1 United States Court of Appeals,

Fifth Circuit.

No. 93-1715.

GREAT WESTERN DIRECTORIES, INC., Plaintiff-Appellee-Cross

Appellant,

v.

SOUTHWESTERN BELL TELEPHONE COMPANY, et al., DefendantsAppellants-Cross Appellees.

CANYON DIRECTORIES, INC., Plaintiff-Appellee-Cross Appellant,

v.

SOUTHWESTERN BELL TELEPHONE COMPANY, et al., DefendantsAppellants-Cross Appellees.

Sept. 20, 1995.

Appeals from the United States District Court for the Northern

District of Texas.

Before WISDOM, REYNALDO G. GARZA and GARWOOD, Circuit Judges.

REYNALDO G. GARZA, Circuit Judge:

I. Summary and Procedural History

Plaintiffs-Appellees, Great Western Directories, Inc. (Great

Western) and Canyon Directories, Inc. (Canyon), filed suit alleging

that Defendants-Appellants, Southwestern Bell Telephone Company, et

al. (collectively, "SWB"), violated Sections 1 and 2 of the Sherman

Act, violated the Texas Free Enterprise and Antitrust Act, violated

the Texas Deceptive Trade Practices Act, and tortiously interfered

with business relations. Appellants allegedly orchestrated an

"affiliation wide concerted action" to extend the SWB monopoly of

the yellow pages market and to eliminate competition by raising the

costs of doing business as an independent directory and by reducing2

the price of advertising in its wholly owned classified directory

by 40%.

A jury returned a verdict in favor of Great Western and

Canyon. The jury found damages of $5 million on Great Western's

antitrust claims, $50,000 in actual and $50,000 in additional

damages on its DTPA claims, and $50,000 in ac tual and $50,000 in

punitive damages for its tortious interference claims. The jury

found damages of $9,400 on Canyon's antitrust claims, $10,000 in

actual and $10,000 in additional damages under its DTPA claims, and

$10,000 in actual and $10,000 in punitive damages on its tortious

interference claims. Both plaintiffs were awarded attorneys' fees.

Following the verdict, Appellants moved for JNOV and for a new

trial. On July 27, 1990, the district court entered judgment on

the verdict, awarding Great Western $15 million and Canyon $28,200

in trebled antitrust damages and award ing both plaintiffs

attorneys' fees; no damage award was made on the state law claims.

On May 8, 1992, the district court held a hearing on Appellees'

motion for injunctive relief and on Appellants' motions for

j udgment as a matter of law and new trial. On July 2, 1993, the

district cour t entered a final judgment granting a permanent

injunction and denying Appellants' post-trial motions.

On July 9, 1993, Appellants filed a motion to stay the

injunction pending appeal. On July 29, 1993, Appellants filed its

notice of appeal. On December 7, 1993, the district court entered

its final judgment, denied Appellants' motion for stay, and refused

to extend its injunction beyond the parties.1 DLI is provided in a variety of formats. One form is known

as the "book on the street" paper or "BOS-paper". BOS-paper is a

published compilation of names, addresses and telephone numbers,

that is, the white pages. Another format is known as "subscriber

listing update service" (update service). The update service

consists of two components. The first component, the "initial

load", is a copy of Telephone's DLI on magnetic tape as of a

given date. The second component, the "updates", is a monthly

update of the initial load.

3 II. Parties and Subject Matter

Southwestern Bell Corporation (SWB) is a holding company;

Southwestern Bell Telephone Company (Telephone), SWB's wholly owned

subsidiary, provides telephone service to its customers in

Arkansas, Kansas, Missouri, Ok lahoma, and Texas. Telephone

publishes and provides the "white pages" to its telephone

customers. In order to publish the white pages Telephone must

compile and maintain a database of names, addresses, and telephone

numbers of all its customers. This compilation is known in the

telecommunications world as directory listing information (DLI).

Southwestern Bell Yellow Pages (Yellow Pages), another wholly

owned subsidiary of SWB, licenses DLI 1 from Telephone for use in

publishing its classified, or yellow pages, directory. Telephone

licenses DLI to independent publishers, such as Great Western and

Canyon. Great Western is based in Amarillo, Texas and publishes a

competing yellow pages (classified) directory in eleven cities in

Texas and Oklahoma. Canyon publishes a single directory in Canyon,

Texas (near Amarillo). Canyon is a "niche" publisher whose

directory caters to local advertisers who do not need to advertise

outside of their immediate geographic area.

