Standard Oil Co. of California v. U.S. (1949)

1
Standard Oil Co. of California v. U.S. (1949)
Basic Facts Justice Department challenged
Standard Oil contracts which required independent
service stations to buy gasoline exclusively from
Standard Oil. Basis of claim was Clayton 3
(prohibits exclusive dealing where effect is to
substantially lessen competition or tend to
create a monopoly) and Sherman 1. What did Dist.
Ct. hold? What was Standard Oils market share
in Western U.S.? What was Standard Oils
independent stations market share? How many
independent stations in Western are had exclusive
contracts with Standard Oil? What percent of
total? Did Standard have market power? What was
issue for Supreme Court?
2
Standard Oil Co. of California v. U.S. (1949)
What was Courts basis for holding that
requirement of Clayton 3 was satisfied? How was
Court influenced by fact that Standard Oils
competitors all used exclusive requirement
contracts? What was Courts view of relative
short-term and long-term effects? How did Court
view the use of economic tests to evaluate
requirements contracts? Dissent (Jackson,
Vinson, Burton) Ct adopts per se. Requirements
contracts often wage competition, not suppress
it. Business demands of industry justify such
agreements. Shouldnt use lash of antitrust
when businessmen develop successful method to
compete.
3
Tampa Electric Co. v. Nashville Coal Co. (1961)
Facts Nashville contracted to supply all
Tampas coal needs for new plant at stated price.
Prices jumped up, Nashville reneged, claiming
contract violated Clayton 3 and Sherman
Act. What did Court say was key consideration
for Clayton 3? What factors lead Court to
conclude this factor not satisfied? What was
relevant market? How was it impacted by
contract? How did Court distinguish Standard Oil
Case?
4
Barry Wright Corp. v. ITT Grinnell Corp. (1st
Cir. 1983)
Facts Grinnell, nuclear plant pipe installer
and buyer of 50 of snubbers in U.S., was
customer of Pacific, only snubber manufacturer in
U.S. To secure alternative source, Grinnell
financed Barry and agreed to buy all 1977 needs
from Barry. When Pacific dropped price and Barry
missed deliveries, Grinnell entered into large
fixed dollar amount contract with Pacific for
1977-79. Barry sued under Clayton and
Sherman. What did court say about per se rule as
applied to exclusivity or requirements
contracts? What was Grinnells market share?
How much competition did the agreement
foreclose? What factors impacted courts
decision that Dist. Ct. could conclude Grinnells
contracts with Pacific were not exclusionary
and thus not unlawful under antitrust?
5
Barry Wright Corp. v. ITT Grinnell Corp. (1st
Cir. 1983)
Facts Grinnell, nuclear plant pipe installer
and buyer of 50 of snubbers in U.S., was
customer of Pacific, only snubber manufacturer in
U.S. To secure alternative source, Grinnell
financed Barry and agreed to buy all 1977 needs
from Barry. When Pacific dropped price and Barry
missed deliveries, Grinnell entered into large
fixed dollar amount contracts with Pacific for
1977-79. Barry sued under Clayton and
Sherman. What did court say about per se rule as
applied to exclusivity or requirements
contracts? What was Grinnells market share?
How much competition did the agreement
foreclose? What factors impacted courts
decision that Dist. Ct. could conclude Grinnells
contracts with Pacific were not exclusionary
and thus not unlawful under antitrust?
6
Valley Liquors Inc. v. Renfield Importers (7th
Cir. 1982)

• Facts Liquor distributor reordered distributors
  and eliminates price-cutter distributor with no
  explanation. Dismissal was affirmed, Posner
  stating
• Elimination of price-cutter may not have
  negative effect on intraband comp.
• Reduction in intrabrand competition not presumed
  illegal.
• In restricted distribution case, P must show
  consumer worse off after
• consideration of intrabrand and interbrand
  competition.
• Market power is key factor to prove harm to
  consumers. If no market power,
• cant afford to take actions harmful to
  consumers.
• Even if powerless firm use distribution
  practices that have anticompetitive
• effect, it too small to warrant trundling out
  the great machine of antitrust.

7
United States v. Microsoft (D.C. Cir. 2001)
(Exclusive Dealing)
Facts Microsoft gave AOL desktop space and AOL
agreed not to promote any non-Microsoft browser
except at customers request and then no more than
15 of non-Microsoft Browsers. How much of
internet access providers had Microsoft tied
up? Why had Sherman 1 claim against Microsoft
been dismissed, not appealed? How did court
generally view exclusive contracts? How
significant was Microsofts monopoly power in OS
system to condemnation of exclusive
contracts? What was Microsofts alleged
justification for exclusive contracts?
8
EU Exclusive Dealing
What were two primary conditions per European
Court of Justice in Stergious Delimitis v.
Henninger Brau AG, the beer case? What were the
compelling factors that struck down the exclusive
ice cabinets in Scholler Lebensmittel (the ice
cream case)? What was the market share in ice
cream case? How does the analysis in EU cases
differ from rule of reason analysis of Microsoft,
Jefferson Parish, Valley Liquors?
9
Principe v. McDonalds Corp (4th Cir. 1981)
What were alleged tied products? What was Ps
complaint about economics of building lease
requirement? Were the lease, note and license
deemed separate products for tying purposes? How
did court distinguish Chicken Delight, which
found illegal tying? Given courts rationale,
could McDonalds ever go to far and expose itself
to antitrust?
10
Queen City Pizza v. Dominos Pizza, Inc. (3rd
Cir. 1997)
What did Dominos agreement require regarding
ingredients, supplies and materials for making
pizza? How much of ingredient aftermarket did
Dominos control with its franchisees? What had
franchisees done to develop other sources? Had
they succeeded? Why? What had Dominos done to
frustrate efforts? What was District Ct.s
rational for dismissing antitrust claims? Note
Ps six distinct antitrust claims top of page
599. How did court view contract restrains
impact on relevant market? How did court
distinguish Kodak after-market result? Note
treatment of information and switching challenges
of Kodak holding. Note how court used its
market power conclusion to deny all Ps antitrust
claims, noting P might have contract claims.
11
Queen City Pizza v. Dominos Pizza, Inc. (3rd
Cir. 1997)
Dissent How did dissents view of relevant
market differ from majority view? How did
dissent view information, switching costs and
lock-in problems? Are Dominos franchisees more
or less vulnerable than ISOs in Kodak? Is that
relevant? How about consumers? Was Kodaks
product any more unique than Dominos from
consumer perspective? How relevant is the
uniqueness factor?