Atlantic Richfield v. USA Petroleum
495 U.S. 328 (1990)

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U.S. Supreme Court

Atlantic Richfield v. USA Petroleum, 495 U.S. 328 (1990)

Atlantic Richfield Company v. USA Petroleum Company

No. 88-1668

Argued Dec. 4, 1989

Decided May 14, 1990

495 U.S. 328




Petitioner Atlantic Richfield Company (ARCO), an integrated oil company, increased its retail gasoline sales and market share by encouraging its dealers to match the prices of independents such as respondent USA Petroleum Company, which competes directly with the dealers at the retail level. When USA's sales dropped, it sued ARCO in the District Court, charging, inter alia, that the vertical, maximum price-fixing scheme constituted a conspiracy in restraint of trade in violation of § 1 of the Sherman Act. The court granted summary judgment to ARCO, holding that USA could not satisfy the "antitrust injury" requirement for purposes of a private damages suit under § 4 of the Clayton Act because it was unable to show that ARCO's prices were predatory. The Court of Appeals reversed, holding that injuries resulting from vertical, nonpredatory, maximum price-fixing agreements could constitute "antitrust injury." Reasoning that any form of price-fixing contravenes Congress' intent that market forces alone determine what goods and services are offered, their prices, and whether particular sellers succeed or fail, the court concluded that USA had shown that its losses resulted from a disruption in the market caused by ARCO's price-fixing.


1. Actionable "antitrust injury" is an injury of the type the antitrust laws were intended to prevent, and that flows from that which makes defendants' acts unlawful. Injury, although causally related to an antitrust violation, will not qualify unless it is attributable to an anticompetitive aspect of the practice under scrutiny, since it is inimical to the antitrust laws to award damages for losses stemming from continued competition. Cargill, Inc. v. Monfort of Colorado, Inc.,479 U. S. 104, 479 U. S. 109-110. P. 495 U. S. 334.

2. A vertical, maximum price-fixing conspiracy in violation of § 1 of the Sherman Act must result in predatory pricing to cause a competitor antitrust injury. Pp. 495 U. S. 335-341.

(a) As a competitor, USA has not suffered "antitrust injury," since its losses do not flow from the harmful effects on dealers and consumers that rendered vertical, maximum price-fixing per se illegal in Albrecht v. Herold Co.,390 U. S. 145. USA was benefitted, rather than harmed, if ARCO's pricing policies restricted ARCO's sales to a few large dealers

Page 495 U. S. 329

or prevented its dealers from offering services desired by consumers. Even if the maximum price agreement acquired all of the attributes of a minimum price-fixing scheme, USA still would not have suffered antitrust injury, because higher ARCO prices would have worked to USA's advantage. Pp. 495 U. S. 335-337.

(b) USA's argument that, even if it was not harmed by any of the Albrecht anticompetitive effects, its lost business caused by ARCO's agreement lowering prices to above predatory levels constitutes antitrust injury is rejected, since cutting prices to increase business is often the essence of competition. Pp. 495 U. S. 337-338.

(c) It is not inappropriate to require a showing of predatory pricing before antitrust injury can be established in a case under § 1 of the Sherman Act. Although under § 1 the price agreement itself is illegal, all losses flowing from the agreement are not, by definition, antitrust injuries. Low prices benefit consumers regardless of how they are set. So long as they are above predatory levels, they do not threaten competition and, hence, cannot give rise to antitrust injury. Pp. 495 U. S. 338-341.

3. A loss flowing from a per se violation of § 1 does not automatically satisfy the antitrust injury requirement, which is a distinct matter that must be shown independently. The purpose of per se analysis is to determine whether a particular restraint is unreasonable. Actions per se unlawful may nonetheless have some procompetitive effects, and private parties might suffer losses therefrom. The antitrust injury requirement, however, ensures that a plaintiff can recover only if the loss stems from a competition-reducing aspect or effect of the defendant's behavior. Pp. 495 U. S. 341-345.

4. Providing competitors with a private cause of action to enforce the rule against vertical, maximum price-fixing would not protect the rights of dealers and consumers -- the class of persons whose self-interest would normally motivate them to vindicate Albrecht's anticompetitive consequences -- under the antitrust laws. USA's injury is not inextricably intertwined with a dealer's antitrust injury, since a competitor has no incentive to vindicate the legitimate interests of a rival's dealer, and will be injured and motivated to sue only when the arrangement has a procompetitive impact on the market. Pp. 495 U. S. 345-346.

859 F.2d 687 (CA9 1988), reversed and remanded.

BRENNAN, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and MARSHALL, BLACKMUN, O'CONNOR, SCALIA, and KENNEDY, JJ., joined. STEVENS, J., filed a dissenting opinion, in which WHITE, J., joined, post, p. 495 U. S. 345.

Page 495 U. S. 331

Justice BRENNAN delivered the opinion of the Court.

This case presents the question whether a firm incurs an "injury" within the meaning of the antitrust laws when it loses sales to a competitor charging nonpredatory prices pursuant to a vertical, maximum price-fixing scheme. We hold that such a firm does not suffer an "antitrust injury," and that it therefore cannot bring suit under § 4 of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 15. [Footnote 1]


Respondent USA Petroleum Company (USA) sued petitioner Atlantic Richfield Company (ARCO) in the United States District Court for the Central District of California, alleging the existence of a vertical, maximum price-fixing agreement prohibited by § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1, an attempt to monopolize the local retail gasoline sales market in violation of § 2 of the Sherman Act, 15 U.S.C. § 2, and other misconduct not relevant here. Petitioner ARCO is an integrated oil company that, inter alia, markets gasoline in the western United States. It sells gasoline to consumers both directly through its own stations and indirectly through ARCO-brand dealers. Respondent USA is an independent retail marketer of gasoline which, like other independents, buys gasoline from major petroleum companies for resale under its own brand name. Respondent competes directly with ARCO dealers at the retail level. Respondent's outlets typically are low-overhead, high-volume "discount" stations that charge less than stations selling equivalent quality gasoline under major brand names.

In early 1982, petitioner ARCO adopted a new marketing strategy in order to compete more effectively with discount

Page 495 U. S. 332

independents such as respondent. [Footnote 2] Petitioner encouraged its dealers to match the retail gasoline prices offered by independents in various ways; petitioner made available to its dealers and distributors such short-term discounts as "temporary competitive allowances" and "temporary volume allowances," and it reduced its dealers' costs by, for example, eliminating credit-card sales. ARCO's strategy increased its sales and market share.

In its amended complaint, respondent USA charged that ARCO engaged in "direct head-to-head competition with discounters" and "drastically lowered its prices and in other ways sought to appeal to price-conscious consumers." First Amended Complaint

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