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Chapter 50 - The Clayton Act, the Robinson–Patman Act, and Antitrust Exemptions and Immunities
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
holds that the plaintiff in this case failed to prove what was necessary to sustain
such a claim.
Points for Discussion: Note the tremendous size of the jury verdict in favor of the
plaintiff. The verdict, of course, was set aside by the trial judge, whose action was
affirmed by the Fourth Circuit and by the Supreme Court. Even though the
defendant (Brown & Williamson) ultimately prevailed here, the fact that it
determination that it was not liable.
Many of the Court's comments on predatory pricing allegations apply not only to
the Robinson-Patman Act but also to Sherman Act Section 2 because, as the Court
noted, the essence of a predatory pricing claim is essentially the same under either
statute. Discuss the Court's repeated emphasis on recoupment as the critical
Patman Act or under Sherman Act Section 2.
Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc. (p. 1391): The Supreme
Court reversed the Eighth Circuit's decision that Volvo had engaged in secondary-
line price discrimination among its dealers by providing some Volvo dealers
unsystematic.
Points for Discussion: If, in fact, the "other dealer" in one of the instances cited
by Reeder did possess greater market power than Reeder and managed to extract
higher discounts from Volvo than Reeder could, why is Volvo in court rather than
the other dealer (as a supposed inducer of a discriminatory discount)? The
even play the strongman without knowing it was doing so. Volvo, on the other
hand, keeps books; it knows, in hard numerical terms, what it charges to this
dealer and that dealer, and any evidence of discrimination should be parseable
relatively scientifically. But in the end, the Court concludes that Reeder doesn’t
4. Discuss the various defenses to liability under Section 2(a).
a. Cost justification. Section 2(a) expressly provides for this defense. Difficulties
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
b. Changing conditions. Also explicitly allowed by Section 2(a), this defense is fairly
narrow in scope.
c. Meeting competition. Discuss this defense and note the type of competitive responses
that it is designed to protect. Example: Problem Case #8 (defendant held not to be
5. Discuss the various forms of indirect price discrimination prohibited by the Act. Note the
types of harm these provisions of the Act are designed to prevent.
Cir. 1987) (although Metrix's payments of incentives to parts managers who ordered
parts from Metrix violated Section 2(c) because payments were not for any genuine
MBNA to experience any losses).
b. Discriminatory payments (Section 2(d)) and services (Section 2(e)). These sections
establish per se violations, as does Section 2(c). No "cost justification" defense is
possible, albeit difficult to prove.
6. Point out that buyers who knowingly induce a seller to give them an unlawful
sellers would have.
F. Antitrust Exceptions and Exemptions
1. Point out that each of the exceptions or exemptions to be discussed represents a point of
unions.
3. Discuss the statutory exemptions enjoyed by agricultural cooperatives and by exporters.
scrutiny when they have engaged in a boycott.
further proceedings. The Court held (rejecting the plaintiffs' argument) that in conspiring
Chapter 50 - The Clayton Act, the Robinson–Patman Act, and Antitrust Exemptions and Immunities
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with foreign reinsurers, the defendant insurers did not step outside the "business of
insurance" and therefore did not lose their business of insurance exemption under the
McCarran-Ferguson Act. The Court also clarified the meaning of "boycott," for purposes
of the boycott exception to the business of insurance exemption. The Court held that a
boycott occurs when, in order to coerce a target into certain terms in one transaction,
parties refuse to engage in other, unrelated transactions with the target. Under this
definition, it is not a boycott (but rather a permissible cartelization) when parties refuse to
engage in a particular transaction until the terms of that transaction are agreeable. Some
of the plaintiffs' conspiracy allegations--those alleging refusals by the reinsurers to engage
narrowing. See, for instance, the flirted-with but abandoned effort noted at p. 1396 of
the text.
5. Discuss the antitrust immunity enjoyed by regulated industries and note the impact that
impliedly immune from antitrust scrutiny.