III. Facts4

Appellants and Appellees paint distinctly different pictures

of the facts in this case. However, some facts are uncontested.

I n June 1988 Yellow Pages improved its classified directories in

certain markets and instituted a rate reduction in Amarillo. The

rate reduction consisted of a 40% across-the-board reduction in

advertising r ates as well as various incentives enabling

advertisers who maintained existing expenditure levels to receive

additional advertising. Effective January 1, 1989, Telephone

increased its DLI prices from $0.30 to $0.50 for the initial load,

and the update to $1.00.

The incidents leading up to the rate reduction and the DLI

price increase are hotly contested as are the effects. Appellants

and Appellees each give their own economic explanation of the

causes and effects of the changes instituted by SWB. Briefly,

Appellees contend SWB adopted a strategy to eliminate the

competition and slow their declin ing market share. This was

accomplished by a two-prong attack—raising the prices and imposing

restrictive conditions on the sale of the DLI, while at the same

t ime improving the quality of telephone directories published by

Yellow Pages and reducing the prices charged for the

advertisements. Because Great Western operates at a low marginal

profit of two percent of its sales, reflecting its emphasis on

expansion, the change in DLI prices forced Great Western out of its

Richardson market and prevented it from entering its Little Rock

market.

A ppellants, on the other hand, contend that Yellow Page s '2 Continental Ore Co. v. Union Carbide Corp., 370 U.S. 690,

696, n. 6, 82 S.Ct. 1404, 1409, n. 6, 8 L.Ed.2d 777 (1962).

5 share of the advertising director y market was shrinking, and

accordingly made improvements to their directories and instituted

a rate reduction of 40% in Amarillo on a trial basis. Pursuant to

studies conducted of DLI prices in other markets, Telephone decided

to increase its DLI price . Appellees continued to compete; in

fact, Appellees' revenues and market shares increased after the DLI

price change. Great Western's decision to abandon Richardson and

not to enter Little Rock was based on their fear that SWB would

increase its DLI prices in the future.

IV. Summary of the Law

Standard of Review

This Court reviews a district court's refusal to grant a

judgment as a matter of law de novo, applying the same standards as

the district court. The trial court, in entertaining a directed

verdict, views the evidence in the light most favorable to the

party against whom the motion is made. On appeal, this Court must

consider the evidence in its strongest light in favor of the party

against whom the motion was made, and must give him the advantage

of every fair and reasonable intendment that the evide nce can

justify. 2 A judgment notwithstanding the verdict (JNOV) should be

granted by the trial court

only when the facts and inferences point so s trongly and

overwhelmingly in favor of the moving party that a reasonable

juror could not arrive at a contrary verdict, [while] viewing

the facts in the light most favorable to the nonmovant and

giving that party the advantage of every fair and reasonable3 Spuler v. Pickar, 958 F.2d 103, 105 (5th Cir.1992).

4 United States v. Grinnell Corp, 384 U.S. 563, 570-71, 86

S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966).

5 United States v. E.I. duPont de Nemours & Co., 351 U.S.

377, 391, 76 S.Ct. 994, 1005, 100 L.Ed. 1264 (1956).

6 inference that the evidence justifies. 3

Antitrust Law

Appellees raised two Section 2 claims: monopoly and attempted

monopoly. They contend that Appellants violated Section 2 under

both of these theories by abusing an essential facility and through

market leveraging. The jury returned a verdict in favor of

Appellees finding that:

(1) defendants monopolized and attempted to monopolize the

alleged relevant markets for telephone directory advertising

by denying reasonable access to an essential faci lity, that

is, Telephone's DLI;

(2) defendants mo nopolized the same alleged markets by

leveraging monopoly power over DLI in an illegal restraint of

competition in the telephone directory advertising markets;

and

(3) defendants attempted to monopolize the alleged telephone

directory advertising markets by increasing the price of DLI

to Yellow Pages and its competitors while at the same time

substantially reducing Yellow Pages' rates for telephone

directory advertising and substantially enhancing its

directories.

