Petitioner is a wholesale purchasing cooperative whose
membership consists of office supply retailers in the Pacific
Northwest States. Nonmember retailers can purchase supplies from
petitioner at the same price as members, but since petitioner
annually distributes its profits to members in the form of a
percentage rebate, members effectively purchase supplies at a lower
price than do nonmembers. Petitioner expelled respondent from
membership without any explanation, notice, or hearing. Thereafter,
respondent brought suit in Federal District Court, alleging that
the expulsion without procedural protections was a group boycott
that limited its ability to compete and should be considered
per se violative of § 1 of the Sherman Act. On
cross-motions for summary judgment, the District Court rejected
application of the
per se rule and held, instead, that
rule of reason analysis should govern the case. Finding no
anticompetitive effect on the basis of the record, the court
granted summary judgment for petitioner. The Court of Appeals
reversed, holding that, although § 4 of the Robinson-Patman Act
expressly approves price discrimination occasioned by such an
expulsion as the one in question, and thus provides a mandate for
self-regulation, nevertheless, because petitioner had not provided
any procedural safeguards, the expulsion of respondent was not
shielded by § 4, and therefore constituted a
per se group
boycott in violation of § 1 of the Sherman Act.
Held: Petitioner's expulsion of respondent does not
fall within the category of activity that is conclusively presumed
to be anticompetitive so as to mandate
per se invalidation
under § 1 of the Sherman Act as a group boycott or concerted
refusal to deal. Pp.
472 U. S.
289-298.
(a) Section 4 of the Robinson-Patman Act, which is no more than
a narrow immunity from the price discrimination prohibitions of
that Act, cannot properly be construed as an exemption from or
repeal of any portion of the Sherman Act or as a broad mandate for
industry self-regulation.
Silver v. New York Stock
Exchange, 373 U. S. 341,
distinguished. In any event, the absence of procedural safeguards
in this case can in no sense determine the antitrust analysis,
since if the challenged expulsion amounted to a
per se
violation of § 1, no amount of procedural protection would save it,
whereas, if the expulsion did not amount to a
Page 472 U. S. 285
violation of § 1, no lack of procedural protections would
convert it into a
per se violation. Pp.
472 U. S.
291-293.
(b) The act of expulsion from a wholesale cooperative does not
necessarily imply anticompetitive animus so as to raise a
probability of anticompetitive effect. Unless it is shown that the
cooperative possesses market power or exclusive access to an
element essential to effective competition, the conclusion that
expulsion is virtually always likely to have an anticompetitive
effect is not warranted. Absent such a showing with respect to a
cooperative buying arrangement, courts should apply a rule of
reason analysis. Here, respondent, focusing on the argument that
the lack of procedural safeguards required
per se
liability, made no such showing. But because the Court of Appeals
applied an erroneous
per se analysis, it never evaluated
the District Court's rule of reason analysis rejecting respondent's
claim, and therefore a remand is appropriate to permit appellate
review of that determination. Pp.
472 U. S.
293-298.
715 F.2d 1393, reversed and remanded.
BRENNAN, J., delivered the opinion of the Court, in which all
other Members joined except MARSHALL and POWELL, JJ., who took no
part in the decision of the case.
JUSTICE BRENNAN delivered the opinion of the Court.
This case requires that we decide whether a
per se
violation of § 1 of the Sherman Act, 15 U.S.C. § 1, occurs when a
cooperative buying agency comprising various retailers expels a
member without providing any procedural means for
Page 472 U. S. 286
challenging the expulsion. [
Footnote 1] The case also raises broader questions as to
when
per se antitrust analysis is appropriately applied to
joint activity that is susceptible of being characterized as a
concerted refusal to deal.
I
Because the District Court ruled on cross-motions for summary
judgment after only limited discovery, this case comes to us on a
sparse record. Certain background facts are undisputed. Petitioner
Northwest Wholesale Stationers is a purchasing cooperative made up
of approximately 100 office supply retailers in the Pacific
Northwest States. The cooperative acts as the primary wholesaler
for the retailers. Retailers that are not members of the
cooperative can purchase wholesale supplies from Northwest at the
same price as members. At the end of each year, however, Northwest
distributes its profits to members in the form of a percentage
rebate on purchases. Members therefore effectively purchase
supplies at a price significantly lower than do nonmembers.
