Case Name: LOUISIANA POWER & LIGHT COMPANY v. UNITED GAS PIPE LINE COMPANY and Pennzoil Company
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1985-09-04
Citations: 478 So. 2d 1240
Docket Number: No. CA-1111
Parties: LOUISIANA POWER & LIGHT COMPANY v. UNITED GAS PIPE LINE COMPANY and Pennzoil Company.
Judges: Before GARRISON, BYRNES and ARMSTRONG, JJ.
Reporter: Southern Reporter, Second Series
Volume: 478
Pages: 1240–1264

Head Matter:
LOUISIANA POWER & LIGHT COMPANY v. UNITED GAS PIPE LINE COMPANY and Pennzoil Company.
No. CA-1111.
Court of Appeal of Louisiana, Fourth Circuit.
Sept. 4, 1985.
Rehearing Denied Dec. 20, 1985.
C. Murphy Moss, Jr., George Frazier, Lemle, Kelleher, Kohlmeyer, Hunley, Moss & Frilot, New Orleans, La., W.. DeVier Pierson, David J. Hill, Douglas E. Nord-linger, Timothy S. Buehrer, Scott P. Klur-feld, Pierson Semmes Crolius & Finley, Washington, D.C., for defendant-appellee United Gas Pipe Line Co.
Michael R. Fontham, Wayne J. Lee, Paul L. Zimmering, Stephen G. Bullock, of Stone, Pigman, Walther, Wittmann & Hutchingson, New Orleans, Marshall B. Brinkley, Baton Rouge, for Louisiana Public Service Com’n.
W.T. Tete, of Mars, Medo & Tete, Monroe & Lemann, Andrew P. Carter, Kenneth P. Carter, Terrence G. O’Brien, New Orleans, for plaintiff and appellant Louisiana Power & Light Co.
B. Daryl Bristow, Stephen M. Hacker-man, Baker & Botts, Houston, Tex., Gene W. Lafitte, Frederick W. Bradley, Liskow & Lewis, New Orleans, for defendant-ap-pellee Pennzoil Co.
Before GARRISON, BYRNES and ARMSTRONG, JJ.

Opinion:
BYRNES, Judge.
This is an appeal from a judgment of the trial court dismissing the antitrust claims of Louisiana Power and Light Company, (LP & L), against United Gas Pipe Line Company, (United), and Pennzoil Company, (Pennzoil). The judgment also dismissed a revocatory action brought by LP & L against Pennzoil. LP & L's suit was based on allegations that United and Pennzoil had violated the antitrust laws of Louisiana (La.R.S. 51:121 et seq.) by conspiring together to withhold information and manipulate regulatory mechanisms in such a way as to monopolize trade in natural gas, foreclose competition among gas suppliers to power plants, and avoid contracts which obligated United to supply gas to those facilities at an unfavorably low price.
At the close of LP & L's case in chief, United and Pennzoil filed motions to dismiss the entire suit under C.C.P. Art. 1810(B). The trial judge granted the mo tion "... only insofar as the antitrust claim and the revocatory action are concerned". He dismissed the action because he believed
. Louisiana Power and Light Company has shown no right to relief for its claim of antitrust violation against defendants United Gas Pipe Line and Pennzoil Company.
Louisiana Power and Light has failed to prove by a preponderance of the evidence the elements necessary to support an antitrust action under Louisiana law.
Unfortunately, the trial judge did not elaborate the findings of fact on which this legal conclusion was based and we must therefore make our own findings, based on our evaluation of the record as tempered by the opinion of the trial judge.
Louisiana's antitrust laws are embodied in La.R.S. 51:122 et seq. Section 122 forbids "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce within this state." Section 123 states that "No person shall monopolize, or attempt to monopolize, or combine, or conspire with any other person to monopolize any part of the trade or commerce within this state." These statutes track the federal antitrust laws embodied in the Sherman Act, 15 U.S. C.A. § 1 et seq.
Both the Louisiana & Federal statutes draw a basic distinction between unilateral and concerted action. RS. 51:122, like Section 1 of the Sherman Act, reaches unreasonable restraints of trade effected by "a contract, combination . or conspiracy" between two or more separate entities. Unilateral activity is regulated by R.S. 51:123 and Section 2 of the Sherman Act. These statutes address monopolization and attempts to monopolize trade by a single entity as well as combinations or conspiracies to monopolize.