The offense of monopoly under Section 2 consists of two

elements: (1) possession of monopoly power in the relevant market,

and (2) willful acquisition or maintenance of that power as opposed

to acquiring market dominance through competitively desirable means

or through events beyond its control. 4 Monopoly power is the power

to control prices or exclude competition. 5 Several factors are6 Eastman Kodak Co. v. Image Technical Services, Inc., 504

U.S. 451, 481-83, 112 S.Ct. 2072, 2090, 119 L.Ed.2d 265 (1992).

7 WILLIAM C. HOLMES, ANTITRUST LAW HANDBOOK, 352-53 (1994

ed.).

8 FTC v. Indiana Fed'n of Dentists, 476 U.S. 447, 106 S.Ct.

2009, 90 L.Ed.2d 445 (1986).

7 determinative of a finding of monopoly power: high market share, 6

affirmative actions that have excluded actual or potential

competitors, profit levels, and barriers that would thwart entry. 7

It should be noted that the purpose o f the market definition and

market power inquiry is to determine whether an arrangement has the

potential for genuine adverse affects on competition. Proof of

actual detrimental effects can obvia te the need for the inquiry

into market power. 8

In addition to establishing the existence of monopoly power,

it must be demonstrated that the defendant "willfully" acquired or

maintained its monopoly power. This involves an inquiry as to

whether the defendant has acquired or exploited its monopoly power

through competitively undesirable m eans. What are undesirable

means? The responses of the courts were to distinguish between

those exclusionary effects that are inherent in the forces of free

competition and those that are substantially enhanced or made

p ossible by the possession and exploitation of monopoly power.

Specific intent to maintain a monopoly power is not required;

however, it is relevant in determining whether the challenged

conduct is exclusionary or anticompetitive.

An attempted monopoly in violation of Section 2 consists of9 See e.g. Advanced Health Care Serv. v. Radford Comm. Hosp.,

910 F.2d 139 (4th Cir.1990) (85 percent); Movie 1 & 2 v. United

Artists Communications, Inc., 909 F.2d 1245 (9th Cir.1990) (96

percent); United States v. American Airlines, Inc., 743 F.2d

1114 (5th Cir.1984). In contrast, proof that the defendant's

share is minimal will result in a finding that an actual monopoly

is improbable. See, e.g., Langenderfer, Inc. v. S.E. Johnson

Co., 917 F.2d 1413 (6th Cir.1990) (30 percent declining share);

C.A.T. Industrial Disposal, Inc. v. Browning-Ferris Industries,

884 F.2d 209 (5th Cir.1989) (10 percent market share insufficient

as a matter of law).

8 3 elements: (1) a showing that the defendant has engaged in

predatory or anticompetitive conduct, (2) proof that the defendant

specifically i ntended to acquire monopoly power in the relevant

market, and (3) a dangerous probability that an act ual monopoly

position will ultimately be achieved. Predatory or anticompetitive

conduct is that which unfairly tends to be exclusionary or tends to

destroy competition. Specific intent is the intent to accomplish

the forbidden objective, an intent that goes beyond the mere intent

to do the act. Intent may be inferred by anticompetitive practices

or proven by direct evidence. Dangerous probability of achieving

an actual monopoly position is customarily assessed by looking at

the defendant's market share. If the defendant possesses a large

share, it will likely be concluded that the defendant's conduct, if

undeterred, will result in an actual monopo ly. 9 Control of key

materials is also determinative.

V. Discussion

Exclusionary Conduct

Appellants argue that under both a monopoly or attempted

monopoly theory, Appellees must show that Appellants' conduct was

improperly exclusionary, that is, that the conduct caused injury to10 Although the jury found Appellant liable under several

theories of antitrust law, including monopoly, attempted

monopoly, leveraging, and unreasonable denial of an essential

facility; the briefs focus on the issue of exclusionary conduct

and anticompetitive effect. Because exclusionary conduct is the

linchpin in this case, we will focus upon it.

11 Mahone v. Addicks Utility Dist. of Harris County, 836 F.2d

921, 939 (5th Cir.1988).

12 See id. (recognizing that Section 4 of the Clayton Act

comes with a specific injury requirement).

9 competition. 10 Because Canyon and Great Western continued to profit

after the price increase, and because Great Western could have

profitably expanded, Appellants argue there is no evidence to show

that Appellants' conduct was exclusionary. This is Appellants'

main argument and it is pervasive throughout its brief.