[
Footnote 2] Northwest also
provides certain warehousing facilities. The cooperative
arrangement thus permits the participating retailers to achieve
economies of scale in purchasing and warehousing that would
otherwise be
Page 472 U. S. 287
unavailable to them. In fiscal 1978, Northwest had $5.8 million
in sales. App. 73.
Respondent Pacific Stationery & Printing Co. sells office
supplies at both the retail and wholesale levels. Its total sales
in fiscal 1978 were approximately $7.6 million; the record does not
indicate what percentage of revenue is attributable to retail and
what percentage is attributable to wholesale. Pacific became a
member of Northwest in 1958. In 1974, Northwest amended its bylaws
to prohibit members from engaging in both retail and wholesale
operations.
See id. at 50, 59. A grandfather clause
preserved Pacific's membership rights.
See id. at 59. In
1977, ownership of a controlling share of the stock of Pacific
changed hands,
id. at 70, and the new owners did not
officially bring this change to the attention of the directors of
Northwest. This failure to notify apparently violated another of
Northwest's bylaws.
See id. at 59 (Bylaws, Art. VIII, §
5).
In 1978, the membership of Northwest voted to expel Pacific.
Most factual matters relevant to the expulsion are in dispute. No
explanation for the expulsion was advanced at the time, and Pacific
was given neither notice, a hearing, nor any other opportunity to
challenge the decision. Pacific argues that the expulsion resulted
from Pacific's decision to maintain a wholesale operation.
See Brief in Opposition 11. Northwest contends that the
expulsion resulted from Pacific's failure to notify the cooperative
members of the change in stock ownership.
See Pet. for
Cert. 8. The minutes of the meeting of Northwest's directors do not
definitively indicate the motive for the expulsion. App. 75-77. It
is undisputed that Pacific received approximately $10,000 in
rebates from Northwest in 1978, Pacific's last year of membership.
Beyond a possible inference of loss from this fact, however, the
record is devoid of allegations indicating the nature and extent of
competitive injury the expulsion caused Pacific to suffer.
Page 472 U. S. 288
Pacific brought suit in 1980 in the United States District Court
for the District of Oregon alleging a violation of § 1 of the
Sherman Act. The gravamen of the action was that Northwest's
expulsion of Pacific from the cooperative without procedural
protections was a group boycott that limited Pacific's ability to
compete and should be considered
per se violative of § 1.
See Complaint 118, App. 4-5. On cross-motions for summary
judgment, the District Court rejected application of the
per
se rule, and held instead that rule-of-reason analysis should
govern the case. Finding no anticompetitive effect on the basis of
the record as presented, the court granted summary judgment for
Northwest.
See App. to Pet. for Cert. 22-24.
The Court of Appeals for the Ninth Circuit reversed, holding
"that the uncontroverted facts of this case support a finding of
per se liability." 715 F.2d 1393, 1395 (1983). The court
reasoned that the cooperative's expulsion of Pacific was an
anticompetitive concerted refusal to deal with Pacific on equal
footing, which would be a
per se violation of § 1 in the
absence of any specific legislative mandate for self-regulation
sanctioning the expulsion. The court noted that § 4 of the
Robinson-Patman Act, 15 U.S.C. § 13b, specifically approves the
price discrimination occasioned by such expulsion, and concluded
that § 4 therefore provided a mandate for self-regulation. Such a
legislative mandate, according to the court, would ordinarily
result in evaluation of the challenged practice under the rule of
reason. But, drawing on
Silver v. New York Stock Exchange,
373 U. S. 341,
373 U. S.
348-349 (1963), the court decided that rule of reason
analysis was appropriate only on the condition that the cooperative
had provided procedural safeguards sufficient to prevent arbitrary
expulsion and to furnish a basis for judicial review. Because
Northwest had not provided any procedural safeguards, the court
held that the expulsion of Pacific was not shielded by
Robinson-Patman immunity, and therefore constituted
Page 472 U. S. 289
a
per se group boycott in violation of § 1 of the
Sherman Act. 7 15 F.2d at 1395-1398.
