- price-fix- violation thus an antitrust is of the ceded and the distortion contrast, cases, predatory pric- any distortion of need to show ing without lished has, definition, already occurred. ing. mechanism out, state in points we did dissent As the equally applies well to This characterization Tugboat do not that antitrust Murphy "[the laws] Chemicals, De Pont Ltd. v. E.I. Du Alberta Gas in a non-predatory that results prohibit conduct Cir.1987), (3rd Co., F.2d 1235 & 826 U.S. -, Nemours ce Dissent at 702. price to the consumer." lower However, — denied, rt. ignores fact the crucial dissent Gas, plaintiff Alberta In L.Ed.2d that, pricing Tugboat, predatory was Murphy compa acquisition aof that defendant's claimed because, necessary absence element a a acquired company cancel ny caused conduct, violation there was no canceled, of such project project. Because (It also to mention fails laws. plaintiff’s company bought less acquired resale a maximum Murphy Tugboat was not plaintiff had that the product. court found too, purport to discuss the This, did not case and injury. is an not shown unsurprising cases.) It was such predatory conduct in role of finding: between the connection of whether with our discussion in connection too attenuated is violation more, claim, state- we made the occurred that had plaintiff without violation wholly out of particular antitrust lifts dissent now is of the ment involved do prevent. antitrust laws statement rule was meant context—the against oth- protect businessmen inefficient Tugboat v. Crow Murphy Co. ARCO relies not en- prices but do establish lower ers who Cir.1981), heavily, and ley, F.2d 1256 however, Here, we predatory gage conduct. recognizing that equivocally, so does the dissent viola- seeking whether a to determine are not fact, Murphy controlling. In is not the case our For occurred. the antitrust tion of Tug Murphy wholly In inapplicable. Tugboat is those violation of is a conceded purposes, there boat, complained of the tugboat company one laws; agreed that a violation specifically, it company tugboat charged by another low fees predatory pricing. the absence occurred in pilots. licensed inland services its for the there is a whether only question here is a labor result fees were These lower injury. cognizable pi the inland between entered into solely short, Tugboat with Murphy deals Because one of the defendants. lots and plaintiff who when the issue of cover competitor in the area plaintiff was not question area in competitor in the defendant's legality agreement, of that labor ed oc violation has antitrust may that an claim principal in to our agreement was irrelevant plaintiff who is question of when The curred. event, ultimately that the any we held quiry. In injury” is prove competitor can “antitrust result, Id. at 1259. As agreement was valid. Indeed, it is present case. basic issue entirely on wheth depended plaintiffs claim Circuit did noting that the Seventh worth policies pricing con "overall er defendants’ sufficiently point Tugboat Murphy consider at 1259. anticompetitive conduct." Id. stitute[d] ques the same it when considered it to mention price- agreement, and thus labor With the competi this court—whether before tion now case, an an allegation removed standing injury in maximum have antitrust tors only be demonstrated could titrust violation Corp. v. Sons&Walters price cases. Jack resale is in pricing This predatory scheme. proof of a (7th Inc., Cir. 698 Building, F.2d 737 case, Morton present to the stark contrast 1984). (for pur- price-fixing is unlawful defendant’s purpose drawing a distinction be- should not per be a se violation of the competition tween harm to and harm to However, laws.11 ig- we cannot competitors is to point out that not all nore the fact that maximum resale acts that competitors harm compe- harm maintenance per illegal, is simply se be- However, tition. cause might converse is some think that rule is unwise Injury true. competition necessarily because of speculation commentators’ injury entails might to at least some rule’s demise competi- sight. be in Competition Publications, tors. does Northwest not exist in a Inc. v. Crumb, vacuum; (9th Cir.1985); F.2d it consists of rivalry among Jack Walters competitors. Clearly, Corp. & Sons v. Morton competi- cf. Inc., Building, (7th 737 F.2d probative tors be of harm compe- Cir.1984). clearly Court has tition, although weight to be attached stated—and restated —that maximum re- to such depends evidence on its nature sale maintenance, as a form and on challenged the nature of the con- fixing, is illegal, se and that rule binds aphorism duct. The may not be invoked us until the Congress12 Court or clearly blindly response to a showing that states otherwise. alleges USA competitors harmed; have been other- price-fixing ARCO’s objective had the wise it would often serve to shield unlaw- forcing independent gasoline retailers from ful conduct that adversely compe- affects market, and that large- ARCO had been tition. ly objective. successful in that In its com- Texaco, Inc., Hasbrouck v. 842 F.2d plaint, USA states that “more than a dozen (9th Cir.1988).10 large independents out, liqui- have sold reject We ARCO’s characterization dated or drastically opera- curtailed their USA’s resulted from “in tions, many independent retail stations creased, not competition,” reduced ... have been closed.” It also states that the contrary to the antitrust laws. As in the entry barriers to into the gasoline retail terms of Act, the Robinson-Patman 15 U.S. market heightened have been so that “once 13(a), C. the success of some § firms and independent eliminated, an highly firms, failure of other when due to unlikely replaced.” that it will be The ob- illegal pricing practices, must be character jective and effect of illegal ARCO’s pricing ized as a “lessen[ing] competition”, not [of] scheme has been to reduce the number of an increase in Also, competition. when independent gasoline retailers, in other conspire firms to fix low in order to words, competition. to reduce USA com- drive competition, out long-term conse plains that it has suffered financial losses quences may higher prices and reduced being and is driven out of the service to Albrecht, illegal consumers. 