Opinion ID: 522307
Heading Depth: 3
Heading Rank: 1

Heading: Vertical price-fixing.

Text: 11 In order for a complaint to adequately state a vertical price-fixing violation (AKA resale price maintenance), plaintiff must allege at least some facts which would support an inference that the parties have agreed that one will set the price at which the other will resell the product or service to third parties. See Albrecht, 390 U.S. at 149, 88 S.Ct. at 871; Sitkin Smelting & Ref. Co. v. FMC Corp., 575 F.2d 440, 446 (3d Cir.), cert. denied, 439 U.S. 866, 99 S.Ct. 191, 58 L.Ed.2d 176 (1978) (violation is agreement to fix the price to be charged in transactions with third parties, not between the contracting parties themselves). The critical determination is whether the agreement deprives a trader of the ability to exercise its own judgment in making independent pricing decisions. World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467, 1476 (10th Cir.), cert. denied, 474 U.S. 823, 106 S.Ct. 77, 88 L.Ed.2d 63 (1985) (quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 762, 104 S.Ct. 1464, 1470, 79 L.Ed.2d 775 (1984)). 12 At best, Cayman alleged that United endeavored to coerce sellers (including Cayman) to accept lower than contract prices by systematically refusing to honor contractual take-or-pay clauses and by purchasing natural gas from Canadian suppliers. The district court noted that Cayman made no allegation that United was restricting resale prices to consumers, only that United attempted to fix the price stated in the gas purchase contract. We conclude that these allegations state a claim for breach of contract, but are insufficient to state a claim of vertical price-fixing. The district court correctly refused to transform a state breach of contract claim into a per se violation of federal antitrust laws. 13 Not only is there no per se violation under existing precedent, we hold that this case does not warrant the extension of per se illegality to United's alleged activities. The test for determining whether an alleged business practice not previously covered by per se illegality is a per se violation is whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output ... or instead one designed to 'increase economic efficiency and render markets more, rather than less, competitive.'  Broadcast Music, Inc., 441 U.S. at 19-20, 99 S.Ct. at 1562 (quoting United States v. United States Gypsum Co., 438 U.S. 422, 441 n. 16, 98 S.Ct. 2864, 2875 n. 16, 57 L.Ed.2d 854 (1978)). The per se rule's conclusive presumption that the restraint is unreasonable should not be applied to a challenged practice until experience with a particular kind of restraint enables the Court to predict with confidence that the rule of reason will condemn it. Arizona v. Maricopa County Medical Soc'y, 457 U.S. 332, 344, 102 S.Ct. 2466, 2473, 73 L.Ed.2d 48 (1982). Consequently, before this court adopts a per se classification for the conduct of which Cayman complains, we must apply the Rule of Reason. National Soc'y of Professional Eng'rs v. United States, 435 U.S. 679, 688, 98 S.Ct. 1355, 1363, 55 L.Ed.2d 637 (1978) (The Rule of Reason focuses directly on the challenged restraint's impact on competitive conditions.). 14 Here, Cayman has failed to allege any facts in support of its claim that United's actions have an anti-competitive market effect. Cayman did not allege that United attempted to force producers to accept less than market price; only that United attempted to force producers to accept less than contract price. Breach of contract is not inherently anti-competitive, and may, in fact, be economically efficient in certain circumstances. In those cases, contract law provides adequate remedies for the disruption of the non-breaching party's reasonable expectations. As we have previously stated, [w]e adhere to the view that the antitrust laws should not restrict the autonomy of independent businessmen when their activities have no adverse impact on the price, quality and quantity of goods and services offered to the consumer. Westman Comm'n Co. v. Hobart Int'l, Inc., 796 F.2d 1216, 1220 (10th Cir.1986), cert. denied, --- U.S. ----, 108 S.Ct. 1728, 100 L.Ed.2d 192 (1988). 15