Opinion ID: 399387
Heading Depth: 3
Heading Rank: 1

Heading: Statutory Considerations

Text: 24 To find a violation of the antitrust laws, the actions complained of here must first be shown to have an anticompetitive effect in the marketplace. See pp. 1046-1048 infra. Also, with respect to allegations of conspiracy and attempts to monopolize, specific intent must be shown. Hunt-Wesson Foods, Inc. v. Ragu Foods, Inc., 627 F.2d 919 (9th Cir. 1980); Carpet Seaming Tape Licensing Corp. v. Best Seam, Inc., 616 F.2d 1133 (9th Cir. 1980); International Railways of Central America v. United Brands, 532 F.2d 231 (2d Cir.), cert. denied, 429 U.S. 835, 97 S.Ct. 101, 50 L.Ed.2d 100 (1976). In addition to conspiracy and attempt, Costello has alleged concerted refusals to deal, boycott, restraints on competition, and allocation of markets in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2, and the Wilson Tariff Act, 15 U.S.C. § 8. It is now clear, however, that easy labels do not always supply ready answers. Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., et al., 441 U.S. 1, 8, 99 S.Ct. 1551, 1556, 60 L.Ed.2d 1 (1979). At any rate, the actions involved here do not fit neatly into any of the categories heretofore easily identified as antitrust violations. Although some actions, which resemble in certain respects those alleged here, have in the past been labeled per se violations of the antitrust laws, see, e.g., United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967) (hereinafter Schwinn ) (allocation of exclusive marketing territories held per se illegal under antitrust laws); Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959) (group boycott labeled per se illegal), more recent cases suggest that the economic realities of the market and consumer welfare guide antitrust inquiry. 18 25 The BCL does not operate on the same market level as the retail distributors; and the distributors do not operate on the same market level as Costello. The Church and the retailers, and the retailers and Costello share vertical relations. The retailers do not appear to have anything to gain by boycotting the accused book and it might be suggested that they are in the best position to mediate the market impact of the BCL's memorandum. The relationship between the BCL and the retailers, as far as it appears, may be less restrictive than exclusive franchise systems, which have been sanctioned by the Supreme Court. 19 However, Costello and defendant-intervenors are horizontally as well as vertically related and, for example, a case of predation may be successfully established. See Bork at 144-60. The American Church has a financial interest in the sale of ICEL translations, J.A. 1591, 1604-05, which may be undercut by sales of Costello's books. However, it is at least problematical whether a financial interest sufficient to suggest predation has yet been shown. Further, Memorandum 5, 20 sent by the BCL to various retailers, requesting that they not purchase the accused book for resale, did not explicitly threaten reprisals for rejecting the request, nor did it advocate a complete boycott of Costello's other merchandise. 21 It remains for the district court to find precisely what the practical effect of the memorandum on the retailers was. 26 In presenting its antitrust case so far, Costello has noted that the Catholic Church and the BCL have great market power. But it is unclear whether that power has been abused. Abuse has been suggested by pointing to reciprocal agreements between various conferences. J.A. 1573, 1575, 1580. But the conferences are themselves merely departments of a worldwide organization. The official Church authorization, without which publishers may decide not to export their books, may be simply an endorsement, which publishers are free to solicit and which the BCL is free to award. Seen in that light, authorization has a value that is traded in consideration for the publication or distribution of books that meet a certain standard. If the value of Church authorization is outweighed by the cost of the restrictive standards, publishers and distributors are free to pursue their interest without the Church. Similarly, if the price the BCL extracts from retailers by requesting that unapproved books not be sold, exceeds the value of authorization, the retailers might refuse the request. Assuming that the Catholic Church had a financial interest in every approved book and asked religious goods retailers not to sell unapproved books, retailers might not be willing to pay the full monopoly price for the approved books and accept the restriction as well. The monopoly rent can be extracted only once. See generally, Bork at 107-33. If market power is completely represented by the cost of the product, further cost in the form of a restriction could not be imposed. 22 27 Although, when given the opportunity to develop its antitrust case Costello may be able to demonstrate anti-competitive forces, the case has yet to be made. Since summary judgment was granted on grounds of a religious exemption, we are unable to say that the case cannot be made. On remand it is critical that the district court make complete findings on the nature of the communications between the Church and retail book distributors involved in this case. Such findings are essential to an ultimate assessment not only of whether an antitrust violation has taken place, but also of whether an antitrust exemption can be justified.