Appellants contend that in ord er for Appellees to succeed

under a Section 2 antitrust claim, they must present evidence of

injury to competition. This is not entirely true. Section 2,

under both a claim of monopoly and a claim of attempted monopoly,

proscribes exclusionary conduct. Injury to competition is NOT an

element of Section 2. "[P]roving an injury to competition is not

an element of a monopolization-based antitrust claim." 11 However,

as a practical matter, evidence of an injury must exist if

Appellees are to obtain damages. 12 Additionally, evidence of injury

to competition supports a finding of exclusionary conduct.

Nevertheless, the proper inquiry is whether Appellants engaged in

exclusionary, anticompetitive, or predatory conduct.

Exclusionary conduct is conduct that tends to exclude or

restrict competition and is not supported by a valid b usiness13 Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S.

585, 605 n. 32, 105 S.Ct. 2847, 2859 n. 32, 86 L.Ed.2d 467

(1985).

14 Aspen Skiing Co., 472 U.S. at 605, 105 S.Ct. at 2858.

15 Hanover Shoe v. United Shoe Machinery Corp., 392 U.S. 481,

496, 88 S.Ct. 2224, 2233, 20 L.Ed.2d 1231 (1968); see also

Poster Exchange v. National Screen Service Corp., 431 F.2d 334,

339 n. 13 (5th Cir.1970) (holding that a monopolist's decision to

charge retail prices to competing wholesaler was unlawful if done

"to gain a competitive advantage").

10 reason. Exclusionary conduct comprehends behavior that not only

tends to impair the opportunities but also does not further

competition on the merits or does so in an unnecessarily

restrictive way. 13 An attempt to exclude or actual exclusion is

conduct based on something other than efficiency, that is, without

a valid business purpose. Antitrust law does not require a

plaintiff to prove that the defendant's conduct totally eliminated

all competition or made it so unprofitable as to eliminate the

plaintiff as a competitor. The plaintiff is required to show that

a monopolist's unjust conduct handicapped its competitors. 14 It is

not necessary to excl ude competitors to be guilty of

monopolization. 15

Appellants' argument, that the DLI price increase had no

adverse effect on competition and was not exclusionary, is not

supported by the evidence taken in the light most favorable to

Appellees. Appellees identify extensive evidence, if believed by

the jury, that precludes a judgment as a matter of law. First, a

ju ry could find that SWB's purpose in raising the DLI price and

imposing more restrictive terms was to recapture its market share,16 Although the planning documents from which these quotes

were taken do not specifically recommend increasing the price of

DLI, a jury could easily make the inferential hop.

17 Affidavit of former Yellow Pages President A.C. Parsons.

18 Several individuals testified at trial that Kaufman

suggested looking into DLI prices to increase Telephone's

revenues.

19 SWB argues on appeal that by passing this cost on to the

independents, it can thereby reduce the amount of basic telephone

service to its customers. This was argument was not presented to

the jury and the district court found it meritless, as do we. We

cannot say as a matter of law that this post-trial explanation

accurately stated the true purpose and effect of the DLI price

increase.

11 to prevent expansion of current independents, and to prev ent new

independents from entering the market. SWB identified one of its

c ompetitive weaknesses as "low start-up costs" for independents.

"Competitor's low margin and high risk strategy leaves [them]

vulnerable to expense driven attacks." 16 The only cost or expense

for independents that SWB controlled was the price of DLI. SWB

long since recognized that DLI was "vital to the publishing

industry" and "without sharing this updated information with

competing directory publishers, telephone compa nies are able to

leverage their monopoly position in the telephone service area into

the competitive directory market." 17 Most telling is the evidence

indicating that Kaufman, Yellow Pages' president, suggested a DLI

price increase. 18 An expert of economics testified that increasing

Yellow Pages' own cost of production was "economically irrational

but for its anti-competitive effect [on independents]." 19 Later,

Kaufman questioned why the DLI had been raised to $1.0 0 when it

could have been even higher so that "we might [be able] to

... get20 464 F.2d 26, 38 n. 9 (5th Cir.), cert. denied, 409 U.S.

1077, 93 S.Ct. 687, 34 L.Ed.2d 665 (1972).

12 rid of some publishers." A jury could find that by raising the

cost of production SWB intended to "get rid of" some of the low

margin competitors, and thereby, capture even more of the directory

market.

In Lehrman v. Gulf Oil Corp. 20 this Court d iscussed the

difficulty of determining whether a business's practi ces are

anticompetitive.

