Law Antitrust - Instructor: Dwight Drake Lorain Journal Co. v. United States (1951) Basic Facts: Defendant, controller newspaper and radio station in Lorain, Ohio refused to accept advertising from Loraine merchants who also advertised in new competing radio station in adjoining town. Purpose was to force advertisers to boycott competing station and preserve its monopoly. What was defendant’s defense? What is the private right to select customers and do business with whomever you choose? How vulnerable is that right? What are attempt to monopolize elements?

Law Antitrust - Instructor: Dwight Drake Lorain Journal Co. v. United States (1951) Holding: Injunction for Section 2 “Attempt to monopolize” upheld. -Forced boycott was attempt to monopolize. -Need not have completed monopoly; dangerous probability is enough for offense. -Right to select who one does business with is neither absolute not free of regulation. -Conduct had no purpose but to hurt competitor and advertisers

Law Antitrust - Instructor: Dwight Drake U.S. v. Griffith (1948) Basic Facts: Large theatre owner (53 towns monopoly, 32 not monopoly) negotiated blanket license with distributors to get first run of films in all theaters. Holding: Blanket license illegal under Section 2 as attempt to monopolize. -The use of monopoly power, however lawfully obtained, to foreclose competition, to gain a competitive advantage, to destroy a competitor, is unlawful. -Large scale buying not illegal per se, but may not be used to monopolize or to attempt to monopolize.

Law Antitrust - Instructor: Dwight Drake U.S. v. United Shoe Machinery Corp (1954) Basic Facts: USM manufactured over 75% of shoe-making machines that were offered under 10 year licenses that required their use to full capacity and locked users in. Holding: Ct ordered modest divestiture and required USM to sell, not lease, to customers who would rather buy. -Although “honestly industrial”, leasing not inevitable consequence of ability, natural forces, or law. They don’t encourage competition, but promote further dominance as unnatural barriers. They restrict free market. -Technology and innovation may improve with more competition. -In antitrust, courts have a power found no where else in law – to force divestiture. Must be used very cautiously.

Law Antitrust - Instructor: Dwight Drake U.S. v. Grinnell Corp. (1966) Case established two criteria for Section 2: 1.The possession of monopoly power in relevant market, and 2.The willful acquisition or maintenance of that power as distinguished from growth and development as a consequence of superior product, business acumen or historical accident. (Later …or by acts not on competitive merits)

Law Antitrust - Instructor: Dwight Drake Essential Facilities and Duty to Deal U.S. v Terminal Railroad Assoc. of St. Louis (1912): Ct held that railroads who owned only railroad facility into St. Louis violated Sherman 1 and 2 by trying to control access of competitor railroads. Association must be an “impartial agent for all who, owing to conditions, are under compulsion to use its facilities.” Otter Tail Power v. U.S. (1973): Electric utility that previously sold to towns at retail refused to sell at wholesale to towns that had built their own transmission facilities or to “wheel” at wholesale for Bureau of Reclamation who agreed to sell to towns. Finding illegal monopolization, Ct said Otter Tail had used its ”strategic dominance to foreclose potential entrants.

Law Antitrust - Instructor: Dwight Drake Official Airlines Guides Inc. v. FTC (1980) Basic Facts: Publisher of official airline guide refused to include commuter airline schedules, which forced many to book commuter flights through major carriers. Commuters were at competitive disadvantage. Rationale for exclusion was that commuters were less reliable with schedules. How can this be distinguished from Loraine Case? Otter Tail case? Why was court concerned about limits of antitrust?

Law Antitrust - Instructor: Dwight Drake Official Airlines Guides Inc. v. FTC (1980) Holding: No antitrust violation. -Not case where action designed to monopolize in defendant’s own market. Here, defendant was publisher, not airline. -FTC would have too much power if it could substitute its judgment for every decision of monopolist that impacts competition in other markets. -Even monopolist, as long as he has no purpose to restrain competition or to enhance or expand his monopoly, may make business decisions that favor some and hurt others.

Law Antitrust - Instructor: Dwight Drake Aspen Skiing Co. v. Aspen Highlands Skiing Corp. (1985) Basic Facts: For many years, Aspen skiers could buy four day pass to ski all areas. Aspen acquired all players except Highlands (smaller, inferior resort) and then eliminated four day pass and offered only 3 day that excluded Highlands. When Highlands tried to offer vouchers to Aspen facilities to attract business, Aspen refused to honor vouchers. Jury awarded Highland $7.5 million treble damages, plus costs and atty fees. Court of Appeals affirmed. Did Aspen have monopoly power? What was alleged error, per Aspen? Was this essential facilities case? Who was hurt by what Aspen did?

Law Antitrust - Instructor: Dwight Drake Aspen Skiing Co. v. Aspen Highlands Skiing Corp. (1985) Holding: Affirmed. -Aspen’s monopoly power not even an issue. -Monopolist generally has not duty to advertise or cooperate with competitor. But here monopolist forced changes in pattern of distribution that had been established for years. -This was a monopolist’s action to change character of market. Must analyze impact on consumers and market and whether jury could conclude there was no business justification. -Evidence supports conclusion customers were injured. -Evidence supports jury finding that only business purpose was to hurt competition. Refusal to accept vouchers show real purpose.

Law Antitrust - Instructor: Dwight Drake Olympic Equipment Leasing Co. v. Western Union (1986) Basic Facts: Western Union desired to increase telex sales. Encouraged and assisted independents, like Olympic, to buy and lease terminals. When sales were slow, pulled support from independents (“flush these turkeys”) and decided to go direct to move inventory. Never denied services to customers of independents. Is Western Union any different than Aspen Ski? Was there an essential facility? Was the essential facility withheld to get preserve monopoly? What did Western Union do that hurt Olympic, an independent?

Law Antitrust - Instructor: Dwight Drake Olympic Equipment Leasing Co. v. Western Union (1986) Holding: No antitrust violation. -Western Union encouraged competitors and offered support. -Withdrawal of support may create contract or tort liability, but not antitrust. No duty to support competitors. -Not essential facilities exit because Western Union services always available to all customers. -Olympic could have hired own sales people and competed. No antitrust abuse just because Western Union stopped feeding customers. -Purpose of antitrust not to protect solvency of competitors. Western Union has real business purpose – to move its machine inventory.