We granted certiorari to examine this application of
Silver
v. New York Stock Exchange, supra, in an area of antitrust law
that has not been free of confusion. [
Footnote 3] 469 U.S. 814 (1984). We reverse.
II
The decision of the cooperative members to expel Pacific was
certainly a restraint of trade in the sense that every commercial
agreement restrains trade.
Chicago Board of Trade v. United
States, 246 U. S. 231,
246 U. S. 238
(1918). Whether this action violates § 1 of the Sherman Act depends
on whether it is adjudged an unreasonable restraint.
Ibid.
Rule-of-reason analysis guides the inquiry,
see Standard Oil
Co. v. United States, 221 U. S. 1 (1911),
unless the challenged action falls into the category of
"agreements or practices which, because of their pernicious
effect on competition and lack of any redeeming virtue, are
conclusively presumed to be unreasonable, and therefore illegal,
without elaborate inquiry as to the precise harm they have caused
or the business excuse for their use."
Northern Pacific R. Co. v. United States, 356 U. S.
1,
356 U. S. 5
(1958).
This
per se approach permits categorical judgments with
respect to certain business practices that have proved to be
predominantly anticompetitive. Courts can thereby avoid the
"significant costs" in "business certainty and litigation
efficiency" that a full-fledged rule of reason inquiry entails.
Arizona v. Maricopa County Medical Society, 457 U.
S. 332,
457 U. S.
343-344 (1982).
See also United States v. Topco
Associates, Inc., 405 U. S. 596,
405 U. S.
609-610 (1972). The decision to apply the
per
se rule turns on
"whether the practice facially appears to be one that would
always or almost always tend to restrict
Page 472 U. S. 290
competition and decrease output . . . or, instead, one designed
to 'increase economic efficiency and render markets more, rather
than less, competitive.'"
Broadcast Music, Inc. v. Columbia Broadcasting System,
Inc., 441 U. S. 1,
441 U. S. 19-20
(1979) (citations omitted).
See also National Collegiate
Athletic Assn. v. Board of Regents of University of Oklahoma,
468 U. S. 85,
468 U. S.
103-104 (1984) ("
Per se rules are invoked when
surrounding circumstances make the likelihood of anticompetitive
conduct so great as to render unjustified further examination of
the challenged conduct").
This Court has long held that certain concerted refusals to deal
or group boycotts are so likely to restrict competition without any
offsetting efficiency gains that they should be condemned as
per se violations of § 1 of the Sherman Act.
See
Klor's, Inc. v. Broadway-Hale Stores, Inc.,
359 U.
S. 207 (1959);
United States v. General Motors
Corp., 384 U. S. 127
(1966);
Radiant Burners, Inc. v. Peoples Gas Light & Coke
Co., 364 U. S. 656
(1961);
Associated Press v. United States, 326 U. S.
1 (1945);
Fashion Originators' Guild of America,
Inc. v. FTC, 312 U. S. 457
(1941);
Eastern States Retail Lumber Dealers' Assn. v. United
States, 234 U. S. 600
(1914). The question presented in this case is whether Northwest's
decision to expel Pacific should fall within this category of
activity that is conclusively presumed to be anticompetitive.
[
Footnote 4] The Court of
Appeals held that the exclusion of Pacific from the cooperative
should conclusively be presumed unreasonable on the ground that
Northwest provided no procedural protections to Pacific. Even if
the lack of procedural protections does not justify a conclusive
presumption of predominantly anticompetitive effect, the mere act
of expulsion of a competitor from a wholesale cooperative might be
argued to be sufficiently likely to have such effects under
Page 472 U. S. 291
the present circumstances, and therefore to justify application
of the
per se rule. These possibilities will be analyzed
separately.