Few business practices are anticompetitive on their face....

The circumstances surrounding the use of a particular business

practice give strong clues as to what those who employ the

practice hope to accomplish by it, and what those individuals

hope to accomplish may shed light on whether the practice does

in fact have the hoped for

... anticompetitive effect. In

short, when a firm displays an anticompetitive animus in the

oper ation of an otherwise ambiguous business practice, what

the firm seeks to accomplish provides as sure an indicator of

the actual effect of the practice on competition as can be

found in the shifting sands of antitrust litigation.

There is some evidence, from studies undertaken by SWB and comments

made by Kaufman, that the price increase was intended to restrict

the competition. Appellants argue correctly that this is not a

substitute for exclusionary conduct o r injury to competition.

Nevertheless, it is one more "indicator " of SWB's exclusionary

conduct the jury can take into account.

Second, there is evidence that other Co mpanies' DLI prices

were only one-third of the price Telephone was charging, and that

the terms at which SWB offered the listings were restrictive. For

small independents, like Canyon, SWB's required purchase of the

entire directory even if the publisher only wanted small portions21 After the district court questioned the two year

requirement at a preliminary injunction hearing, SWB reduced the

two year obligation to two months. For the two month period

independents had to purchase both business and residential

listings, thereafter, they could purchase updates for business

only or both.

13 of the listings, substantially increased th e fixed costs of

operation. Independents were required to purchase both the

residen tial and business updates; independents also had to

contract to take updates for a period of two years; and if the

publisher stopped taking updates within the two years, the

publisher could not obtain listings again for another two years. 21

Third, the evidence sup ports a finding that Appellants'

conduct had an anti-competitive effect on the market. Both the

number of publishers' licensing listings and the number of

competit i ve directories sharply declined. The price increase

threatened to put Canyon out of business, forced it to increase

prices to advertisers—adversely affecting the consumer, and reduced

its number of customers. The change contributed to Great Western's

decline in pr ofit margin, forced its withdrawal from Richardson,

forced it to abandon its plans to enter Little Rock, and halted its

historical pattern of entering two to three markets per year.

Canyon's and Great Western's continued survival does not preclude

them of a remedy.

The crux of Appellants' argument is the contention that

Appellees failed to show an antitrust injury. Appellants contend

that Great Western not only profited after the DLI price increase,

but its profits increased over th e previous year. Appellees22 753 F.2d 416, 436 (5th Cir.1985).

14 maintain that the DLI price increased the costs of listings to

Great Western as percentage of its sales from 1.87% to 4.56%,

exceeding Great Western's 2% profit margin. In other words, Great

Weste rn could not maintain its previous increasing rate of

expansion and retain its 2% marginal profit. The issue becomes

whether this is an injury. Appellees' profits increased in 1989,

just not as much as they would have; and for a low profit margin

competitor, the price increase halted Great Western's expansion.

Pierce v. Ramsey Winch Co. 22 is helpful in shedding light upon

this issue. In P ierce the plaintiff was a distributor of, am ong

other things, Ramsey cranes. Because Pierce bought the cranes at

a substantial discount, due to large purchases made in cash, Pierce

was able to sell them individuall y at a lower price than the

manufacturer Ramsey. Therefore, Ramsey refused to supply them to

Pierce. Pierce proceeded to buy them from another manufacturer and

also focused on other products. After the supply termination,

Pierce was able to operate at a profit level even higher than when

selling Ramsey cranes. This Court held that despite the increase

in profit, Pierce could still establish an antitrust injury by

showing it would have earned an even higher profit selling Ramsey

cranes but for the actions of Ramsey. Appellees argue analogously

that they suffered a similar injury; but for SWB's DLI price

increase, Great Western and Canyon would have earned an even higher

profit.

The issue before this Court is whether Great Western and15

Canyon suffered an antitrust injury despite an increase in profit.

We find that they did. There is sufficient evidence of

exclusionary conduct and intent to exclude. This evidence coupled

with the fact that Appellees, low profit margin competitors, could

have profited more than they did leads this Court to conclude that

these actions wer e sufficient to establish an antitrust injury

under Pierce.

Opportunity Lost

Appellants contend the district court err ed in denying its

motion for directed verdict against Great Western for two reasons.

