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Temple University School of Law
Caine, Burton

Caine Antitrust Fall 2009
3 PER SE CATEGORIES: 1) Price fixing; 2) Division of territories; 3) Group refusals to deal. Characterization is essential – the first part of the analysis.
If there is an agreement, proceed in this order: Per se – Quick look – Rule of Reason
Don’t need to prove antitrust injury if the government is bringing the suit. Government just has to show injury to competition.
No private actions under the FTC Act –only the FTC can bring suit.
Restraint ancillary to a lawful agreement is not a violation.
Don’t assume a question is even an antitrust question.
Quick look is a PROCESS (what facts do we look at? All of them? Or are a couple of facts enough?) Per se is a CONCLUSION.
Per se = your proffered defense is not a defense. E.g. “the fixed price was reasonable,” “competition is bad.” No inquiry into intentions or effect.
Quick look = a quick look at this fact tells us enough to conclude it is a violation. If it fails quick look, proceed to RoR. See the CA Dental Assn case for an illustration of the distinction.
Noerr immunity does NOT just apply to agreements; applies to all of antitrust. We don’t really know exactly what Noerr stands for.

A. General Principles
1. Sherman Act § 2
“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States … shall be deemed guilty of a felony….”
2. MONOPOLY = the power to control price, alter the way the market determines price, and eliminate competition. Smaller market share is suggests lack of market power, but does not foreclose on it.
1) What is the relevant market? Two subsidiary questions:
a) What is the product market?
-interchangeability; fungibility; similar functionality; which products compete?; consumer preference
b) What is the geographic market?
2) Was monopolist’s conduct illegal?
a) Monopolization: general intent sufficient
b) Attempt to monopolize requires:
1) predatory or anticompetitive conduct
2) specific intent
3) dangerous probability of success in monopolizing the relevant market
B. Cases
1. Alcoa (2d Cir. 1945) (J. Hand)
a. 90% market share is certainly enough to show monopoly power.
b. Doesn’t matter if monopolist actually uses its power or that its profits are reasonable, only that it possesses the power to obtain supercompetitive profits and acts to maintain that power. Alcoa’s violation was acting to maintain its power (bottom of p. 139).
c. Defining the relevant market:
i. Product market = virgin ingot only. Even though recycled ingot competed, the court did not include it in product market because it started out as virgin ingot that Alcoa had introduced to the market. Alcoa had the power to control the amount of virgin ingot coming onto the market which would later become recycled ingot.
ii. Geographic market = domestic ingot only. Foreign ingot didn’t compete because it had tariffs and transportation costs that Alcoa didn’t have.
d. No specific intent to monopolize required to violate § 2. Everyone intends their own actions.
e. “Monopoly thrust upon” exception: a “natural” monopoly and sheer size alone are not illegal.
f. Duty to help competitors? Berkey, DuPont, and Olympiaclarify Alcoa.
2. Syufy v. American Multicinema (9th Cir. 1986)
a. 60-69% market share is enough to show monopoly power.
b. “Industry anticipated top-grossing films” can be a distinct product market if the films are not in substantial competition with other films.
3. Berkey Photo v. Eastman Kodak (2d Cir. 1979)
Alcoa imposes on monopolist no duty to give advance notice to competitor of new invention even when introduction of new product solidifies monopoly position and adversely affects competitor.
4. In re E.I. duPont de Nemours (FTC 1980)
a. When DuPont found itself with substantial cost advantage in production, it expanded aggressively and increased its market share from 30% to 50%. There was no antitrust violation because the expansion was from “legally obtained efficiencies.”
b. Clarified Alcoa: antitrust law is not intended to block aggressive competition based on efficiencies.
5. Olympia Equipment Leasing Co. v. Western Union (7th Cir. 1986)
a. The lawful monopolist can compete like everyone else.
b. No duty to help competitors; this would be holding an umbrella over inefficient competitors.
6. Broadway Delivery (2d Cir. 1981)
Trial court instruction precluding a finding of monopoly power where defendant’s market share was less than 50% was in error but was harmless because plaintiff had not submitted enough evidence to put the question of market power to the jury in the first place.
7. U.S. v. E.I. duPont de Nemours (Cellophane) (U.S. 1956)
a. DuPont produced 75% of cellophane sold in U.S. Cellophane was less than 20% of all “flexible packaging materials” sales.
b. Relevant product market = all flexible packaging materials.
i. To determine product market, see what cellophane competes with. Look at “cross-elasticity.”
ii. Cellophane competed with other flexible packaging materials because if the price of cellophane went up a penny, consumers would switch to these other items. “Great

situation where only defendant could provide multimountain Aspen skiing experience: changed the character of the market.
i. Taking advantage of natural feature and never entering agreement with plaintiff would probably not be illegal conduct. (Not required to help competitor.)
ii. Cf. Eastman Kodak – change is illegal conduct.
iii. Defendant introduced to consumer the idea that single-mountain skiing was not desirable.
13. Verizon v. Trinko (U.S. 2004) – DUTY TO HELP COMPETITOR?
a. Telecommunications Act required Verizon, which had previously had an exclusive franchise, to provide access to new entrants to the local exchange carrier market.
b. Even though federal statute created new duties designed to deter and remedy anticompetitive harm, it could not be enforced through the Sherman Act without an antitrust violation.
c. This case did not fall under the limited exception of Aspen Skiing, which was at the outer bounds of antitrust liability. Verizon would not have helped its competitors without statutory compulsion, so its prior conduct sheds no light upon the motivation of its refusal to deal (whether the refusal was motivated by competitive zeal or anticompetitive malice).
14. Pacific Bell v. Linkline (U.S. 2009) – DUTY TO HELP COMPETITOR?
A price squeeze claim (raising price to wholesale buyers to make it more expensive for competitors to sell to retail customers) cannot be brought under Section 2 if the defendant is under no antitrust obligation to sell to the plaintiff in the first place.
15. Spectrum Sports v. McQuillan (U.S. 1993)
Attempt to monopolize requires specific intent and dangerous probability of success of monopolizing the relevant market.
16. U.S. v. Microsoft
17. EU Microsoft case
18. Poller v. CBS (not in text)
a. Poller and CBS entered contract; contract provided that CBS could cancel for any reason. When Poller did well, CBS cancelled the contract.
Lower court held that cancelling the contract in order to monopolize was not a lawful reason. Supreme Court remanded, but it is unclear why. One of two possibilities: 1) summary judgment was inappropriate because of issue of material