A
The Court of Appeals drew from
Silver v. New York Stock
Exchange, 373 U. S. 341
(1963), a broad rule that the conduct of a cooperative venture --
including a concerted refusal to deal -- undertaken pursuant to a
legislative mandate for self-regulation is immune from
per
se scrutiny and subject to rule of reason analysis only if
adequate procedural safeguards accompany self-regulation. We
disagree, and conclude that the approach of the Court in
Silver has no proper application to the present
controversy.
The Court in
Silver framed the issue as follows:
"[W]hether the New York Stock Exchange is to be held liable to a
nonmember broker-dealer under the antitrust laws or regarded as
impliedly immune therefrom when, pursuant to rules the Exchange has
adopted under the Securities Exchange Act of 1934, it orders a
number of its members to remove private direct telephone wire
connections previously in operation between their offices and those
of the nonmember, without giving the nonmember notice, assigning
him any reason for the action, or affording him an opportunity to
be heard."
Id. at
373 U. S. 343.
Because the New York Stock Exchange occupied such a dominant
position in the securities trading markets that the boycott would
devastate the nonmember, the Court concluded that the refusal to
deal with the nonmember would amount to a
per se violation
of § 1 unless the Securities Exchange Act provided an immunity.
Id. at
373 U. S.
347-348. The question for the Court thus was whether
effectuation of the policies of the Securities Exchange Act
required partial repeal of the Sherman Act insofar as it proscribed
this aspect of exchange self-regulation.
Page 472 U. S. 292
Finding exchange self-regulation -- including the power to expel
members and limit dealings with nonmembers -- to be an essential
policy of the Securities Exchange Act, the Court held that the
Sherman Act should be construed as having been partially repealed
to permit the type of exchange activity at issue. But the
interpretive maxim disfavoring repeals by implication led the Court
to narrow permissible self-policing to situations in which adequate
procedural safeguards had been provided.
"Congress . . . cannot be thought to have sanctioned and
protected self-regulative activity when carried out in a
fundamentally unfair manner. The point is not that the antitrust
laws impose the requirement of notice and a hearing here, but
rather that, in acting without according petitioners these
safeguards in response to their request, the Exchange has plainly
exceeded the scope of its authority under the Securities Exchange
Act to engage in self-regulation."
Id. at
373 U. S. 364
(footnote omitted). Thus, it was the specific need to accommodate
the important national policy of promoting effective exchange
self-regulation, tempered by the principle that the Sherman Act
should be narrowed only to the extent necessary to effectuate that
policy, that dictated the result in
Silver.
Section 4 of the Robinson-Patman Act is not comparable to the
self-policing provisions of the Securities Exchange Act. That
section is no more than a narrow immunity from the price
discrimination prohibitions of the Robinson-Patman Act itself. The
Conference Report makes clear that the exception was intended
solely to
"safeguard producer and consumer cooperatives against any charge
of violation of the act
based on their distribution of earnings
or surplus among their members on a patronage basis."
H.R.Conf.Rep. No. 2951, 74th Cong., 2d Sess., 9 (1936) (emphasis
added). This section has never been construed as granting
cooperatives a blanket exception from the Robinson-Patman Act, and
cannot plausibly be construed as an exemption to or
Page 472 U. S. 293
repeal of any portion of the Sherman Act. [
Footnote 5]
"There is nothing in the last section of the bill [containing §
4] that distinguishes cooperatives, either favorably or
unfavorably, from other agencies in the streams of production and
trade, so far as concerns their dealings with others."
80 Cong.Rec. 9419 (1936) (remarks of Rep. Utterback).
In light of this circumscribed congressional intent, there can
be no argument that § 4 of the Robinson-Patman Act should be viewed
as a broad mandate for industry self-regulation. No need exists,
therefore, to narrow the Sherman Act in order to accommodate any
competing congressional policy requiring discretionary
self-policing. Indeed, Congress would appear to have taken some
care to make clear that no constriction of the Sherman Act was
intended. In any event, the absence of procedural safeguards can in
no sense determine the antitrust analysis. If the challenged
concerted activity of Northwest's members would amount to a
per
se violation of § 1 of the Sherman Act, no amount of
procedural protection would save it. If the challenged action would
not amount to a violation of § 1, no lack of procedural protections
would convert it into a
per se violation, because the
antitrust laws do not themselves impose on joint ventures a
requirement of process.