LP & L's briefs to this court seem to limit its claims for antitrust injury, under both R.S. 51:122 & 123, to allegations based on conspiracy. LP & L's original brief outlined its position as follows:
LP & L's complaint against United and Pennzoil is for their violation of the state analogues of both Sherman Sec. 1 and Sec. 2 As applied to the case at hand, the fact of conspiracy is an element in common to their violations under both substantive sections of law.
A firm can be guilty of Sec. 2 by its unilateral conduct, whereas a Sec. 1 violation requires agreement or concerted acts. However, Sec. 2 of the Sherman Act and R.S. 51:123 of the Louisiana statutes, also provide that "[n]o person shall . combine, or conspire with any other person to monopolize .
LP & L's complaint is not directed at United's unilateral conduct. Rather, it is directed at that course of conduct wherein Pennzoil combined and conspired with United in inflicting antitrust injury upon LP & L, other power-plants and the electric consumers in Louisiana generally, (emphasis added) (LP & L original brief page 109-110).
Throughout its brief, LP & L seems to emphasize its conspiracy based claims almost to the exclusion of any claim of unilateral action by United or Pennzoil. For example, in discussing the relationship of the Federal and State antitrust statutes LP & L states that:
"... basically the relationship of sec. 122 and 123 of the state statute is the same as sec. 1 and 2 of the federal statute .
The two sections are complementary to each other. The principal difference between the two sections insofar as the federal eases are concerned is that the prohibition against a restraint of trade extends only to conduct by more than one firm, whereas the prohibition against monopolization even extends to the conduct of a single firm. The distinction is not of crucial importance to the case now before the Court because plaintiff is complaining of the conduct of a combination of two firms, Pennzoil and United. " (emphasis added) (LP & L original brief page 89)
Apparently, LP & L did not feel that the unilateral action of either company was sufficient to support an antitrust action.
Accordingly, our analysis of this case will first focus on the adequacy of LP & L's proof that United and Pennzoil conspired together to restrain trade or achieve a monopoly. In undertaking this analysis, reference to the Federal jurisprudence relative to antitrust law is both instructive and necessary given the similarity between the Federal and State statutes and the relative scarcity of Louisiana cases dealing with the subject. Parish National Bank v. Lane 397 So.2d 1282 (La.1981) Our analysis is further narrowed by the nature of the relationship between the defendants.
Until 1965, United Gas Pipeline Company was a wholly owned subsidiary of United Gas Corporation and was not affiliated in any way with Pennzoil. In December 1965, Pennzoil acquired 42% of the common stock of United Gas Corporation, giving it effective control of that corporation as well as its wholly owned subsidiary United Gas Pipeline Company. In April 1968, Pennzoil and United Gas Corporation merged. United Gas Pipeline Company was then operated as a wholly owned subsidiary of the newly formed Pennzoil-United Corporation, which later changed its name to Pennzoil Company. In March 1974, Pennzoil and United Gas Corporation ceased to be affiliated.
Both the Louisiana statutes and the Federal statutes from which they are derived, require concerted action by two or more separate entities to establish a combination or conspiracy to restrain or monopolize trade. The question of whether the coordinated actions of a parent and its corporate subsidiary can constitute this plurality of actors troubled courts for many years and produced an inconsistent and confusing line of cases.
However, the United States Supreme Court has recently resolved the question, at least as to wholly owned subsidiaries. In Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), the court held that a parent and its wholly owned subsidiary are incapable of conspiring with one another as a matter of law for purposes of Section 1 of the Sherman Act (the federal counterpart of R.S. 51:122). Left unresolved was the question of when, if ever, a parent and its partially owned subsidiary could conspire together.
The ruling in Copperweld marked the partial demise of the so called intra-enter-prise conspiracy doctrine, a concept first introduced by the Supreme Court in United States v. Yellow Cab Company, 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947). Under the intra-enterprise conspiracy doctrine it was possible to find a parent corporation and it's corporate subsidiary capable of conspiring together in violation of the Sherman Act even if they formed a single enterprise with common ownership. The result was to subject the relationship between a parent corporation and its corporate subsidiaries to the same Section 1 scrutiny as economically independent, unaffiliated corporations.
