United States v. AT&T (D.D.C. 1981)
What products did Western Electric provide Bell Operating Companies?
What had AT&T done to promote the Western Electric bias?
What was AT&T’s defense to the activities of Western Electric?
What was the standard for testing vertical integration? Per se?
What had AT&T done that killed its motion to dismiss?
Did the Consent Decree require divestiture of Western Electric? Why not?
Who was hurt the most by AT&T’s activities of buying from itself through
Western? Consumers? Competitors of AT&T? Western Competitors?
What parallels exist between the old AT&T and Microsoft today?
Law 552 - Antitrust - Instructor:
Dwight Drake
FTC v. Morton Salt Co. (Supt. Ct. 1948)
Basic Facts: Morton Salt offered the same quantity discounts to all
wholesalers and retailers. Only five companies were large enough to
take advantage of large case price discount. FTC found violation of
Clayton 2 price discrimination, and issued cease and desist order. Ct. of
appeals set aside order.
What was Ct. of Appeals rationale for setting aside order?
Per Court, was is purpose of Robinson-Patman Act as related to small
businesses?
Per Morton Salt, how much injury to competition must be shown to
sustain a price discrimination claim under Clayton 2?
Law 552 - Antitrust - Instructor:
Dwight Drake
FTC v. Morton Salt Co. (1948)
Holding: Reverse and sustain FTC cease and desist order for price
discrimination under Clayton 2.
- Robinson-Patman designed to deprive large buyer of price advantages
which are not justified by sellers reduced costs.
- Standard quantity discounts are discriminatory under Robinson-Patman
whenever have defined effect of competition.
- Burden of proof on cost-savings defense is upon Morton, not government.
- Need not prove actual injury to competition, only that there “is reasonable
possibility” it “may” have such effect. Here, it was obvious – inferred.
- Fact that salt is small item relative to all grocery store volume is irrelevant.
- Purpose of Robinson-Patman to protect small businesses.
- Greatly handicap Act to require proof of injury; “reasonable possibility” of
injury to competition is self-evident when some customers purchase for less
than other customers.
Law 552 - Antitrust - Instructor:
Dwight Drake
J. Truett Payne Co. v. Chrysler Motors Corp. (Sup. Ct. 1981)
Basic Facts: Chrysler offered Birmingham dealers cash incentives based on
number of cars sold in excess of quota, and paid bonuses when quota of
autos had been purchased. P went out of business and sued under
Clayton 2 for price discrimination.
What was jury verdict in Dist. Ct.?
What was the issue on appeal to Fifth Circuit? What did Fifth Circuit hold?
What was the Plaintiff’s theory of damages?
Why did the Supreme Court reject the “automatic damages” theory?
Did the Court acknowledge the use of easy, lenient damage rules in
antitrust?
Why did the Court refuse to apply the lenient damage rules in this case?
Law 552 - Antitrust - Instructor:
Dwight Drake
Boise Cascade Corp. v. FTC (D.C. Cir. 1988)
Basic Facts: Boise, as both wholesaler and retailer of office products,
received wholesale discounts on all purchases and thus had better
pricing than other retailers. FTC held Boise violated section 2(f) of
Robinson-Patman. This was petition to D.C. Circuit for review.
Note Statutory summary on top of page 627.
How significant were Boise’s purchases from manufacturers?
How did court view the Morton Salt inference – that substantial price
discrimination between competing purchasers over time causes
competitive injury?
Why did court believe this inference might be rebutted in this case?
How does the Boise “rebutting inference” holding differ from the “cost
justification” and “meeting competition” defenses?
Law 552 - Antitrust - Instructor:
Dwight Drake
Morton lives on - Boise “Rebutting Inference” Rejected
Texaco Inc. v. Hasbrouck (Sup. Ct. 1990): Held functional discounts to dual
distributors illegally discriminated against independent retailers.
Arguments based on market competition that favored buyers as
wholesalers and complaining buyers as retailers all rejected. Morton Salt
presumption of competitive injury applied.
Chrome Lighting v. GTE Products Corp (9th Cir. 1997): Sylvania gave
discounts to larger players in lighting market, and P had gone out of
business. Court rejected arguments that market was competitive and P
had failed to show competitive injury. Strong language about legislative
intent to protect individual competitors, not just competition. Rejected
primary-line price discrimination standard of Brooke Group that requires
showing of threatened injury to competition. Secondary-line cases
different because of Clayton Act intention to protect secondary-line
competitors. Morton Salt inference may not be overcome by showing of
no harm to competition.
Law 552 - Antitrust - Instructor:
Dwight Drake