B
This case therefore turns not on the lack of procedural
protections but on whether the decision to expel Pacific is
properly viewed as a group boycott or concerted refusal to deal
mandating
per se invalidation. "Group boycotts" are often
listed among the classes of economic activity that merit
per
se invalidation under § 1.
See Klor's, Inc. v.
Broadway-Hale Stores, Inc., 359 U.S. at
359 U. S. 212;
Northern Pacific R. Co. v. United States, 356 U.S. at
356 U. S. 5;
Silver v. New York Stock Exchange, 373 U.S. at
373 U. S. 348;
White Motor Co. v.
United
Page 472 U. S. 294
States, 372 U.
S. 253,
372 U. S.
259-260 (1963). Exactly what types of activity fall
within the forbidden category is, however, far from certain.
"[T]here is more confusion about the scope and operation of the
per se rule against group boycotts than in reference to
any other aspect of the
per se doctrine."
L. Sullivan, Law of Antitrust 229-230 (1977). Some care is
therefore necessary in defining the category of concerted refusals
to deal that mandate
per se condemnation.
See St. Paul
Fire & Marine Ins. Co. v. Barry, 438 U.
S. 531,
438 U. S. 543
(1978) (concerted refusals to deal "are not a unitary phenomenon").
Cf. Broadcast Music, Inc. v. Columbia Broadcasting System,
Inc., 441 U.S. at
441 U. S. 9.
Cases to which this Court has applied the
per se
approach have generally involved joint efforts by a firm or firms
to disadvantage competitors by
"either directly denying or persuading or coercing suppliers or
customers to deny relationships the competitors need in the
competitive struggle."
Sullivan,
supra, at 261-262.
See, e.g., Silver,
supra, (denial of necessary access to exchange members);
Radiant Burners, Inc. v. Peoples Gas Light & Coke Co.,
364 U. S. 656
(1961) (denial of necessary certification of product);
Associated Press v. United States, 326 U. S.
1 (1945) (denial of important sources of news);
Klor's, Inc., supra, (denial of wholesale supplies). In
these cases, the boycott often cut off access to a supply,
facility, or market necessary to enable the boycotted firm to
compete,
Silver, supra; Radiant Burners, Inc., supra, and
frequently the boycotting firms possessed a dominant position in
the relevant market.
E.g., Silver, supra; Associated Press,
supra; Fashion Originators' Guild of America, Inc. v. FTC,
312 U. S. 457
(1941).
See generally Brodley, Joint Ventures and
Antitrust Policy, 95 Harv.L.Rev. 1523, 1533, 1563-1565 (1982). In
addition, the practices were generally not justified by plausible
arguments that they were intended to enhance overall efficiency and
make markets more competitive. Under such circumstances, the
likelihood of anticompetitive effects is clear, and the possibility
of countervailing procompetitive effects is remote.
Page 472 U. S. 295
Although a concerted refusal to deal need not necessarily
possess all of these traits to merit
per se treatment, not
every cooperative activity involving a restraint or exclusion will
share with the
per se forbidden boycotts the likelihood of
predominantly anticompetitive consequences. For example, we
recognized last Term in
National Collegiate Athletic Assn. v.
Board of Regents of University of Oklahoma that
per
se treatment of the NCAA's restrictions on the marketing of
televised college football was inappropriate -- despite the obvious
restraint on output -- because the "case involves an industry in
which horizontal restraints on competition are essential if the
product is to be available at all." 468 U.S. at
468 U. S.
101.
Wholesale purchasing cooperatives such as Northwest are not a
form of concerted activity characteristically likely to result in
predominantly anticompetitive effects. Rather, such cooperative
arrangements would seem to be "designed to increase economic
efficiency and render markets more, rather than less, competitive."