The doctrine has been criticized almost since its inception as placing form over substance. Much of this criticism has focused on the inconsistencies which the concept of intra enterprise conspiracy fostered in the casé law. As a result of applying the doctrine, courts viewed the conduct of enterprises organized into corporate subsidiaries as that of potential conspirators under Sec. 1 of the Sherman Act. However, those same courts treated identical conduct by firms organized into unincorporated divisions as immune from Sec. 1 scrutiny because unincorporated divisions were not subject to the fiction which gives an incorporated subsidiary a separate legal identity from its corporate parent. Without the legal fiction of separate identity, courts declined to treat án unincorporated division as a 'person' for antitrust conspiracy purposes. The only feature which distinguished these two lines of cases was the form in which the enterprise was organized.
Under the intra-enterprise conspiracy doctrine as developed in the case law, a corporation's organizational choices, and not its economic conduct, determined whether or not the sub-units of the corporation could be conspirators. The doctrine gives undue emphasis to the fact that a subsidiary is separately incorporated from its parent, and encourages courts to treat as concerted action by two entities what is in reality the unilateral behavior of a single economic unit.
The Supreme Court recognized the validity of this criticism and responded in Cop-perweld by abrogating the doctrine as it applied to wholly owned subsidiaries. The Court reasoned that:
A parent and its wholly owned subsidiary have a complete unity of interest. Their objectives are common, not disparate; their general corporate actions are guided or determined not by two separate corporate consciousness but one.... With or without a formal "agreement" the subsidiary acts for the benefit of the parent, its sole shareholder. If a parent and a wholly owned subsidiary do "agree" to a course of action, there is no sudden joining of economic resources that had previously served different interests, and there is no justification for Section 1 scrutiny. Copperweld, supra 104 S.Ct. at 2742.
The Court obviously focused its analysis on the economic consequences of the relationship between a parent and its wholly owned subsidiary and not the mere formality of their separate incorporation.
Wholly owned subsidiaries are not independent economic forces, but mere subunits of the larger enterprise which owns them. The economic force represented by such a subsidiary is controlled by the parent for its benefit. Because the coordination of activities between parent and subsidiary does not cause ".. the sudden joining of economic resources that had previously served different interests.. " or deprive the market place of a previously independent economic decisionmaker, the Cop-perweld Court saw no reason to subject such coordination to analysis for antitrust conspiracy.
The Court ruled that total ownership of a subsidiary was sufficient to establish the economic unity which would insulate the enterprises from allegations of a conspiracy for antitrust purposes. Total ownership implies total control, which in turn negates the inference of independent decision making which separate incorporation might otherwise suggest, and which is necessary to establish a conspiracy.
It seems clear that the degree to which the parent actually exercises its power to control a subsidiary was not as important to the Court in Copperweld as the parent's possession of that power.
. [I]n reality a parent and a wholly owned subsidiary always have a "unity of purpose or common design." They share a common purpose whether or not the parent keeps a tight rein over the subsidiary; the parent may assert full control at any moment if the subsidiary fails to act in the parent's best interests. Copperweld, supra at 2742.
That power to control is what keeps the economic force of the subsidiary in line with the goals of the parent. It is also the most compelling reason for treating the enterprise as a single economic unit.
Antitrust law seeks to protect competition in the marketplace by limiting how an enterprise can exercise its economic power. If the economic power of affiliated enterprise is controlled and coordinated by one decisionmaker for the benefit of the enterprise as a whole, then the exercise of that power should be viewed as the conduct of a single economic force. Economic realities, not corporate formalities, should guide courts in their analysis of this issue. Cop-perweld. supra. In our opinion, this is true whether the corporate subsidiary is wholly or partly owned. If the parent has sufficient control of the subsidiary to dictate its economic policy, it seems illogical to treat the two corporations as separate or competing economic forces.
Antitrust law is aimed at preventing the economic consequences of certain behavior which society has deemed undesirable in a system of free and open competition. As to concerted action, antitrust law focuses on the danger presented to the competitive system by the joining of previously independent and competing economic forces. Concerted activity of this sort supresses the independent decisionmaking which a competitive marketplace demands.
In the case of partially owned subsidiaries, the presence or absence of the parent's power to dictate economic policy is necessarily a more fact specific inquiry than in the case of wholly owned subsidiaries. Some partially owned subsidiaries are controlled by their parent, others are not.
