Document: 127 S. Ct. 1069 (2007) WEYERHAEUSER COMPANY, Petitioner, v. ROSS-SIMMONS HARDWOOD LUMBER CO., INC. No. 05-381. Supreme Court of United States. Argued November 28, 2006. Decided February 20, 2007. *1071 Andrew J. Pincus, Washington, DC, for petitioner. *1072 Kannon K. Shanmugan, the States as amicus curiae, by special leave Court, supporting Michael E. Haglund, Portland, OR, respondent. Stephen V. Bomse, M. Laurence Popofsky, Heller, Ehrman, White & McAuliffe LLP, San Francisco, CA, Kevin Arquit, Joseph F. Tringali, Simpson, Thacher Bartlett New York, NY, Counsel Record, Charles A. Rothfeld, Nickolai G. Levin, Mayer, Brown, Rowe Maw Sandy McDade, Guy C. Stephenson, Weyerhaeuser Company, Federal Way, WA, Petitioner. Roy Pulvers, Lindsay, Hart, Neil Weigler, Kelley, Shay Scott, Horngren, Jones Wilder Respondent. Justice THOMAS delivered opinion Court. Respondent Ross-Simmons, a sawmill, sued petitioner Weyerhaeuser, alleging that drove it out business bidding up price sawlogs to level prevented Ross-Simmons from being profitable. A jury returned verdict in favor on its monopolization claim, and Ninth Circuit affirmed. We granted certiorari decide whether test we applied claims predatory pricing Brooke Group Ltd. Brown Williamson Tobacco Corp., 509 U.S. 209, 113 2578, 125 L. Ed. 2d 168 (1993), also applies bidding. hold does. Accordingly, vacate judgment Appeals. I This antitrust case concerns acquisition red alder mills process those logs Pacific Northwest. These hardwood-lumber usually acquire one three ways. Some are purchased open market. come mill through standing short- long-term agreements with timberland owners. And others harvested owned sawmills themselves. The allegations relevant our decision this relate began operating sawmill Longview, 1962. entered Northwestern market 1980 acquiring an existing lumber company. gradually increased scope operation, now owns six hardwood region. By 2001, Weyerhaeuser's were approximately 65 percent available sale App. 754a, 341a. From 1990 2000, made more than $75 million capital investments Id., at 159a. During period, production every owned. 160a. In addition increasing production, used "state-of-the-art technology," id., 500a, including sawing equipment, increase amount recovered log, 549a. contrast, appears have engaged little efficiency-enhancing investment. See 438a-441a. *1073 Logs represent 75 sawmill's total costs. 169a. 1998 while prices finished fell. divergent trends input output cut into mills' profit margins, suffered heavy losses during time. 155a (showing negative net income 2000). Saddled several dollars debt, shut down completely May 2001. 156a. blamed driving costs, filed suit against attempted under § 2 Sherman Act. 26 Stat. amended, 15 U.S.C. (2000 ed., Supp. IV). alleged that, among other anticompetitive acts, had "its dominant position sawlog drive levels severely reduced or eliminated margins competition." 135a. Proceeding part "predatory-bidding" theory, argued overpaid cause rise artificially high plan business. As proof practice occurred, pointed large share purchasing market, rising predation declining profits same period. Prior trial, moved summary Ross-Simmons' predatory-bidding theory. 6a-24a. District denied motion. 58a-69a. At close 9-day matter law, alternatively, new trial. motions based argument not satisfied standard set forth Group, supra. 940a-942a. 720a, Pet. Cert. 46a. rejected proposed instructions incorporated elements test. 725a-730a, 978a. Ultimately, instructed could prove practices acts if concluded "purchased needed, paid higher necessary, order prevent [Ross-Simmons] obtaining they needed fair price." Finding proved claim monopolization, $26 Weyerhaeuser. 967a. was trebled $79 million. appealed Appeals Circuit. There, Group's should apply disagreed affirmed Confederated Tribes Siletz Indians Ore. Co., 411 F.3d 1030, 1035-1036 (2005). reasoned "buy-side bidding" "sell-side pricing," though similar, materially different does necessarily benefit consumers stimulate competition way 1037. Concluding "the led establish liability predatory-pricing *1074 context do carry over force," declined F.3d, 1038. went conclude substantial evidence supported finding 1045. 548 ___, 126 2965, 165 948 (2006). does, Appeals' judgment. II considered what plaintiff must show succeed Act.[1] typical scheme, predator reduces product (its output) below cost, hoping competitors Then, vanquished, raises supracompetitive level. Matsushita Elec. Industrial Co. Zenith Radio 475 574, 584-585, n. 8, 106 1348, 89 538 (1986) (describing pricing). For scheme make economic sense, goods cost be recouped (with interest) supracompetitive-pricing stage scheme. 588-589, 1348; Cargill, Inc. Monfort Colo., Inc., 479 104, 121-122, 17, 107 484, 93 427 (1986); see R. Bork, Antitrust Paradox 145 (1978). Recognizing reality, established two prerequisites recovery pricing. "First, seeking competitive injury resulting rival's low complained appropriate measure costs." U.S., 222, 2578. Second, demonstrate competitor . dangerous probabilit[y] recouping investment below-cost prices." 224, first prong testrequiring costis necessary because "[a]s general rule, exclusionary effect above either reflects lower structure predator, so represents merits, is beyond practical ability judicial tribunal control." 223, particularly wary allowing above-cost cutting such could, perversely, "chil[l] legitimate cutting," which directly benefits consumers. 