Document: 394 U.S. 495 89 S.Ct. 1252 22 L.Ed.2d FORTNER ENTERPRISES, INC., Petitioner,v.UNITED STATES STEEL CORP. et al. No. 306. Argued Jan. 23, 1969. Decided April 7, Kenneth L. Anderson, Louisville, Ky., for petitioner. Macdonald Flinn, New York City, respondents. Mr. Justice BLACK delivered the opinion of Court. 1 This case raises a variety questions concerning proper standards to be applied by United States district court in passing on motion summary judgment civil antitrust action. Petitioner, Fortner Enterprises, Inc., filed this suit seeking treble damages and an injunction against alleged violations §§ 2 Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. 1, 2. The complaint charged that respondents, Steel Corp. its wholly owned subsidiary, Homes Credit Corp., had engaged contract, combination, conspiracy restrain trade monopolize sale prefabricated houses. It there was continuing agreement between respondents 'to force corporations individuals, including plaintiff, condition availing themselves services Corporation, purchase at artificially high prices only * *.' Specifically, petitioner claimed order obtain loans totaling over $2,000,000 from development certain land Kentucky, area, it been required agree, loans, erect house manufactured each lots purchased with loan proceeds. Petitioner materials were then supplied unreasonably proved defective unusable, thus requiring expenditure additional sums delaying completion date development. sought profits lost, along decree enjoining enforcing requirement use houses Steel. After pretrial proceedings which number affidavits answers interrogatories filed, District Court entered holding petitioner's allegations failed raise any question fact possible violation laws, 293 F.Supp. 762. Noting involved here essentially tying arrangement, under purchaser take tied product—here homes—as being allowed credit, Judge held establish prerequisites illegality our cases, namely sufficient market power product foreclosure substantial volume commerce product. Appeals affirmed without 6 Cir., 404 F.2d 936, we granted certiorari, 393 820, 126, 21 92 (1968). Since find no basis sustaining judgment, reverse proceed trial. 3 We agree conduct challenged primarily involves arrangement traditional kind. sold credit Division Our cases have made clear that, least when are met, arrangements kind illegal themselves, specific showing unreasonable competitive effect is required. discussion Northern Pacific R. Co. v. States, 356 5-6, 78 514, 518, 545 (1958), dispositive question: 4 '(T)here agreements or practices because their pernicious competition lack redeeming virtue conclusively presumed therefore elaborate inquiry precise harm they caused business excuse use. 5 '* Where (tying) conditions successfully exacted merits respect inevitably curbed. Indeed 'tying serve hardly purpose beyond suppression competition.' Standard Oil California 337 293, 305-306, 69 1051, 1058, 93 L.Ed. 1371. They deny competitors free access product, not party imposing requirements has better lower price but his leverage another market. At same time buyers forced forego choice competing products. For these reasons fare harshly laws forbidding restraints trade.' Times-Picayune Publishing 345 594, 606, 73 872, 879, 97 1277. whenever economic appreciably 'not insubstantial' amount interstate affected. International Salt 332 392, 68 12, 20.' (Footnote omitted.) Despite recognition strict standard, even out jury. did 'sufficient power' here, although Corp.'s terms evidently uniquely attractive petitioner, enjoyed unique attractiveness contr l generally. also affected 'insubstantial' very small percentage available area foreclosed sellers contract think plain misunderstood two controlling misconceived extent authority evaluate evidence ruling judgment. 7 A preliminary error should pass unnoticed Court's assumption mentioned must meet prevail merits. On contrary, necessary bring into play doctrine per se illegality. found satisfied Pacific, 20 (1947), approved defendants means implied inability satisfy would fatal plaintiff's case. plaintiff can still he prove, more thorough examination purposes effects involved, general Act violated. Accordingly, if could further conspired together restraining acquiring monopoly And such rarely justify claim kind, said Poller Columbia Broadcasting, 368 464, 473, 82 486, 491, 458 (1962): 8 'We believe procedures used sparingly complex litigation where motive intent leading roles, proof largely hands conspirators, hostile witnesses thicken plot. present subject cross-examination credibility weight given testimony appraised. Trial affidavit substitute trial jury so long hallmark 'even handed justice." 9 need consider, however, whether entitled theory, raised which, trial, within scope doctrine. makes reference particular share tie, hence approve judge's conclusions issue agreed definition relevant one.1 An analysis shares might become apparently dollar-volume actually represented part sales bidding. But normally consideration simply total business, enough merely de minimis, Salt, 'unreasonable, se, foreclose market' 396, 15. 