The most readily apparent evidence of a parent's power to control a partially owned subsidiary is its use of that power. The more centralized the management of an enterprise, the more evident it becomes that the enterprise is being operated as a single economic unit. However, modern corporate structure is such that complex business organizations are frequently operated on the basis of very general policy directives from the parent corporation, with decisionmaking authority delegated to employees of the subsidiary, subject to review and approval by the parent where necessary. Indeed this is the management philosophy preferred by Pennzoil and implemented by its management following the takeover of United (see transcript page 14577).
Thus, while the degree of day to day control actually exercised by the parent of a partially owned subsidiary is relevant, it is not always an accurate measure of the parent's power to control that subsidiary. Other factors which may help gauge this power include the presence of overlapping management, the filing of consolidated financial statements or tax returns, the percentage of the subsidiary's stock which the parent owns, the reasons for organizing the enterprise in subsidiary form, and whether or not the corporations are held out to be distinct legal entities or competitors.
While none of these factors is controlling in any particular case, they are all aimed at establishing the degree of control which a parent can exercise over its partially owned subsidiary. If a partially owned subsidiary does not retain the power to set its own economic course, it is difficult to perceive of it as an independent actor in the formation of a conspiracy with its parent. Conversely, if the parent has the power to compel its subsidiary to go along with an anti-competitive scheme then the subsidiary cannot be viewed as having the capacity to join the conspiracy; there is no meeting of independent minds, nor is the marketplace deprived of an independent economic deci-sionmaker.
The mere formality of separate incorporation does not justify ignoring this reality. If an enterprise is operated as a single unit it should be treated as one for antitrust purposes regardless of how it is organized. The goal of antitrust law is to benefit the consumer by promoting economic efficiency and protecting competition. The decision of an enterprise to operate in corporate subsidiary form is not, in itself, a threat to competition. In fact, such a decision may improve an enterprise's efficiency and thus benefit the marketplace.
A corporation may elect to operate through corporate subsidiaries for a variety of reasons unrelated to antitrust concerns. Separate incorporations may improve management, reduce Federal or State taxes, facilitate compliance with reg ulatory or reporting laws, or avoid special tax problems relating to multi-state operations. Separate incorporation may also improve local identification with an enterprise's product or encourage local investment in a particular aspect of a larger concern. Copperweld, supra, at 2743.
It is inconsistent with the goals of antitrust law to make conspiratorial capacity turn on an enterprise's choice of organizational structure. If an enterprise uses the economic force of its corporate subsidiaries as part of an anti-competitive scheme, its conduct should be judged as that of a single entity unless it can be shown that the subsidiary was capable of exercising independent judgment in deciding to join the scheme.
Under the intra-enterprise conspiracy doctrine, courts have tended to presume that a parent and its subsidiary have the capacity to conspire together based on the formality of separate incorporation. Some showing of operational integration has been necessary to overcome this presumption. Presuming conspiratorial capacity in this way, solely on the basis of separate incorporation, obscures the distinction which antitrust law draws between concerted and independent action and diverts attention from the economic realities which that law seeks to address and control.
If a party alleges a conspiracy between a parent and its corporate subsidiary, the burden must be on that party to prove that the conspiracy took place. To establish this fact it must be shown that the alleged conspirators were capable of conspiring together. We now examine the record of this case to determine if it supports a finding of conspiratorial capacity between Pennzoil and United.
As previously noted, Pennzoil and United were affiliated during the entire period in which LP & L alleges they planned and executed an antitrust conspiracy. The record establishes, and both parties admit, that when Pennzoil acquired 42 percent of United Gas Corporation's stock in December 1965, it acquired a controlling interest. (LP & L original brief pg. 29, Tr. pg. 14562) Shortly thereafter, in January 1966, Pennzoil was able to place a number of its nominees on the board of directors of both United Gas Corporation and it's wholly owned subsidiary, United Gas Pipeline Company. These new board members, most of whom were also directors of Pennzoil, constituted a majority of both boards. (Tr. pg. 14727) From that point on, it is clear that Pennzoil exercised ultimate control over the actions of United Gas Corporation and United Gas Pipeline Company.
Hugh Leidtke, chief executive officer and chairman of the board of Pennzoil, testified that Pennzoil encouraged it's subsidiaries to formulate their own policy ideas, even on topics as important as the curtailment of gas deliveries. However, he also testified that those ideas were submitted to Pennzoil to determine if the corporate parent objected to the subsidiary's plans or felt that it conflicted with overall corporate policy. (Tr. pg. 14619-14625).
