Opinion ID: 500777
Heading Depth: 3
Heading Rank: 2

Heading: Gasco's 1982 Marketing Campaign

Text: 36 The jury found that Gasco's 1982 campaign to offer cut-rate contracts to large propane purchasers was anticompetitive and predatory. Oahu defends this result on the ground that Gasco made false 'offers' without ever intending to compete for that business. Gasco disputes the finding of predatory conduct, arguing that it had the absolute right to offer reduced prices so long as those offers were not shown to be below costs or shown to be predatory by clear and convincing evidence. 37 The parties' legal dispute may be summarized as follows. Neither party argues that Gasco set prices below its costs for the purposes of alluring Oahu's customers. The allegation of exclusionary conduct is not founded, therefore, on a theory of predatory pricing. Rather, Oahu's claim is that the insincerity or sham nature of Gasco's offers is sufficient to support a finding of predatory conduct. 38 The first question--whether the offers were shams--may be disposed of quickly. Reviewing the factual evidence in this appeal from a denial of a JNOV motion, we draw all reasonable inferences in Oahu's favor. The jury having returned a general verdict, we must presume it to have accepted Oahu's claim that Gasco's offer of cut-rate contracts were shams. This finding was reasonably supported by the evidence. The jury heard evidence, for example, that most of the customers of Oahu Gas that Gasco solicited were known to have long-term contracts with Oahu that they would be unlikely to break. A Gasco employee testified, moreover, that when making an offer to an Oahu customer, she invited the customer to ask Oahu to meet or beat the offered price-cut. This testimony provides support for an inference that Gasco's true goal was not to attract customers, but to cut into Oahu's profits. Oahu also offered evidence, which we must presume the jury found credible, that Gasco did not make the same offers to its own customers as it did to Oahu's. This evidence, taken in full, is substantial enough to sustain Oahu's claim that Gasco's offer did not reflect a business risk on its part but only constituted a ploy to entice Oahu to lower its prices. 39 The harder question is whether this sham offer violated Sherman Act Section 2. Although the evidence supports the jury's finding of a predatory intent underlying Gasco's marketing campaign, the net result of this campaign seems to have been to increase competition in the market by inducing Oahu to lower its prices. Thus, we have before us a situation in which conduct with a predatory rationale had a procompetitive effect. 40 In order to sustain the jury's finding of predation, we would have to turn our back on a large body of case law holding that [t]he test of willful maintenance or acquisition of monopoly power is whether the acts complained of unreasonably restrict competition. Drinkwine v. Federated Publication, Inc., 780 F.2d 735 (9th Cir.1985), cert. denied, 475 U.S. 1087, 106 S.Ct. 1471, 89 L.Ed.2d 727 (1986). Here, there was no restriction on competition, let alone an unreasonable restriction. To be sure, Gasco's intent is not irrelevant to the inquiry. See id. (citing Aspen Skiing, 472 U.S. at 602-03, 105 S.Ct. at 2857) (Intent must also exist but is subsumed in an analysis of the exclusionary conduct). But a finding of anticompetitive intent will not sustain a Section 2 claim in the face of evidence of procompetitive effects. 41 This analysis should not be taken as an endorsement of Gasco's conduct. A campaign to harm or destroy rivals through deceptive marketing smacks of unfair competition, whose hallmark is harm to competitors. In seeking to induce Oahu's clients to abandon Oahu or to force Oahu to accept lower profits, Gasco engaged in activity that in some jurisdictions is actionable under the law of torts. 42 The goal of the antitrust laws, however, unlike that of business tort or unfair competition laws, is to safeguard general competitive conditions, rather than to protect specific competitors. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977). Professors Areeda and Turner, in their discussion of the antitrust liability of firms that engage in unfair competition, stated in a passage of particular relevance here: 43 [W]hile it may be a tort for a defendant to induce another to deal in violation of his contract with the defendant's rival, it should not be an exclusionary practice. Buying an employee away from a rival, for example, does not impair competition any more when that employee was under a long term contract than when he was not. The competitive effect, if any, results from the transfer of resources or patronage away from the rival and to the monopolist.... If there is a tort, so be it. But antitrust law should not make liability depend upon the existence or nonexistence of contracts which do not affect the competitive results. 44 3 P. Areeda & D. Turner, Antitrust Law p 7381 (1978). 45 We reverse the jury's finding of antitrust liability growing out of Gasco's 1982 marketing campaign. The undisputed evidence in the record that this campaign resulted in no anticompetitive effects precludes a finding of liability even though we accept the jury's conclusion that Gasco intended the campaign to harm Oahu and thereby to increase its market share.