10 leave room doubt allegedly substantial. may true, claim, annual purchases never exceeded $190,000, while than $500,000 cannot sum almost $200,000 paltry 'insubstantial.' In event, narrow focus contracts appropriate context. As special provision awarding successful plaintiffs illustrates, Congress encouraged private compensate those who directly injured vindicate important public interest competition. See Perma Life Mufflers Parts 392 134, 138—139, 88 1981, 1984, 982 determining too insubstantial warrant prohibition practice, therefore, figure policy challenge, portion accounted brings suit. all purchasers, brought Government practice generally, less worthy judicial scrutiny one individual fraction sales. case, respondents' throughout country totaled $4,000,000 1960, $2,800,000 1961, $2,300,000 1962. These amounts scarcely regarded insubstantial. 11 standard does not, held, require defendant dominant position tie-in unmistakably though falls far short dominance exists some See, e.g., Salt; Pacific; Loew's 371 38, 83 97, (1962). 45, 102: 'Even absent dominance, crucial inferred product's desirability consumers uniqueness attributes.' 12 decisions rejecting truly based generally served legitimate achieved restrictive way, presence appreciable restraint provides reason invalidating tie. Such results seller exert market, complete them other fact, concept mind, exist pure monopoly. Market usually stated ability single restrict output, reduced output inevitable result higher prices. Even monopolist seldom losing sales; many will cease buy less, rises. source serious concern reason, regardless greatest lesser degree power. both instances, despite freedom seller's power, buyers—whether few many, scattered group market—can accept stronger preferences choose instead prevent patronage prices, impose burdensome tie-in, 13 put forward clearly entitle day standard. construction company president built conventional homes $400 Steel's comparable models. freely situation obligating going rate, differential (prefabricated houses) itself suggest addition, president, A. B. Fortner, accepted solely offer provide 100% financing, lending equal full acquired, unusually advantageous him. He financing corporation cheap during 1959—1962 period. His views supported finance Louisville type plan offered 'was Enterprises potential borrower through Mortgage Service Company institution mortgage affiant's knowledge period.' 14 do mean apparent argument 'unique unusual.' mean, reflect creditor's advantages competitors.2 disfavored, Poller, supra, claims read light most favorable well subsidiary rates. show three-to-four-year period financial willing match rates possibility decline property values, difficulty recovering value sale, desirable creditor collateral greater secures, unwillingness institutions probably reflects feeling profitably lend money risks involved. hand, advantage providing economies resulting nationwide character operations. banks savings associations prohibited offering state federal law.3 Under circumstances pleadings sufficiently disclose borrowers go issue. be, course, sustained goes turn serves record before us impossible reach matter law, function speculate ultimate findings fact. conclude 16 Brief reflected affected, involving normal principles. support this, every argue form equivalent reduction cash Consumers say, deprived services, suffer tangible obtained elsewhere combined credit-product package cost purchasing components separately. 17 All arguments claim—namely, somehow manufacture goods ever selling credit. effect. There is, outset familiar physical goods, problem separate products usual seller, corporation, how much paid constitute inseparable item entire transaction considered involve arises. Sales cry provided corporation,4 large above needed pay produ ts purchased. Whatever exactly 'single product,' see 18 Nor anything distinguish kinds may, products, extend new markets asserted justifications tie different advanced service commodity. Although viewed terms. achieve purpose, extending reducing itself.5 19 buyer buying commodity separately, win customers otherwise constituted producers '(C)ompetition curbed.' 6, 545. assumed purchase, able anyone else strong preference eliminate him lay personal funds, borrow relatives, up collateral, guarantors, expedients chosen producer captured arrangement. barriers entry since, sell buyers, strength larger arrangements. If companies scale operations, course exploit legitimately lowering charges only, lines produces efficiently competitors. treating differently principle services. fungible commodity—like wheat or, matter, unfinished steel—credit markets, like often imperfect, easy big vast treasury wield tie-ins cause evils always intended prevent, crippling equally, more, efficient producing own Therefore, inquiries factors treatment justified rather reversed, remanded directions let 23 Reversed remanded. 24 WHITE, whom HARLAN joins, dissenting. 25 judicially developed proscription commonly understood this: ties availability violates § affects quantity defines invoke rule. Prior guidance dispositive. Admittedly, 608-611, 1277 (1953), necessary; 11, 521, (1958). indicated 102, (1962), 'the purport abandon rule essential violation. applies permit extension conditioned itself. extended built, logic dictates themselves. Proscription departs established my view outlawed Act. Provision nothing vigorous nearly approaching encourage. Moreover, distinct price. facilitate competition, since risk working capital entrepreneurs businessmen, majority's away retaining form, inappropriate. I dissent. 