The testimony of William Leidtke, president of Pennzoil, also illustrates that Pennzoil, as the parent corporation, reviewed and approved the major decisions of United Gas Pipeline Co., it's wholly owned subsidiary. (Tr. pg. 14821-14828) Although Pennzoil's approval was often given tacitly, by not objecting to United's proposals, the fact remains that Pennzoil reviewed United's decisions and, most importantly, had the power to accept or reject them. When one keeps in mind that a majority of United's directors, who were responsible for formulating these ideas, were Pennzoil appointees, it becomes quite obvious that Pennzoil could exercise control over the decision making processes at United. Although Pennzoil did not directly dictate policy to United, it retained the power to veto decisions made by the boards of United Gas Corporation or United Gas Pipeline Company.
Moreover, most of the corporate decisions which are relevant to LP & L's antitrust claims were made after Pennzoil had acquired a controlling interest in United and had placed its nominees on the boards of United Gas Corporation and United Gas Pipeline Company. Thus, during the period in question, Pennzoil not only had the power to veto any policy choice with which it did not agree, but also had direct input into the process by which those choices were made.
' In April, 1968, Pennzoil was able to compel a merger of the two corporations. In December, 1968 Pennzoil was able to cause United Gas Pipeline Co. to pay a dividend of $51,000,000.00 to it's new owner. Pennzoil justified this dividend and a subsequent loan by Pennzoil to United as a means of restructuring United's debt-equity ratio in order to obtain more favorable rates from regulatory agencies. Regardless of the truth of this assertion, Pennzoil's actions clearly demonstrate that it had the power to dictate economic policy to United and used that power as it saw fit.
Under these circumstances, we must conclude that Pennzoil and United were operated as a single economic unit for the benefit of the Pennzoil corporate enterprise. What United lost in the Pennzoil takeover was its power to make the final decision as to its economic policies. After 1965, United was no longer an independent economic force, but a sub-unit of Pennzoil without the capacity to conspire with its new parent.
LP & L contends that under Louisiana Law a corporation can conspire with its individual members, shareholders and managers in violation of antitrust law, citing Tooke & Reynolds v. Bastrop Ice & Storage Co., Inc., 172 La. 781, 135 So. 239 (1931). In that case, the plaintiff claimed that Bastrop Ice and Storage Co. had attempted to monopolize the ice market in the Bastrop area by cutting its price below cost in an attempt to drive him out of business. The plaintiff contended that the owners, directors and managers of Bastrop Ice and Storage Co. conspired with that corporation to monopolize and restrain trade.
The ease was before the Court on an exception of no cause of action, and the facts alleged in plaintiff's petition were therefore accepted as true. The Court concluded that those facts stated a cause of action for conspiracy to restrain trade and monopolize trade under Louisiana Law. However, the merits of plaintiff's allegations, as opposed to their sufficiency to state a cause of action, were not before the court. Viewed in this light, the holding in Tooke & Reynolds stands only for the proposition that Louisiana law recognizes a cause of action based on allegations of conspiracy between a corporation and it's shareholders, members, and managers to violate antitrust law.
In this case, LP & L does not allege such a conspiracy. In its original petition, LP & L names only Pennzoil Company and United Gas Pipeline Company as defendants. The petition contains no allegations of conspiracy between either of those corporations and any of their employees, shareholders, or directors; nor was such a contention made at trial or in brief to this Court. Under these circumstances, we fail to see how Tooke & Reynolds is relevant to the case at hand, which involves allegations of a conspiracy between affiliated corporations, not between a corporation and its employees or directors.
We recognize that there is language in Tooke & Reynolds which implies that there was a combination between Bastrop Ice and Storage Co., Inc. and its parent corporation, Louisiana Ice and Cold Company of Monroe. However, the petition in Tooke & Reynolds does not appear to have alleged such an intra-enterprise conspiracy, and only prayed for judgment against Bastrop Ice and Storage and its two managing directors. The right to pursue the other corporations was specifically reserved for a future suit. Thus, the question of a conspiracy between a parent corporation and it's corporate subsidiary was not before the Court, and its pronouncements on that subject are not binding on this Court.