First, Great Western's fear of future price increases is too

speculative to support a damage award for abandoning the Richardson

market and failing to enter the Little Rock market. Second, Great

Western has no standing to sue for its failure to enter Little

Rock. We will discuss each in turn.

There is no evidence, Appellants argue, that Great Western

could not compete in Little Rock and Richardson at the existing DLI

prices. In fact, the district court acknowledged that it was the

fear of future price increases, not present DLI prices, that forced

Great Western to abandon Richardson and Little Rock. Great

Western's claims are not ripe. Appellants contend if Telephone

raised DLI prices to exclusionary levels in the future, then Great

Western would be entitled to relief.

The court instructed the jury not to award damages unless they

were in fact attributable to the alleged wrongful conduct. The

jury could find and the court did find that the enhanced investment23 Affiliated Capital Corp. v. City of Houston, 735 F.2d

1555, 1565 (5th Cir.1984) (en banc).

24 Flintkote v. Lysfjord, 246 F.2d 368, 395 (9th Cir.), cert.

denied, 355 U.S. 835, 78 S.Ct. 54, 2 L.Ed.2d 46 (1957);

Connecticut Importing Co. v. Frankfort Distilleries, Inc., 101

F.2d 79, 81 (2d Cir.1939); Bailey's Bakery, Ltd. v. Continental

Baking Co., 235 F.Supp. 705, 716-17 (D.Haw.1964), aff'd, 401 F.2d

182 cert. denied, 393 U.S. 1086, 89 S.Ct. 874, 21 L.Ed.2d 779

(1969).

16 risk was a material cause of Great Western's abandonment of

Richardson and failure to ent er Little Rock. Additionally, this

Court stated that in cases where the defendant's acts are motivated

by intent to injure the plaintiff, the inferential leap to the

finding of fact of damage is not great. 23 The district court found

"the harm to Great Western and to fair compet ition was caused by

what Defendants did and by what Great Western knew they wanted to

do, would do, and could continue doing without legal redress being

sought." The evidence reveals that SWB had tripled its DLI prices

twice within four years and implemented condi tions designed to

deter new entry. An expert witness testified that investment

decisions necessarily take into account risk. The value of a

Little Rock entry before the DLI increase was reasonably certain,

but not guara nteed. By increasing the risk to new entrants, SWB

raised barriers to entry. Great Western not only had to consider

present elevated DLI prices but also the risk of future increases

over the three year period it takes to enter the market.

Appellant cites several old non- Fifth Circuit cases for the

proposition that a plaintiff cannot obtain damages that are to be

suffered in the future. 24 These cases are distinguishable. The25 Great Western alleges that SWB never raised the issue of

preparedness in any of its motions for directed verdict, thus

permitting this Court to review for plain error only.

Preparedness, though, is only an element of standing under the

antitrust claims. SWB expressly challenged the appellee's

standing under antitrust in its motions for directed verdict.

SWB also stated in its discussion of Great Western's tortious

interference claim that Great Western was unprepared to enter the

Little Rock Market. Regardless of the standard of review, Great

Western put on no evidence of key aspects of standing as will be

discussed.

17 evidence reveals that SWB's conduct elevated the risk of entry into

the respective markets now, not in the f uture, to such a degree

t hat a jury could find the risk of entry prevented Great Western

from entering the markets. As the district court stated it was

what SWB did and what it could and would continue to do that caused

injury.

Appellants' second argument is based on standing. Appellants

contend Great Western has no standing to sue for abandoning its

plans to enter the Little Rock market unless it can establish a

business or property interest protected by Section 4. 2 5 To

establish this interest, Great Western must show that it intended

and was prepared to enter the market. J ayco Systems, Inc. v. Savin

Business Machines Corp., 777 F.2d 3 06, 313-314 (5th Cir.1985),

cert. denied, 479 U.S. 816, 107 S.Ct. 73, 9 3 L.Ed.2d 30 (1986).

Ample evidence exists in the record of Great Western's intent to

enter the Little Rock market. Appellee had begun investigations

into the market, and had set a 1989 date for publication of a

Little Rock directory. However, there is not substantial evidence

that Great Western was prepared to enter the Little Rock market.