Broadcast Music, Inc. v. Columbia Broadcasting System, Inc.,
supra, at
441 U. S. 20. The
arrangement permits the participating retailers to achieve
economies of scale in both the purchase and warehousing of
wholesale supplies, and also ensures ready access to a stock of
goods that might otherwise be unavailable on short notice. The cost
savings and order-filling guarantees enable smaller retailers to
reduce prices and maintain their retail stock so as to compete more
effectively with larger retailers.
Pacific, of course, does not object to the existence of the
cooperative arrangement, but rather raises an antitrust challenge
to Northwest's decision to bar Pacific from continued membership.
[
Footnote 6] It is therefore
the action of expulsion that
Page 472 U. S. 296
must be evaluated to determine whether
per se treatment
is appropriate. The act of expulsion from a wholesale cooperative
does not necessarily imply anticompetitive animus and thereby raise
a probability of anticompetitive effect.
See Broadcast Music,
Inc. v. Columbia Broadcasting System, Inc., supra, at
441 U. S. 9.
Wholesale purchasing cooperatives must establish and enforce
reasonable rules in order to function effectively. Disclosure
rules, such as the one on which Northwest relies, may well provide
the cooperative with a needed means for monitoring the
creditworthiness of its members. [
Footnote 7] Nor would the expulsion characteristically be
likely to result in predominantly anticompetitive effects, at least
in the type of situation this case presents. Unless the cooperative
possesses market power or exclusive access to an element essential
to effective competition, the conclusion that expulsion is
virtually always likely to have an anticompetitive effect is not
warranted.
See L. Sullivan, Law of Antitrust 292-293
(1977); Brodley, 95 Harv.L.Rev. at 1563-1565.
Cf. Jefferson
Parish Hospital Dist. v. Hyde, 466 U. S.
2,
466 U. S. 12-15
(1984) (absent indication of market power, tying arrangement does
not warrant
per se invalidation).
See generally
National
Page 472 U. S.
297
Collegiate Athletic Assn. v. Board of Regent of University
of Oklahoma, 468 U.S. at
468 U. S. 104,
n. 26 ("
Per se rules may require considerable inquiry into
market conditions before the evidence justifies a presumption of
anticompetitive conduct"). Absent such a showing with respect to a
cooperative buying arrangement, courts should apply a rule of
reason analysis. At no time has Pacific made a threshold showing
that these structural characteristics are present in this case.
See Complaint, App. 2; Motion for Partial Summary
Judgment, App. 9. [
Footnote
8]
The District Court appears to have followed the correct path of
analysis -- recognizing that not all concerted refusals to deal
should be accorded
per se treatment and deciding this one
should not. [
Footnote 9] The
foregoing discussion suggests, however, that a satisfactory
threshold determination whether anticompetitive effects would be
likely might require a more detailed factual picture of market
structure than the District
Page 472 U. S. 298
Court had before it. Nonetheless, in our judgment, the District
Court's rejection of
per se analysis in this case was
correct. A plaintiff seeking application of the
per se
rule must present a threshold case that the challenged activity
falls into a category likely to have predominantly anticompetitive
effects. The mere allegation of a concerted refusal to deal does
not suffice, because not all concerted refusals to deal are
predominantly anticompetitive. When the plaintiff challenges
expulsion from a joint buying cooperative, some showing must be
made that the cooperative possesses market power or unique access
to a business element necessary for effective competition. Focusing
on the argument that the lack of procedural safeguards required
per se liability, Pacific did not allege any such facts.
Because the Court of Appeals applied an erroneous
per se
analysis in this case, the court never evaluated the District
Court's rule of reason analysis rejecting Pacific's claim. A remand
is therefore appropriate for the limited purpose of permitting
appellate review of that determination.
III
"The
per se rule is a valid and useful tool of
antitrust policy and enforcement."
Broadcast Music, Inc. v.
Columbia Broadcasting System, Inc., 441 U.S. at
441 U. S. 8. It
does not denigrate the
per se approach to suggest care in
application. In this case, the Court of Appeals failed to exercise
the requisite care, and applied
per se analysis
inappropriately. The judgment of the Court of Appeals is therefore
reversed, and the case is remanded for further proceedings
consistent with this opinion.
It is so ordered.