6. Discuss the "state action" exemption and the Supreme Court's tendency in recent decades
to narrow the scope of this important exemption. Here, the Court's deference to principles
of federalism (often expressed in other contexts) runs head-on into the Court's hostility
toward anticompetitive activities. The Armstrong case (discussed shortly as part of the
privileges was not shielded from antitrust scrutiny by the state action doctrine. The Court
emphasized that a challenged activity cannot qualify for immunity under the state action
doctrine unless it is "clearly articulated and affirmatively expressed as state policy" and
"actively supervised by the state." The peer-review process at issue in Patrick, although
state.
a. Note the antitrust problems that confronted municipalities in the wake of the City of
Boulder decision (referred to, though not by name, in the text). These problems
caused Congress to pass the Local Government Antitrust Act of 1984. A later
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refuse service to areas outside their boundaries. Eau Claire, Wisconsin created such a
facility and allegedly used its monopoly to force neighboring towns to agree to
Also, it is worth noting that the Local Government Antitrust Act does not shield, from
treble damages liability, municipal officials who acted outside the scope of their
official powers.
7. Discuss the Noerr-Pennington doctrine's application to attempts to persuade the legislative
or executive branch to take certain action. Also note its application to the filing and
pursuit of a lawsuit. The scope of Noerr-Pennington became a matter of debate in Allied
Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988). There, the Supreme
Center's Sherman Act claims, and that the district court therefore properly dismissed the
Surgical Center's complaint.
Points for Discussion: This case illustrates the interaction that sometimes exists between
the state action exemption (the Parker doctrine) and the Noerr-Pennington doctrine. Note
regulate business, not politics."
Ask the class why the state action exemption applies here. (The certificate of need process
was well-established under state law and was actively supervised by the state.) Ask why
Noerr-Pennington protects the defendants. (They were petitioning the government in an
effort to obtain a certain result from a government process.) Ask why the "sham"
immunity? Note the court's reasoning on this point and its assertion that parties such as
then Surgical Center have recourses other than antitrust lawsuits at their disposal when
they think that other parties have used false and fraudulent statements in an effort to
influence government action.
Chapter 50 - The Clayton Act, the Robinson–Patman Act, and Antitrust Exemptions and Immunities
50-13
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
grounds, the party who brought the lawsuit is not deprived of Noerr-Pennington
immunity on the basis of the sham exception unless the lawsuit was "objectively
baseless." If the lawsuit was not objectively baseless, the filing party's subjective
intent--even subjective intent that he, she, or it could not win the case--does not make
the lawsuit a sham.
reconcile.
9. Discuss the various doctrines that shield some foreign commercial activities from antitrust
scrutiny.
a. Sovereign immunity.
b. Act of state doctrine.
Example: Problem Case #9.
c. Sovereign compulsion.
to produce and did in fact produce some substantial effect in the United States (such
conduct being present here), and that principles of international comity did not
counsel against obtaining antitrust jurisdiction over the foreign defendants. The Court
reached this conclusion on the international comity issue because foreign law neither
scrutiny.
IV. RECOMMENDED REFERENCES:
A. PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW.
B. PHILLIP E. AREEDA & LOUIS KAPLOW, ANTITRUST ANALYSIS: PROBLEMS, TEXT, CASES.
C. HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY.
D. ROBERT BORK, THE ANTITRUST PARADOX.
L. REV. 1805 (1991).
G. William J. Baer & David A. Balto, New Myths and Old Realities: Recent Developments in
Antitrust Enforcement, 2 COLUM. BUS. L. REV. 207 (1999).
H. Andrew I. Gavil, Secondary Line Price Discrimination and the Fate of Morton Salt: To Save
It, Let It Go, 48 EMORY L.J. 1057 (1999).
doctrine.