In assessing a company's preparedness to expand, courts have26 See also Hayes v. Solomon, 597 F.2d 958, 973 (5th

Cir.1979), cert. denied 444 U.S. 1078, 100 S.Ct. 1028, 62 L.Ed.2d

761 (1980); Martin v. Phillips Petroleum Corp., 365 F.2d 629,

633-34 (5th Cir.), cert. denied 385 U.S. 991, 87 S.Ct. 600, 17

L.Ed.2d 451 (1966); Gas Utilities Co. v. Southern Natural Gas

Co., 996 F.2d 282, 283 (11th Cir.1993), cert. denied, --- U.S. --

--, 114 S.Ct. 687, 126 L.Ed.2d 654 (1994); Curtis v. CampbellTaggart, 687 F.2d 336, 338 (10th Cir.), cert. denied, 459 U.S.

1090, 103 S.Ct. 576, 74 L.Ed.2d 937 (1982).

27 Accord Gas Utility Co., 996 F.2d at 283 (lack of

preparedness to enter new market when no contracts consummated

and no financing); Curtis, 687 F.2d at 338 (experience in

proposed business operation, unaccompanied by contracts and

financing, not enough to establish "business or property"

interest).

18 looked to several factors: the ability of the plaintiff to finance

the business and purchase the necessary facilities and equipment,

consummation of contracts by the plaintiff, affirmative action by

the plaintiff to enter the business, and background and experience

in the prospective business. Id. 26

This Circuit has typically found lack of standing where a

plaintiff lacked evidence on all the preparedness factors. I d. at

315-316 (plaintiff showed no ability to obtain financing); H ayes,

597 F.2d at 974-975 (plaintiff failed to prove ability to finance

or contracts made); Martin, 365 F.2d at 634 (plaintiff failed to

prove any of the four factors). 27 While we do not hold that every

plaintiff in every case must show all four of the factors to merit

standing, we find Great Western's showing to be insubstantial.

While Great Western has experience, there is no evidence of

affirmative steps taken, contracts made or financ ing arranged in

preparation to enter the Little Rock market. The sum total of

Great Western's preparation was review of pricing information, two28 See also Cable Holdings v. Home Video, 825 F.2d 1559, 1562

n. 3 (11th Cir.1987) (citing Heatransfer with approval).

19 visits to Little Rock b y a corporate officer and setting of a

publication date. Great Western has only demonstrated that it

i ntended to enter the market, not that it was prepare d to do

business there.

Great Western urges us to find its situation analogous to that

of the plaintiff in Heatransfer Corp. v. Volkswagenwerk A.G. where

we found standi n g in absence of all four of the factors of

preparedness for a plaintiff who intended to expand production, not

move into a new market. 553 F.2d 964, 988 n. 20 (5th Cir.1977). 2 8

The plaintiff in Heatransfer had standing in absence of all four

factors of preparedness because little preparation was needed. No

significant modification of plaintiff's production facilities was

necessary for its expansion. Nor did plaintiff need to obtain new

contract rights or additional sources of financing. Id.

In contrast, for a plaintiff moving into a new market, such as

Great Western, the showing of preparedness is fundamental. We

stated that,

"even though an antitrust plaintiff operates a going concern,

he must demonstrate his preparedness and intent to expand that

business into a new market if he claims that the expansion of

that business into a new market has been foreclosed to him by

the monopolistic activities of the defendant." Id.

Great Western was not in the position of the plaintiff in

Heatransfer. There were significant barriers to entry to the

Little Rock marke t. Costs to enter the market were estimated at

$1.6 million. Additionally, Great Western would have had to29 Securities & Exchange Commission v. MacElvain, 417 F.2d

1134, 1137 (5th Cir.1969) (finding that the district court did

not abuse its discretion in entering a permanent injunction),

cert. denied, 397 U.S. 972, 90 S.Ct. 1087, 25 L.Ed.2d 265 (1970).

30 The district court apparently adopted Appellee's proposed

findings in support of the injunction. Such findings merit

heightened scrutiny. Falcon Constr. Co. v. Economy Forms Corp.,

805 F.2d 1229, 1232 (5th Cir.1986) ("A district court that adopts

one party's suggested findings essentially verbatim leaves doubt

whether it has discharged its duty to review the evidence for

itself and reached its decision on the basis of its own

evaluation for the evidence rather than that of an advocate.").

20 establish a new customer base and new contracts. Under these

facts, Great Western cannot claim that little or no preparation was

required.