390 ARCO’s price-fixing. This is the Cf. U.S. at S.Ct. at 873: Socony that the antitrust rules were Vacuum, meant prevent. S.Ct. at 268- Finally, we consider the Seventh We note that par commentators with a Circuit’s treatment the issue. Jack ticular viewpoint economic have argued Walters & Sons v. Morton Build that maximum resale maintenance ing, Cir.1984), F.2d 698 Wal- Flynn Ponsoldt, supra, See, 10.See & Fesmire, e.g., at 1126 4n. Blair & "Maximum Price (citation omitted): Fixing Antitrust”, Syracuse the Goals of (1986); Hovenkamp, L.Rev. 43 H. Economics One of popular the more cliches is that the (1985); and Federal Antitrust Law 247-72 protect competition, East not com- erbrook, Fixing”, petitors. "Maximum implicitly Price 48 U.ChLL. cliche asserts that one (1981); Bork, Rev. 886 R. can have The Antitrust competitors, Paradox without "competition,” contains no definition and is frequently deny used congressionally to goals defined policy of antitrust in Spray-Rite favor of 12. See Monsanto Co. v. Serv. goals by the narrow assumed the neoclassical 79 L.Ed. model. (1984) (Brennan, J., 2d 775 concurring). competitive playing field.” The an “even dealer, a dis- ters, building-materials Morton, participants in rule when by process can produced goods of tributor farm build- to combine prefabricated process not allowed to of are manufacturer claimed, among other Walters conclude ings. of time.14 We fix ahead dealers, its had coerced Morton things, that policies of the anti- purposes and that the conspiracy Walters, to maintain a including recogniz- by are effectuated trust laws best prices. Id. resale maintain to en- “standing” competitors of to ing the Walters’ dismissed court The district 706. price-fixing against the antitrust laws force affirmed. Circuit claims, the Seventh point differ- put the conspiracies. To same price main- resale Regarding the maximum injury done to ently, we conclude Posner, writing for the tenance, Judge by price-fix- competitors to the market and had not Walters court, that concluded conspiracies is antitrust ing —the injury: antitrust shown laws were injury the antitrust type of case, did if Morton even present In the prevent.15 to meant fixing its against prohibition violate above, we reverse stated For the reasons to Walters only harm prices, the dealers’ and re- district decision of the court deal- competing fact that came proceedings con- for further mand the case itself) their (or would lower ers Morton opinion. sistent with this not. if did Walters prices to consumers the lower that suggestion no There is AND REMANDED. REVERSED cost; they below have been prices would Wal- prices_ lawful have been would ALARCON, dissenting: Judge, Circuit complain about heard to not ters will be competition, having lawful to meet I. encourage, to law seeks may merely because action, plaintiff/appel- In this antitrust injury. by an antitrust have been enabled (“USA”) ap- Company lant USA Petroleum grant- order at 709. from the district court’s peals of defend- summary judgment favor ing were, disagree.13 The antitrust We Company Richfield ant/appellee Atlantic earlier, give to intended we discussed to demon- (“ARCO”) failure for USA’s distributors . independent entrepreneurs and to make rights and consumers of distributors has noted: As one commentator pricing denial judgments about their own —a bring to able would Even consumers by goals guaranteed of rights Judge under the rule established actions propo- to the policy. Congress did not leave & Sons opinion in Jack Walters Posner’s authority deter- to restraints nents such Building.... Morton v. scope contract unilaterally of the mine escape the conclusion I ... cannot Similarly, Congress did rights of distributors. growing impatient with Con- Judge Posner — proponents of maximum not intend the to over- gress’s Court’s refusal or the price should what best to determine decided to undertake rule Albrecht—has public. of the the benefit be for on his task own. Chicago vi- School Members of with recognize conflicts that our decision 15.We us, things sions, of the kinds as do most Larm, 824 Circuit. In U.S. that of Seventh perfect world. that should obtain Cir.1987), “absent said we F.2d resale maintenance rule se so, disinclined we are good to do reason some justifies among fact definitely not them. That circuit.” conflict with another create a direct political. arguments, theoretical both surren that statement We did intend taking into justify matter But it does not authority important issues decide der our hands, we certain no matter how own one’s suggest we would impression or to first right. are be that we Alternatives", to consider first adopt circuit the view “Chicago Hovenkamp, and Its Rather, we omitted). every (footnote instance. issues such Duke L.J. give respectful attention meant that we Ponsoldt, supra, carefully 1149: Flynn eval & circuit and other the views of the Cf. settling on analysis before circuit’s uate that prices] dis- a direct conspiracy to fix [A good find so we have done Here ours. we process competitive placement of the disagree reached with the result power reason to Judge assumption of It is an determination. restraint, denying Posner. proponent 698 injury.” respectfully satisfy