223-224, 2578; Atlantic Richfield USA Petroleum 495 328, 340, 110 1884, 109 333 (1990) ("Low regardless how set, long levels, threaten competition"). Thus, specifically allow plaintiffs recover cutting, concluding "discouraging depriving constitute *1075 sound policy." supra, second there probability recoupment lossesis because, without recoupment, highly unlikely firm would engage explained Matsushita, makes investmentthe plus been realized absent schemeat initial, below-cost-selling phase. 1348. rational, reasonably expect recoup run least original profits. Ibid.; Without reasonable expectation, rational willingly suffer definite, short-run losses. centrality required "demonstrate likelihood sufficient compensate amounts expended predation, time value money invested it." 225, described parts "essential components real injury" "not easy establish." 226, reiterated costs erroneous findings quite "`[t]he mechanism engages pricinglowering pricesis stimulates competition,'" therefore, mistaken "`"chill very conduct laws designed protect."'" Ibid. (quoting 122, 484). III Predatory bidding, alleges case, involves exercise power buy side purchaser inputs "bids critical rival buyers cannot survive (or compete vigorously) and, result, predating buyer acquires maintains increases its) monopsony power." Kirkwood, Buyer Power Exclusionary Conduct, 72 L.J. 625, 652 (2005) (hereinafter Kirkwood). Monopsony Blair Harrison, Policy Monopsony, 76 Cornell L.Rev. 297 (1991). such, monopoly sell sometimes colloquially called "buyer's monopoly." 301, 320; Piraino, Proposed Approach Buyers' Competitive 56 Hastings 1121, 1125 bidder ultimately aims gained prices. To end, once has caused competing exit inputs, will seek "restrict purchases level," thus "reduc[ing] unit remaining input[s] purchases." Salop, Anticompetitive Overbuying Buyers, 669, 672 Salop). reduction lead "a significant saving offsets profit[s] earned output." If all goes planned, reap monopsonistic offset any *1076 prices.[2] (In defendant's input-purchasing present situation suppliers suing monopsonist Act, nor risk significantly concentration sells, i.e., lumber.) IV Predatory-pricing analytically similar. Hovenkamp, Law Pricing, Competition Int'l, 1, pp. 21, 35 (Spring 2006). similarity results theoretical connection between monopsony. Kirkwood 653 "mirror image" monopoly); Khan State Oil 1358, 1361 (C.A.7 1996) ("[M]onopsony cartel [is] treated law"), vacated remanded grounds, 522 3, 118 275, 139 199 (1997); Vogel American Soc. Appraisers, 744 F.2d 598, 601 1984) ("[M]onopoly symmetrical distortions standpoint"); Hearing Issues Agriculture: Buying Processors Our Nation's Agricultural Markets before Senate Committee Judiciary, 108th Cong., 1st Sess., 3 (2004). kinship suggests similar legal standards monopsonization. Cf. Noll, "Buyer Power" Economic Policy, 589, 591 ("[A]symmetric treatment no basis analysis"). Tracking monopsony, strikingly allegations. thereby, parallel fashion, raised key Both involve deliberate use unilateral measures purposes.[3] both logically require firms incur short-term chance might future. *1077 B More importantly, mirrors respects deemed analysis Group. noted "`predatory schemes rarely tried, even successful.'" 2578 1348). requires certain short term reaping sacrifice. reasoning today reason, "[s]uccessful probably successful predation." 66 (1993). like actions taken often "`"the essence competition."'" turn quoting 594, Just sellers purchasers, bid scarce inputs. There myriad reasonsranging benign affirmatively procompetitivewhy result miscalculation needs response consumer demand outputs. efficient procompetitive strategy gain adopted input-intensive process. Or excess hedge future rises shortages. Salop 682-683; 655. nothing illicit about these decisions. Indeed, sort essential innovation market.[4] failed may potential difficulty aspiring faces "predatory produces aggregate welfare enhanced." Failed can also, but necessarily, 677-678. predator's likely Usually, leads manufacture generally consumers.[5]Id., 677; 66-67. "boon consumers" *1078 be. addition, presents less direct threat harm achieves success charging rely raising 676. Even remain constant, predominant force capture C similarities combined convince us two-pronged claims. adaptation context. That is, revenues generated pricing, "is control courting intolerable risks chilling legitimate" conduct. Given multitude ends served behavior too lax serious here Consequently, only suffice defendant incurred power. Absent sense offsetting gains. (citing making showing conditions market." conceded standard. Brief 49; Tr. Oral Arg. 49. Therefore, theory support jury's verdict. V reasons, remand further proceedings consistent opinion. It ordered. NOTES [1] dealt Robinson-Patman observed, "primary-line Act character inflicted actionable Act." 221, Because similarity, [2] firm's same, then bidder's appear here, conditions, monopolistic levels. 679-682 monopsonist's depends upon market). [3] overbuying fall rubric purchaser's attempt exclude purchasers. identical: rise. causes offering pay predatory-overbuying demanding input. Either way, increase. meant suggest economically identical overbuying." [4] Higher obviously encourage enter sales well. [5] Consumer additional instead destroy 677, 22. Also, markets, outputs decreases struggling competitors.

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