Great Western argues that "its plans to enter Little Rock

were kept secret" to prevent entrenchment in the market by SWB.

However, this Court's eyes are open only to what is in the record.

We will not attempt to divine Great Western's machinations but will

look to what the company actually did in preparation. Preparation

is an element for standin g under Section 4 and Great Western did

little. Because Great Western was not prepared to enter the Little

Rock market, it had no standing to protect an alleged interest in

that market. We reverse and remand to the District Court with

instructions to dismiss the Little Rock claim.

Injunction

We review the propriety of a district court's decision to

issue a permanent injunction for an abuse of discretio n. 29 The

factual underpinnings are reviewed for clear error, while the

ap plication of legal principles is reviewed de novo. 3 0 For the31 Richard O'Neal stated the updates are essential for the

independents to call on new businesses and to distribute new

directories.

32 Former Yellow Pages president explained that directory

publishers need updated information to develop sales leads and to

deliver directories to newly connected users.

21 reasons discussed below, we affirm the district court's decision to

issue the permanent injunction.

Appellants contend that the district court erred in granting

Appellees' injunctive relief because (a) Appellee failed to show

the requisite threatened loss or damage, (b) the evidence was

insufficient to s upport Appellees' claim that the updates were

essential and the update prices prohibited new entry, and (3) there

is no basis for the 13.5 cent amount. Section 16 of the Clayton

Act empowers fede ral courts to grant an injunction "against

threatened loss or damage by a violation of the antitrust laws."

Appellants' argument is merely more of the same—there is no

evidence of a threatened loss. The evidence is sufficient to

support a finding that the updates were properly included in the

instructions. Testimony from Richard O'Neal, Great Western's

founder, 31 corroborated by SWB business plans 32 expla ined the need

to maintain current i nformation through updates. In determining

the 13.5 cent price the district court considered the average price

per listing charged by other regional Bell operating companies, the

effect it would have on basic telephone ratepayers, and the costs

of providing the data to independents. Appellant complains that by

imposing such a low price, the district court is in effect forcing

telep hone customers to subsidize operations of the independent33 See e.g., OtterTail Power Co. v. United States, 410 U.S.

366, 372-75, 93 S.Ct. 1022, 1027-28, 35 L.Ed.2d 359 (1973);

Alameda Mall, Inc. v. Houston Lighting & Power Co., 615 F.2d 343,

353-54 (5th Cir.1980).

34 See Wilk v. American Medical Association, 671 F.Supp. 1465

(N.D.Ill.1987), aff'd, 895 F.2d 352 (7th Cir.1990).

35 See Loew's Inc. v. Milwaukee Towne Corp., 201 F.2d 19, 22-

23 (7th Cir.1952), cert. denied, 345 U.S. 951, 73 S.Ct. 865, 97

L.Ed. 1374 (1953).

22 directories. The cost of compiling and maintaining the DLI falls

squarely upon the ratepayers, when it should be shared more by

independents who pay merely pennies more than the cost of copying

the data. However, any regulated business can make the same

argument and courts nevertheless have uniformly applied antitrust

laws to them. 33 Additionally, the district court could find that

the 13.5 cent price provided an adequate margin over costs.

On cross-appeal, Great Western and Canyon argue that the

injunction should apply across the five state market and not merely

where the plaintiffs are located. Broader relief embraces the

public interest served by private antitrust lawsuits, 34 while narrow

relief places the plaintiffs in a preferred status over its

competitors. 35 Furthermore, Appellees contend that if Great Western

could not expand, neither could any other independent.

The district court narrowed its injunction because it found

that the evidence in this case did not justify injunctive relief in

markets other than where the plaintiffs compete. No evidence of

direct harm in these markets was provided. Also, the district

court recognized that it can grant injunctive relief to non-parties

but only if necessary to give the named plaintiffs the continuing36 See Professional Ass'n of College Educators v. El Paso

County Community College Dist., 730 F.2d 258, 274 (5th Cir.),

cert. denied, 469 U.S. 881, 105 S.Ct. 248, 83 L.Ed.2d 186 (1984).

23 relief to which they are entitled. 3 6 We find no error requiring

reversal.

We AFFIRM the court below in every respect with the exception

that we REVERSE th e claim of Great Western with regard to its

entering the Little Rock market. The court below will make the

necessary changes in its judgment because of the dismissal by us of

the Little Rock claim of Great Western.