JUSTICE MARSHALL and JUSTICE POWELL took no part in the decision
of this case.
[
Footnote 1]
That section reads in relevant part:
"Every contract, combination in the form of trust or otherwise,
or conspiracy, in restraint of trade or commerce among the several
States, or with foreign nations, is declared to be illegal."
[
Footnote 2]
Although this patronage rebate policy is a form of price
discrimination, § 4 of the Robinson-Patman Act specifically
sanctions such activity by cooperatives:
"Nothing in this Act shall prevent a cooperative association
from returning to its members, producers, or consumers the whole,
or any part of, the net earnings or surplus resulting from its
trading operations, in proportion to their purchases or sales from,
to, or through the association."
49 Stat. 1528, 15 U.S.C. § 13b. A relevant state law provision
provides analogous protection. Ore.Rev.Stat. § 646.030 (1983).
[
Footnote 3]
See L. Sullivan, Law of Antitrust 229-230 (1977);
Bauer, Per Se Illegality of Concerted Refusals to Deal: A Rule Ripe
for Reexamination, 79 Colum.L.Rev. 685 (1979).
[
Footnote 4]
Northwest raises no challenge before this Court to the
conclusion of the Court of Appeals that the cooperative's decision
to expel Pacific was a "combination or conspiracy" affecting
interstate commerce within the meaning of § 1 of the Sherman
Act.
[
Footnote 5]
See, e.g., American Motor Specialties Co. v. FTC, 278
F.2d 225, 229 (CA2),
cert. denied, 364 U.S. 884
(1960).
[
Footnote 6]
Because Pacific has not been wholly excluded from access to
Northwest's wholesale operations, there is perhaps some question
whether the challenged activity is properly characterized as a
concerted refusal to deal. To be precise, Northwest's activity is a
concerted refusal to deal with Pacific on substantially equal
terms. Such activity might justify
per se invalidation if
it placed a competing firm at a severe competitive disadvantage.
See generally Brodley, Joint Ventures and Antitrust
Policy, 95 Harv.L.Rev. 1521, 1532 (1982) ("Even if the joint
venture does deal with outside firms, it may place them at a severe
competitive disadvantage by treating them less favorably than it
treats the [participants in the joint venture]").
[
Footnote 7]
Pacific argues, however, that this justification for expulsion
was a pretext, because the members of Northwest were fully aware of
the change in ownership despite lack of formal notice. According to
Pacific, Northwest's motive in the expulsion was to place Pacific
at a competitive disadvantage to retaliate for Pacific's decision
to engage in an independent wholesale operation. Such a motive
might be more troubling. If Northwest's action were not
substantially related to the efficiency-enhancing or procompetitive
purposes that otherwise justify the cooperative's practices, an
inference of anticompetitive animus might be appropriate. But such
an argument is appropriately evaluated under the rule of reason
analysis.
[
Footnote 8]
Given the state of this record, it is difficult to understand
how the Court of Appeals could have concluded that Pacific
"loses the ability to use Northwest's superior warehousing and
expedited order-filling facilities, as well as any competitive
advantages that may flow simply from being known in the industry as
a member of an established cooperative."
715 F.2d 1393, 1395 (1983). The District Court had specifically
found no anticompetitive effect.
[
Footnote 9]
The District Court stated:
"I think that, in a case of this nature, in order to move an
antitrust violation, it is necessary to show some restraint of
competition, and I don't believe that is shown here. Even if it is
a group boycott, I still believe under [
Joseph E. Seagram &
Sons, Inc. v. Hawaiian Oke Liquors, Ltd., 416 F.2d 71 (CA9
1969), and
Ron Tonkin Gran Turismo, Inc. v. Fiat Distributor,
Inc., 637 F.2d 1376 (CA9 1981)], that the Rule of Reason
operates. And I think if you apply the Rule of Reason to the facts
that are submitted by the parties here that are not disputed in
this case, you come to the conclusion that there is [
sic]
simply been no showing by the Plaintiff in this case of a restraint
of competition, as distinguished from possible damage to the
Plaintiff by being expelled from the association."
App. to Pet. for Cert. 23-24.