strate “antitrust I “cannot injury’ the ‘antitrust re- disagree majority’s with the conclusion quirement Clayton Act without § the district court erred. Because USA showing prices charged ... for ARCO [the present any failed to showing facts anti- gasoline] predatory.” to be The court injury, trust I would affirm. prices found those predatory. were not Accordingly, granted it ARCO’smotion and

II. complaint prejudice. dismissed USA’s with USA, retailer, gasoline brought this challenge action to marketing pro- ARCO’s III.

gram in which ARCO discontinued its cred- it gasoline prices cards and offered lower USA claims the district misapplied court ARCO, to consumers. USA claimed a ma- the substantive law when it concluded the jor integrated company, oil violated section injury USA suffered as a result of the Act, (1982), 1 of the Sherman 1 15 U.S.C. § alleged price-fixing conspiracy was not an by conspiring with certain retail dealers to injury, “injury titrust i.e. set retail gasoline for ARCO-brand antitrust prevent.” laws were intended to levels USA could not match. USA Bowl-O-Mat, Brunswick v. Pueblo claimed ARCO violated section 2 of the 477, 489, 690, 697, Act, (1982), Sherman 15 U.S.C. at- § (1977). L.Ed.2d 701 USA contends it suf tempting monopolize gasoline the retail injury fered antitrust injury its through the “predatory pricing” of illegal resulted from price-fixing an con gasoline. its ARCO-brand USA also as- spiracy. serted claims violations of the Robin- We review independently and non-defer Act, son-Patman Cartwright Act and entially a contention that the district court various state laws. misapplied the substantive law its order USA claimed ARCO’s increased granting summary judgment. Ashton v. competition resulted in having “lost sales Cory, Cir.1986). 780 F.2d We it otherwise would have made.” USA view the light evidence most favor sought compensation for these lost sales USA, non-moving able to party. Mat Act, under section 4 of Clayton sushita Electric Industrial Co. v. Zenith (1982), U.S.C. provides, part, § Radio “[a]ny person injured who shall be ... (1986); 89 L.Ed.2d 538 Baker v. reason of anything forbidden in the anti- Department Navy, 814 F.2d trust laws sue ... and shall recover — (9th Cir.) denied, -, cert. threefold damages by him sustained.” 98 S.Ct. 390 ARCO moved for summary judgment on USA’s sections 1 and 2 claims. ARCO IY. contended USA’s section claim failed for “dangerous no probability” existed that presented The issue appeal on this is a ARCO-brand monopolize sellers would question difficult impression. first We market. ARCO contended USA’s section are asked to determine whether a retail claim failed for want of antitrust injury. competitor suffers injury in the ARCO contended the USA described profits form of lost as a result of a non- in its complaint was not predatory maximum because it solely resulted non-preda- agreement. We purposes must assume for tory price competition. appeal prove USA could In response motion, to this USA volun- se violation of Sherman Act for maxi- § tarily dismissed its section 2 claim. There- mum However, fixing. after, ARCO renewed its motion concern- in Matsushita in- ing USA’s section 1 claim. The structs, district “... must more show than a [USA] that, court held assuming even a vertical conspiracy in violation of the antitrust conspiracy to fix prices, laws; USA they must show an to them