Chapter 50 - The Clayton Act, the Robinson–Patman Act, and Antitrust Exemptions and Immunities
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V. ANSWERS TO PROBLEM CASES:
1. Yes. The Ninth Circuit Court of Appeals noted that the standards for tying liability are
agreed with MBNA's argument that tying the sale of Mercedes parts to the sale of Mercedes
2. Yes, according to the Second Circuit Court of Appeals. Although a post-merger market share
of 48.8 percent was sufficient to establish prima facie illegality, the trial court should have
easy that any anticompetitive effect of the merger before us would be eliminated more quickly
by such competition than by litigation." The trial therefore erred in holding that the merger
1984).
3. Yes. The Court concluded that the acquisition threatened competition in several ways. First,
the merger eliminated potential competition because it eliminated the moderating effect Ford
be able to compete for sales to Chrysler. Finally, the acquisition aggravated an already
oligopolistic market. Prior to the merger, there were only two significant buyers of original
U.S. 562 (1972).
4. The U.S. Court of Appeals for the Ninth Circuit concluded that the FTC’s argument was
addition, the court upheld the Commission’s imposition of the divestiture remedy. Olin Corp.
v. FTC, 986 F.2d 1295 (9th Cir. 1993).
5. No. The Supreme Court held that the state action exemption did not protect the title insurers
against claims that they committed horizontal price-fixing regarding rates for title searches and
doctrine to apply to a challenged activity, the activity must be (1) clearly articulated and
affirmatively expressed as state policy, and (2) actively supervised by the state. The second
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
either rubberstamped the rates set by the rating bureaus without conducting any meaningful
investigation or inquiry, or allowed the rates to become effective through the "negative option"
explained in the Court's opinion. Almost never did the states question the actions taken by the
rating bureaus. Absent any real regulation by the states, the Court concluded that the active
supervision element was lacking. Federal Trade Commission v. Ticor Title Insurance Co., 504
U.S. 621 (1992).
6. No. Despite recognizing that functional discounts are generally lawful, the Supreme Court
case. Texaco Inc. v. Hasbrouck, 496 U.S. 543 (1990).
7. No. The antitrust violation alleged was a violation of Section 2(a) of the Robinson-Patman
Act. Indian Coffee and Folger were primary line competitors. Such competitors injured by
which a jury could, and probably must, find that in relevant time periods Folger discriminated
in price between the Cleveland and Pittsburgh markets and other geographic areas in which,
Given this evidence of actual competitive injury and predatory intent, the trial court erred in
directing a verdict for Folger. Indian Coffee Corp. v. Procter & Gamble Co., 752 F.2d 891
(3d Cir. 1985).
8. No. The U.S. Court of Appeals for the Fourth Circuit reversed and remanded the case for
further proceedings. The Fourth Circuit concluded that Bayer's volume-based discount pricing
general conditions in the marketplace were protected by the meeting competition defense, the
defense would apply so frequently that the liability provisions of the Robinson-Patman Act
9. No. The act of state doctrine applies only when the relief sought or the defense interposed
would have required a court in the United States to declare invalid the official act of a foreign
case because the validity of a foreign sovereign act was not at issue. W.S. Kirkpatrick & Co.,
Inc. v. Environmental Tectonics Corp., 110 S. Ct. 1853 (U.S. 1990).
Chapter 50 - The Clayton Act, the Robinson–Patman Act, and Antitrust Exemptions and Immunities
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Pocahontas's "deputization" theory, which would enable the court to treat a number of a
competitor's "deputies" as the same person for purposes of the statute, the failure to identify
any such individuals was fatal to Pocahontas's claim. Pocahontas Supreme Coal Co. v.
Bethlehem Steel, 828 F.2d 211 (4th Cir. 1987).
11. No, according to the U.S. Supreme Court. The Court held that when the filing and prosecution
of a lawsuit is the activity challenged on antitrust grounds, the party who brought the lawsuit is
applied to filing lawsuits), the objective component comes first. If there is an objectively
reasonable basis in the law and the facts for the bringing of the lawsuit, the analysis ends. The
PRE's allegation of wrongful subjective intent on Columbia's part was irrelevant. A losing
(1993).