The same can be said of Economy Carpet v. Better Business Bureau, 361 So.2d 234 (La.App. 1st Cir.1978), writ denied 362 So.2d 1387 (La.1978), also cited by LP & L. That case involved allegations of a conspir acy to restrain trade between the Better Business Bureau and its employees. The issue of conspiracy between affiliated corporations was not raised in that case. The rule which we announce today is not controlled by Tooke & Reynolds or Economy Carpets, nor is it in conflict with those cases. We have been cited to no Louisiana case which directly addresses the question of when affiliated corporations can conspire together in violation of state antitrust law.
As stated earlier in this opinion, LP & L's claims against Pennzoil and United appear to rest exclusively on the theory that those entities either conspired together to restrain trade or conspired together to monopolize or attempt to monopolize trade. However, due to the serious nature of the allegations in this case, we will nonetheless address the issue of whether the Pennzoil-United enterprise, viewed as a single economic unit, either monopolized or attempted to monopolize trade.
To maintain a claim of unlawful monopolization under R.S. 51:123 (or Sec. 2 of the Sherman Act), the plaintiff must establish, by a preponderance of the evidence, that the defendant: 1) possessed monopoly power in a clearly defined economic and geographic market, and 2) had the general purpose or intent to exercise or maintain that power. United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, 92 L.Ed. 1236 (1948), United States v. Grinnell Corp., 384 U.S. 563, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966).
The threshold question in these cases is whether or not the defendant possesses monopoly power. Monopoly power is the power to control prices or exclude competition. United States v. E.I. DuPont De Nemours & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). To determine the existence of monopoly power it is necessary to define the market within which that power is allegedly exercised. Without a clearly defined market there is no backdrop against which to measure a defendant's ability to control prices or exclude competition.
In antitrust cases, the market which is relevant is the area of effective competition within which the defendant operates. This market has two elements, product and geography. As to product, the relevant market consists of those goods which are reasonably interchangeable for the purpose for which they are produced, taking into account price, use and quality. United States v. DuPont, supra. The geographic element of the relevant market is the area in which sellers of the defendant's product operate, and to which buyers can practicably turn to obtain that product. Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961).
LP & L has urged that the relevant product market in this case is natural gas for use as boiler fuel and that the relevant geographic markets are the areas immediately proximate to its generating stations at Sterlington and Nine Mile Point. (LP & L original brief page 32-34, reply brief page 44-45). We do not address the correctness of LP & L's choice of these markets because we have concluded that LP & L did not prove that United or Pennzoil, separately or as a single economic unit, possessed monopoly power in any market, including those urged by LP & L.
Monopoly power is the power to control prices or exclude competition. The record reveals that Pennzoil and United were unable to do either. LP & L contends that by misrepresenting its gas reserves to Federal regulators and the public, United was able to prevent other suppliers from either entering the market or increasing their share of the available business. The record does not support this contention.
In the late 1960's, Texaco, which had been supplying all the needs of LP & L's Little Gypsy Station since the late 1950's, was given the right to serve two thirds of the requirement of the Nine Mile Point. Prior to this time Texaco had not provided any gas to Nine Mile Point. The reason Texaco got this increased business was that it offered a cheaper price. (Tr. pg. 266-67). Texaco actively pursued this business and was willing to incur the expense of constructing a pipeline to the Nine Mile Point Station to get it. Texaco clearly was an active and effective competitor in the marketplace. It is also clear that United did not possess the power to exclude this competition.
The negotiations, which resulted in the. 1968 gas supply contract at Nine Mile Point provide a further graphic illustration of United-Pennzoil's inability to exclude competition or demand a monopoly price for its product. The record shows that LP & L was able to demand and receive price concessions from United by threatening to place new units at a facility which United did not have a contractual right to serve and which could be supplied with less expensive gas from Texaco. To avoid a drastic decrease in its sales to LP & L, United not only agreed to lower its price at Nine Mile Point, but also agreed to waive its contractual right to be the sole supplier of gas at that facility. The result of this last concession was that United only provided one third of the requirements of Nine Mile Point after 1968 and Texaco supplied the other two thirds. LP & L contends that United actually increased its sales as a result of the 1968 contract because of increased capacity at Nine Mile Point. We disagree.
United's increased sales were the result of an increased demand for gas at Nine Mile Point. These increased sales do not rebutt the undeniable fact that United's share of the Nine Mile Point "market" decreased dramatically, as a result of the 1968 contract. This scenario is hardly the picture of a monopolist wielding its power to exclude competitors or control prices. In fact, it is just the opposite; United was forced to lower its price to LP & L and surrender two thirds of what had previously been its exclusive market to Texaco.