699 contract, in form of trust combination the 475 illegal conduct.” resulting from the otherwise, in conspiracy, restraint of 586, or 106 S.Ct. at or at among the several or commerce trade had its injury concept of antitrust The nations, states, foreign is declared or with in decision Supreme Court’s in the origins fixing agreements, illegal.” Price to be 477, Brunswick, S.Ct. 690. 97 429 U.S. minimum or maximum they set whether Brunswick, bowling alley op- plaintiff or are horizontal prices or whether damage action un- brought a treble erators per se are all deemed agreements, against Act Clayton section 4 of the der despite Act operator. Plain- violations of Sherman bowling alley competing § acquisition types price fixing agree competitor’s that some claimed their fact tiffs alleys proximity in the benefits. See bowling may competitive of several ments have section 7 of operation violated Duffy, 479 U.S. of their Liquor Corp. v. e.g., 324 as it threatened Act inasmuch Clayton 335, 93 L.Ed.2d 667 107 S.Ct. 480, 97 S.Ct. monopoly.” Id. at “create a price fixing); Ari (1987) (minimum plain- damages, at 693. To establish Maricopa County Medical Socie zona v. competitor that had the demonstrated tiffs 2466, 332, 102 S.Ct. ty, 457 U.S. 73 L.Ed.2d alleys would alleys, those acquired (horizontal price fix (1982) maximum profits plaintiffs’ have closed Co., 145, v. Herald 390 U.S. Albrecht ing); reduc- from the resultant increased (1968) (maxi 869, 19 L.Ed.2d 998 88 S.Ct. competition. tion in price fixing); mum vertical Kiefer-Stewart plaintiffs that Supreme Court held The Sons, 340 U.S. Joseph Seagram E. & Co. v. damages under section seeking treble (1951) (verti 211, 259, 95 L.Ed. 71 S.Ct. causally injury than prove more must price fixing); cal and horizontal in the mar- illegal presence linked to an Co., Socony-Vacuum v. Oil States United prove in- Plaintiffs must ket. 811, 150, 84 L.Ed. 1129 60 S.Ct. 310 U.S. say injury of jury, is to which price fixing). (1940) (horizontal minimum pre- were intended the antitrust “eco part on se rule is based from that which flows vent and convenience, judicial prediction, nomic unlawful. defendants’ acts makes at certainty.” 457 U.S. business anticompetitive injury should reflect Thus, every rule of S.Ct. at “[a]s anti- or of either of the violation effect match between application, the general by the possible acts made competitive Id. imperfect.” actual is presumed and the violation. also Conti See at 2473. 102 S.Ct. at 488-89, (emphasis in at 697 Id. at 97 S.Ct. T.V., Sylvania, v. GTE Inc. nental principle, original). Applying this n. 50 n. 433 U.S. for plaintiffs’ claim failed held the (1977) (“cases that do not L.Ed.2d 568 16 53 solely preserva- their resulted arise”). Be may generalization fit competition. An suffered tion of the conduct match between cause the ac- competition, preservation account it follows that may imperfect, the rule Court, the “anti- is not one cording to the the reason does not fit some conduct prevent.” intended trust laws were may not violation finding an antitrust for at 697. may result result in antitrust injury.1 only limited antitrust V. ques- proper majority states that Act, 15 U.S.C. 1 of the Sherman Section rule injuries a type of “Every tion is not “what part, (1982) provides relevant

