Opinion ID: 2452031
Heading Depth: 2
Heading Rank: 1

Heading: A. Poultry Farms, 881 F.2d at 1401-02.

Text: Not only is evidence of subjective intent misleading to the jury, but it also leaves a standard that is too vague for businesses to follow. Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227, 232 (1st Cir. 1983). In the absence of a clear standard, business will tend to err on the side of keeping prices high and consumers will be the ultimate losers. Id. This result is contrary to the purpose stated in section 15.04 of the Texas Antitrust Act. The legal environment for small business is tough enough. An antitrust standard which focuses on whether a seller had improper thoughts about its competitors only makes the legal environment worse. A test focusing on conduct provides a much more certain guideline for business. In addition to applying an incorrect standard, the court of appeals improperly combined a showing of predatory pricing with a showing of what is required to obtain treble damages. Section 15.21(b) of the Texas Antitrust Act provides that the trier of fact must award treble damages if the unlawful conduct was willful or flagrant. Tex.Bus. 15.21(a)(1). The requirement of willful or flagrant conduct to treble damages is above and beyond what is required to prove predatory pricing. It is improper to combine the requirements of section 15.21(a)(1) into the elements of the test for predatory pricing under section 15.05(b). We are not presented with and do not address the question of what is appropriate proof of willful or flagrant conduct for purposes of section 15.21(a)(1). [27] We therefore adopt the following test for predatory pricing: (1) the seller has an objectively reasonable expectation of recouping its losses due to the alleged predatory pricing by charging higher prices later, that is, the predatory pricing is economically feasible; and (2)(a) the price charged is below average variable cost; or (b)(i) there are substantial barriers to market entry; (ii) the seller is charging a price below its short-run profit-maximizing price and its average total cost; [28] and (iii) the benefits of the seller's price depended on its tendency to discipline or eliminate competition and thereby enhance the firm's long-term ability to reap the benefits of monopoly power.