Having evaluated the myriad of evidence, documentary and otherwise, presented by LP & L we have concluded that United-Pennzoil did not possess monopoly power in the markets defined by LP & L. The trial judge was therefore correct in dismissing LP & L's claim that Pennzoil-United monopolized trade.
We next address LP & L's contention that Pennzoil-United attempted to monopolize trade. To maintain a charge of attempted monopolization it must be proven that the defendant had a specific intent to destroy competition or build a monopoly. Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953). It must also be established that the defendant engaged in predatory conduct in furtherance of that intent, and that there was a "dangerous probability" the attempt would succeed. In our opinion LP & L has failed to prove any of these elements.
A desire to increase business is not sufficient to establish the specific intent to monopolize. Every business desires to increase its share of the market. It is only when that desire includes the specific intent to destroy competition or control prices that antitrust principals are violated. United States Steel Corp. v. Fortner Enterprises, Inc., 429 U.S. 610, 97 S.Ct. 861, 51 L.Ed.2d 80 (1977). It is obvious that United-Pennzoil wanted to increase its share of the market. However, it is far from clear that they had the specific intent to monopolize trade.
The evidence which LP & L presented in support of this claim is open to more than one interpretation. Much of it is concerned with the shift in jurisdictional status of the gas being supplied to LP & L. In our opinion, the evidence does not show that United-Pennzoil's efforts in this area actually excluded competition or were intended to do so. Rather, it tends to show an intent to rewrite United's contract with LP & L and other power plants by the use of federal regulations. Texaco clearly was and remained a vigorous and effective competitor in the marketplace throughout the period in question. Moreover, United never attempted to charge monopoly prices by it's applications to Federal regulators, although some price increase was clearly its goal.
These actions may raise breach of contract issues, but they do not provide a sufficient basis for imposing antitrust sanctions. The record simply does not support the conclusion that United-Pennzoil attempted to monopolize trade. There clearly was no 'dangerous probability' that Texaco, or any other company, would be excluded from the market by United-Pennzoil's activities or that those activities would give United-Pennzoil the power to control prices. The trial judge was therefore correct in dismissing this claim.
Finally, we address the dismissal of LP & L's revocatory action against Pennzoil. This action was aimed at setting aside dividends paid by United to Pennzoil. LP & L contended that the payment of this dividend was in fraud of its rights because it impaired United's ability to fulfill its contractual commitment to LP & L. LP & L also contended that payment of the dividends made it impossible for United to satisfy the judgment which LP & L anticipated would be rendered in its favor on the contract issue.
Under former C.C. Art. 1968, a revocato-ry action could not be maintained:
"unless the contract be broken, nor until judgment be obtained for the recovery of what is due in consequence of its breach.".
As previously noted, the antitrust and revocatory actions were severed from the contract action below. At the time the revocatory action was dismissed the trial judge had not yet determined if a breach of contract had occurred. Because a finding of a breach is a prerequisite to the revoca-tory action, the trial court acted prematurely in dismissing this claim.
The record in the breach of contract action is not presently before the court and we are therefore unable to rule on the merits of the revocatory action. Accordingly, we remand this claim to the trial court for its consideration. If the court has already found that a breach occurred, a hearing on the merits of the claim should be held.
The judgment of the trial court dismissing the antitrust claims of LP & L against United and Pennzoil is affirmed. The judgment dismissing LP & L's revocatory action against Pennzoil is reversed and the issue is remanded to the lower court for further proceedings consistent with this opinion and the law.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED IN PART.
. See: Handler and Smart, "The Present Status of the Intracorporate Conspiracy Doctrine", 3 Cardozo Law Rev. 23 (1981), for a good discussion of this case law.
. A thorough discussion of this doctrine and the problems it fostered can be found in Areeda, "Intraenterprise Conspiracy in Decline", 97 Harvard Law Rev. 451 (1983). See also Willis & Pitofsky, "Antitrust Consequences of Using Corporate Subsidiaries", 43 N.Y.U. Law Rev. (1968) and Note, "Conspiring Entities" Under Sec. 1 of the Sherman Act, 95 Harvard Law Rev. 661 (1982).
. See Areeda, supra, at 462-69 for a discussion of how Federal Courts have used these factors to modify the application of the intra-enterprise conspiracy doctrine in pre-Copperweld cases.