1§ injury analysis conclusively n. 16. Antitrust S.Ct. at 2557 per se rule asserts that the 1. USA anticompet- "injury” requires reflect presumes maximum vertical violation, any procompeti any pro- effect of the itive anticompetitive it can never have so Brunswick, contrary, See consequences. tive effects. competitive On the examples of antitrust viola although price For recognition 97 S.Ct. at 697. per se rule is a Beauty injury, see Local procompeti- tions without fixing agreements have some Lamaur, Inc., 787 F.2d 1197 Supply, Cir.1986); anticompetitive Inc. potential, effects on bal- tive Liability Scope Anti Page, The aspects. outweigh procompetitive ance Violations, T.V., Inc., Stan.L.Rev. trust at 50 n. Continental (1977); Shores, maximum resale maintenance Price-Fixing Vertical prevent, was meant to but what kind of Beyond And The Contract Conundrum: injuries against price fixing rules were Monsanto, 377, 54 Fordham L.Rev. 379 prevent.” Maj. op. meant to at 694. This (1985). contrast, price In horizontal re inquiry ignores require- the Brunswick drastically straints reduce interbrand com anticompet- ment that the reflect the petition. See Motor v. White Co. United itive effect of the violation. The anticom- States, 253, 267, 696, 704, 372 U.S. 83 S.Ct. petitive depending effects will be different (1963) (Brennan, J., 9 L.Ed.2d 738 concur type price fixing agreement. on the ring); also, Maricopa see Arizona v. Thus, Court instructs us that: 332, County Society, Medical 457 U.S. 348 The term “restraint of trade” [Sher- 18, 2466, 18, n. 102 n. S.Ct. 73 L.Ed.2d 48 1], man Act like the term at common § (1982) (“horizontal generally restraints are law, particular refers not to a list of restraints”); less defensible than vertical agreements, particular to a economic but Shores, supra, at 401. A in in- reduction consequence, produced by be competition terbrand causes more concern quite agreements different sorts of law, under the antitrust because interbrand varying times and circumstances. competition is primary seen as the concern Sharp Business Electronic Elec T.V., of the antitrust law. Continental — -, tronics 108 S.Ct. Inc., 19, 433 U.S. at 52 n. 97 at 2558 (1988). 99 L.Ed.2d 808 There n. 19. fore, analyze “illegal price fixing we must price fixing, The effect of minimum agreements” to determine whether vertical, whether generally horizontal or is is horizontal or vertical and higher prices. Pitofsky, In Dis Defense of whether it sets maximum or minimum counters: The No-Frills Case A Per for prices properly so we can determine the Against Se Rule Vertical Price Fixing, consequences anticompetitive economic 1487, (1983); Geo.L.J. Liquors, inquiry necessary effects. This to deter 335, addition, 475 U.S. 107 S.Ct. at 723. In allegedly mine whether an caused price fixing, minimum vertical unlike some “illegal price fixing” is of the types restraints, other of vertical is similar prevent. meant to were price fixing to horizontal because it re general, In price fixing agree horizontal competition. stricts interbrand Continental illegal ments are create because mar ., Inc., 18, T. V 433 U.S. at 51 n. 97 S.Ct. power ket previously did not exist and Co., (citing at 2558 n. 18 White Motor cooperative among competitors action 268, (Brennan, J., U.S. at 83 S.Ct. at 704-05 creates a restraint is otherwise not concurring)). Areeda, possible. Law, 7 P. Antitrust price fixing, Maximum (1986). contrast, whether vertical price a vertical horizontal, or being is not viewed as ordinarily any restraint does not increase price fixing princi destructive as minimum power merely one’s market but reflects pally generally existing because results in lower power party of one in the market ¶ Areeda, place. Law, to consumers. 7 P. Antitrust Northwest Publica tions, Crumb, 473, (1986). (9th Inc. v. impact price of vertical restric 752 F.2d Cir.1985); tions is to reduce or eliminate accord intrabrand Jack Walters & Sons necessarily Inc., competition2 impacting Corp. Building, without v. Morton F.2d 698, competition.3 interbrand Cir.) See Continental denied, cert. T.V., Inc., 433 U.S. at 97 S.Ct. at U.S. 105 S.Ct. 83 L.Ed.2d 359 (1985); Turner, Law, competition competition 2 P. Areeda & D. Antitrust 3. Interbrand involves &345 ¶¶ between sellers of different brands of the same V.,Inc., generic product. Continental T. competition Intrabrand involves at 52 n. 97 S.Ct. at 2558 n. 19. among sellers of the same brand of the same V., product. Sylvania, Continental T. Inc. v. GTE 52 n. 2558 n. 53 L.Ed.2d 568 ket, perhaps potential to deter entrants fixing horizontal (1984). Maximum coming in.” at 584 n. from than maxi- anticompetitive as more viewed Thus, 1355 n. 8. USA’s must its fixing mum vertical alleged anti- the context of the viewed in competi- eliminate interbrand potential determine whether violation to trust lacks Maximum tion.4 anticom- alleged injury results effects anticompetitive potential petitive aspects has, maximum horizontal fixing agreement. creating potential in contrast has su- Easterbrook, See competitive benefit. VI. Indeed, maximum verti- pra, 20.5 at 890 n. analysis in maxi manufacturer a single a The antitrust fixing by price cal fixing agreement is dif competition.6 price mum vertical interbrand stimulate states, Corp., 479 335, because, as one commentator Liquor U.S. 107 ficult See 324 maximum regulation of imposed “[sjupplier (“a restraint vertical 724 at S.Ct. virtually is never charged by dealers single prices or wholesaler manufacturer by a & H. Hoven- P. Areeda anticompetitive.” competition even interbrand may stimulate Law 11335.2h, (Supp. Antitrust n. 56 (em- kamp, competition”) intrabrand as it reduces Scope The Liabili also 1987); Page, see price Maximum vertical of phasis original). in Violations, 37 Stan.L. ty Antitrust prices set when fixing is destructive for (when (1985) price Matsushita, 475 U.S. Rev. 1445, 1469-70 See predatory. are in fixing agreements reduce and Below cost 1354-55. 584, at 106 S.Ct. at practice harm from the output, no “chiefly in crease predatory as prices are seen Antitrust Page, injury); having can be antitrust a domi- single firm in a cases which An Efficiency: Damages and Economic market, prices in cuts its share of nant Injury, Approach to Antitrust 47 U.Chi.L. of the mar- competition out to force order in Supreme Court in dictum that the anticompeti- 6.I potential note of 4. For a discussion stat fixing, S.Ct. at 1520 price Corp., 108 Business Electronic horizontal maximum tive effects of Easterbrook, Fixing, price inter- 48 restraints reduce Price “vertical Maximum ed that see 886, (1981). Despite the Court’s price competition." From the 900-908 U.Chi.L.Rev. brand referring anticompetitive of maximum potential effects was clear that the Court it is citations argues fixing, price Easterbrook price horizontal The restraints. vertical to minimum abandoned in T.V.,Inc., should be se rule U.S. at 51 433 Continental Court cites fixing price case. Id. 18, maximum horizontal 18, quotes at n. which 2558 n. concurring opinion White in Justice Brennan’s fixing price vertical 5. Because maximum States, 83 v. United Motor Co. having procompetitive benefits as some viewed stated, 696, (1963) where he L.Ed.2d S.Ct. 9 738 very is not effect its economic and because designed price is not maintenance ”[r]esale restraints, nonprice Con vertical different from fact, to, invariably reduce does almost but 10, T.V., & n. 97 U.S. at 69 43S tinental only among price competition not sellers 2567, 10, many n. commentators S.Ct. at argued quite as much between product, but affected analyzed under rule that it should competing Resale product brands.” 20; Easterbrook, supra at 890 n. reason. of traditionally used has been price maintenance 17; Vertical Pitofsky, at n. Price supra, 1490 cf. fixing price to minimum vertical to refer also, (1985); see Fixing, 983 98 Harv.L.Rev. context Justice Brennan was used 1148, Jeans, Inc., F.2d 849 Jeanery, v. James Inc. Similarly, case. vertical minimum Cir.1988) (presenting, "[a]n abbre n. 3 1153 Posner, Policy and Antitrust relies on the Court debate”). I also bibliography this note viated Analysis the Restrict Supreme Court: An was asked the Solici Distribution, Merger and Potential ed Horizontal Monsanto other amici in Co. General and tor Decisions, 294 Colum.L.Rev. Competition U.S. Spray-Rite Service Again, Pos- (1975) support comment. of its (1984), to reconsider 79 L.Ed.2d price maintenance” the term "resale ner uses al should restrictions whether vertical ways fixing. id. minimum vertical refer to Supreme Court declined be unlawful. Furthermore, Justice Posner uses 36. n. not been question it had to reach the Dr. Miles” the “rule of quote to refer to White’s on nor raised presented district court case. vertical a minimum which was 7. S.Ct. at at 761 n. n. appeal. U.S. for not the Court Posner criticizes Id. argument in the Similarly, not raised was this drawing minimum between a distinction us, opinion express no and I case before fixing. Id. at argument. merits (1980). If 72 L.Ed.2d the conduct Rev. plain- that no anti- anticompetitive, Murphy Tugboat, it follows trust exists. tugboat company tugboat tiff sued a rival company damages under section treble involving a common scenario most Clayton plaintiff Act. The claimed price fixing agreement maximum vertical tugboat company that the rival entered into by dealers or distributors involves a suit pilots price fixing agreement with inland suppliers. their The “restraint pilots’ set the fees for the services at trade” involved in a maximum that was lower than the fees other- a level supplier price fixing agreement between charged by pilots in the Francisco wise San the elimination or and its dealers is drastic plaintiff tugboat at 1258. The in the intrabrand area. reduction dealer in fact company pilot market. Whether a coerced claimed the fee agree such an suffers anticompetitive because the rival’s depend particular cir ment would package price, tugs which included Turner, 1 P. Areeda & D. cumstances. fees, pilot it the was lower than would have ¶ (1978); e.g. Law 346c see Jack Antitrust agreement. the If been absent the rival’s Build & Sons v. Morton Walters lower, package price plaintiff the was Cir.1984), 698, (7th Inc., ing, 737 F.2d charge higher would have been able to 1018, denied, 469 U.S. 105 S.Ct. rt. ce price price market or maintain and increase (maximum 83 L.Ed.2d 359 plaintiff share. at Id. 1257-58. in price fixing agreement did not result profits damages. claimed these lost dealer); antitrust to Knutson v. cf. in Murphy Tugboat We stated Cir.1976) Review, Inc., Daily 548 F.2d 795 complain plaintiff did not and could not denied, 97 S.Ct. rt. ce pilot agreement the fee the about because (1977) (pre 53 L.Ed.2d 1094 Bruns plaintiff operating pilot in was not the ser- awarding wick case terminated dealers lost vices market. We held that the rival’s profits). package price not Act did violate Sherman invoking A case like the one before us an package price, 1 because the which was § competitor against action one its rival’s always higher plaintiff’s price, than the supplier satisfactorily cannot be resolved Therefore, pack- not cost. the was below by adopting analysis of the dealer ver- age price predatory not and the rival was supplier Although plaintiff sus cases. did not violate Sherman Act 1. In reach- § lessening “prove does not have to an actual stated, ing this conclusion we anti- “[the recover, competition in order to ... prohibit non-predatory trust do not laws] strongest case for relief will be where com- price in conduct that results a lower Brunswick, petition has been diminished.” consumer. The antitrust laws do not re- n. 698 n. 14. U.S. S.Ct. at quire price of a erection umbrella Thus, the drastic reduction or elimination competitors.” of inefficient benefit in the intrabrand market at 1259. suggests is more like- ly dealer-versus-supplier to occur instructive, Murphy Tugboat is it is but Furthermore, dealer-versus-sup- cases. controlling not differs from the plier usually cases involve coercion and important respects. present case in several impair threats which a dealer’s “freedom” First, price fixing in alleged Murphy prices.7 to set plaintiff’s tug- did exist in the Tugboat not market, pilot boat it existed in the inland presented

The closest case to the facts Here, alleged price fixing here market. ex- Murphy Tugboat Crowley, Co. v. (9th Cir.1981), denied, gasoline 658 F.2d 1256 cert. ists USA’s retail market. Sec- Although alleged prices required by USA that it was "forced” to ket had set above those prices, match ARCO’s it is difficult to see how appear ARCO. It would instead that USAvolun- gasoline ARCO of the with 17% tarily price chose to match ARCO’sreduced during its most successful month "forced” USA competitive. remain prices to match ARCO’s when most of the mar- competition”); vigorous package ond, Tugboat Murphy (“cutting at 1360 Only fixed. U.S. was not charged customers often is business to increase package in order prices cost component one contrast, Car very competition”); USA fee) fixed. essence (the was pilot cf. Colorado, gasoline ARCO fixed Inc. v. alleges gill, Monfort of customers, that ARCO L.Ed.2d not retail charged to U.S. supplying component seeking injunctive cost relief (“a (1986) plaintiff fixed some Act must show gasoline. Clayton 16 of under § and that a show injury, threat a case disclosed has not My research in merely to damage due ing of loss or deal jurisdiction any or in other this circuit not constitute competition does creased its rival's versus competitor ing awith injury”). such inju the antitrust addresses supplier which 4 in the Act Clayton requirement ry § of a context VII. Act of Sherman in violation us, has USA Turning the facts before affir Instead, repeated I found l.8§ deal- with its conspired that ARCO alleged the Sherman principle that mations of in maximum vertical engage ers to as a “con by Congress designed

Act market level.9 prices fixing to set below v. So prescription,” Reiter sumer welfare ARCO’s found The district court 330, 343, 99 S.Ct. notone USA predatory,10 and does were (1979),and was 2326, 2333, L.Ed.2d 931 finding appeal. challenge this from competitors designed to insulate not alleged maximum impact of ARCO’s Brunswick, 429 competition. See vigorous be to fixing price scheme Brown 488, quoting 697 97 S.Ct. at atU.S. competition or eliminate intrabrand reduce 294, States, 370 U.S. v. United Co. Shoe neces- without among ARCO brand dealers 1521, 510 8 L.Ed.2d 320, 82 S.Ct. competition.11 interbrand impacting sarily enact ... (“the were (1962) antitrust the competition in Arguably, interbrand not competition protection for ‘the ed would be gasoline” submarket12 “discount original); ac ”) (emphasis competitors' inde- entry into by ARCO’s Tremco., stimulated Corp. v. Roofing M Triple cord niche. At market retailers’ pendent (2d Cir.1985)(“[t]he F.2d 243 in the dealers gasoline time those same pro never intended laws were antitrust already sell- were who by interbrand hardships occasioned for the a balm vide plaintiff not “antitrust does suffer that a Champlin Petrole King Enterprises v. King 8. & [plaintiff] conspired drive Cir.1981), petitioners unless Co., cert. F.2d um denied, (i) by pricing below markets out of relevant 71 L.Ed. (ii) necessary products, or their to sell the level facts (1982) similar to contains facts appropriate measure However, King pricing some below & I do not find presented here. Matsushita, at 585 n. dis cost.” helpful Enterprises did King acknowledges that stan- USA n. 8. requirement it in at 1355 cuss the engage in conspiracy to inapplicable to is dard conspiracy to maximum fix horizontal volved a fixing. price maximum vertical prices. Allison, Price- Analysis the Vertical An 11. See in the alleged no facts exist USA has 9. Dichotomy, Akron L.Rev. Nonprice any horizontal suggest maximum that record to price study (1987). conducted Allison also existence. fixing was of the ten out In non-price restraints. agreements also Vertical involving ver he studied eleven cases be cause concern element a horizontal have restraints, only other and no tical they eliminate only reduce or do cause not affected. Id. po intrabrand they competition, but have intrabrand 1. drastically table inter- reduce eliminate tential to Co. v. competition. See brand Keifer-Steward Sons, gasoline argued the discount below that Seagram & USA the re- separate (1951). a market submarket was L.Ed. 219 find- district court’s gasoline market. The tail gas- separate discount no ings engage established conspiracy to aof For claim existed. oline market has stated pricing the predatory persuasively using stated an ex- tator has ing prices higher than USA ARCO here, presented ample similar to the facts may not have affected ARCO’s been assumed, if is Even causation we must alleged price fixing agreement. any plaintiff is entitled to be ask whether event, the claim is that essence USA’s product’s free of a rival lowered ARCO, companies, major one of the oil entirely apart is lawful from the upon independent retailers’ intruded agreement.... assumed vertical [T]he pricing indepen- market niche under rely plaintiff would on the assumed cau- dent retailers. The result lower sation, query protecting but whether consumers, profit less for USA. USA’s but plaintiff’s higher prices interest in serves vigorous profits loss of from ARCO’s com- purposes of the antitrust laws.... petition injury.13 is not antitrust The dis- long So as the of the defendant’s granting summary trict court did not err lawful, product reason itself judgment in favor on the basis of ARCO’s awarding competitor treble dam- in- USA’s failure to demonstrate antitrust sue, ages encourage him is to but we jury- already seen rationale to be protection insufficient. And the of the attempts to avoid this USA result defendant’s rivals is not the reason for reformulating the Brunswick test. USA prohibiting maximum resale mainte- inquiring misstates that as test whether directly nance. Those more affected are alleged anticompetitive ARCO’s acts were fully capable suing, they if feel them- type the antitrust laws were intend- detrimentally selves if affected. And prevent opposed ed to to whether its not, perhaps do the social interest in type was of the the antitrust laws forbidding practice begin is weak to prevent. were intended to After reformu- with. test, lating the USA devotes the bulk of its (Footnote omitted) Areeda, 2 P. Antitrust alleged efforts to demonstrate ARCO’s ¶ Law 346c price-fixing activities were of majority’s analysis price fixing Under the prevent. laws were intended to markets, “distorts the and harms all the satisfaction, Having this to its established Thus, participants.” Maj. op. at 694. USA contends that remains ... “[a]ll dealers, majority implies that retail retail that USA damages show its claimed competitors and consumers all suffer anti- presumed flow from the market distorting any illegal price trust as a result of Since, USA, according effects.” fixing agreement. majority’s conclu- question “necessarily of “flow” is a fact ignores sion the fact that consumers are inquiry,” injured by intensive USA concludes that fix- ing, competitors and retail injured are not jury court must remand this issue de- complain and cannot about minimum verti- termination. price fixing. Matsushita, cal USA’s reformulation of the Brunswick 584 n. 106 S.Ct. at 1355 n. simple question test transforms it into a participants may 8. Market all be harmed causation. directly This mistaken notion types price fixing agree- different contravenes Brunswick. The Brunswick ments, only bring but can an action plaintiffs seeking court held treble dam- based on the that in- ages prove “must more than causal- jures them. majority’s refusal to ana- ly illegal presence linked to an in the mar- lyze this case in the context of a maximum Brunswick, ket.” 429 U.S. at agreement,14 (emphasis added). at 697 As one commen- According majority, that, majority “[ejven to the [they] as a result of 14. does state if analyze fixing, competitors question specif- retail were to at the are "harmed more price fixing, given However, ic level of maximum resale Maj. op. distorted market." at 694. long consequences practice term of that majority explain does not what the harm is [they] would reach the same result for similar or what the market distortion is. However, Maj. op. long reasons.” at 694. consequences majority high- term notes are illegal generic aon relying instead disserta- in a resulted

fixing analysis, has “market distor- premised

tion ex- fully defined that are never

tions”

plained. order court’s district affirm the

I would USA summary judgment because

granting injury. demonstrate

failed to Plaintiff, CUNNINGHAM, E.

Rufus al., ANGELES, et OF LOS

COUNTY

Defendant-Appellee, Eiden,

Richard

Real-party-in-interest-Appellant.

No. 87-6596. Appeals, States

United

Ninth Circuit. Aug.

Argued and Submitted 11, 1988.

Decided Oct. of these from either not suffer services to consumers. prices and reduced er consequences. long speculative term competitor would Maj. op. as a at 696. USA

Case Details

Case Name: USA Petroleum Company v. Atlantic Richfield Company

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Oct 7, 1988

Citation: 859 F.2d 687

Docket Number: 87-5681

Court Abbreviation: 9th Cir.