27 prove product—money. sense unique, furnished repaid advantageous, indeed equally good principally interested houses, economical housing project. Before concluding hich amounted provider mind rationale based. 28 cases1 among commentators2 fundamental meant guard attain another, distort second distortion injures brand first make optimal second. customer indifferent brands loses agreeing get first,3 work significant toward product4 and, forecloses difficult firms enter prepared existing quality, offset attraction simultaneous production significantly expensive simple shifting habits considerably cumbersome responsive variations offers.5 addition anticompetitive evade control clandestine transfer profit product;6 counting device discrimination;7 line customer8 extract easily return line.9 29 distortions depend upon existence quite apart relationship bear what alleged? Only product—money—was terms, perhaps all. Let consider possibilities turn. 30 First, price, loss, repayment surely measure about except low ordinarily reflection proves neither nor absence, absence reasonable inference. One benefits precisely allows them, so. 31 product—money, counter—is especially poor untied elsewhere. functionally sold. elsewhere, compare houses-credit united plus source. By cutting competitor compete point forgo sacrifice why cut prefers. 32 common event American economy. Often supply needs large, restricts purchasers selling. another. majority opinion, mere him, buyer, then, casts great sellers. proscribe independently demonstrable Unlike majority, am unable affidavits, fruit years discovery, independent whatever power.10 33 Second, adopting assumption, enterprise unavailable all, worse. Were Steel, carry finds acceptable engaging hard risky so, survival growth initiation enterprises fail sources. Of market—which assert—the illegal. others r latively acceptance risk. 34 Neither asserts prior violated Clayton Act11 contracted develop tract here—a development—even particularly advantageous. What triggers application transactions trade. patented, supply. reasonably apparent. buyers' tie-in—the customers—will suffice exercises prefer offers terms—where gives merchandise—the Buyers burdened. restrained. matched Promotional effected underpricing exercise unless resources withstand margins willingness manner suspect. are, taint muffle itself, violation, 35 join evisceration shown becomes 1. Certainly unnecessary ban promotional protect exclusion significance threaten reached Act.12 discrimination, examined statutes designed purpose.13 dealt unfair method Federal Trade Commission 38 719, 45. example, Hastings Mfg. FTC, 153 253 (C.A.6th Cir.), cert. denied, 328 853, 66 1344, 90 1626 (1946), was, inter alia, piston rings, ranking sixth seventh industry, attempt exclusive dealers preferential guaranteeing making rings. Relying expertise FTC precedents Court, concluded 'is manufacturer retail outlets,' F.2d, 257 (a proposition called today's decision) dealing 36 principal evil aims acquire in, distort, money, completely item. apply Cutting likely Those real deals customers; 37 say inapplicable, necessarily suppliers manipulate conspiracy, parallel behavior. Through existed, sort, coupled However, lowered supplementary proof. FORTAS, STEWART 39 Brother WHITE'S general, subscribe opinion. add statement 40 facts materially heretofore decided. originated situations B seller. leased patented machines lessee International's salt machines. railroad holdings 'preferential routing' clauses compelling ship railroad's commodities produced 41 language 'goods, wares, merchandise, machinery, supplies, commodities,' land. effect, theory difference immaterial. exclusively proceeding. But, leasing thereon. facts, controlled economically demarcated 'market,' however defined, governed Pacific. steel erected subdivision acquisition, improvement, development, erection costs. Most related installation 42 venture. building constituting owner sense. agrees entirely ancillary sort advances geared progressive stages erection, resale 43 approached Fortner's owned. October after lengthy discussions, offered, $2,000,000. secured mortgages lots. notes carried 6% interest, 'Service Fee' 1/2 1% notes. Provisions insure funds progressively acquisition (from company), improvement preparatory construction, obligated lot advanced, $1,700,000 disbursed balance 44 holds 'tying' agreement, extraordinarily onerous incidents attached well. 45 agree. incidental financing. deal 46 WHITE shows, treat depart existence. factual pattern described basis—i.e., trend create product—the machine, copyrighted film, land—to To 'leverage' article costs connected doctrine, indeed, convert instrument penalizes 47 inconceivable arise outlaw combination might, situations, 'unfair methods competition' discrimination furnishing discriminatory Broth suggests. rely actualities sweeps ban.* 48 novel extension—this distortion, it—of destructive. economy distributor franchisee enable handle retail, rent facilities, fixtures machinery connection distribution prepare public. conceivable, businessman receiving seller-lender's unlawful banking area. Arrangements run frequently, characteristically, represent indispensable distributive trades, until today unlawful. Cf. 315, 321, 1062, 1371 (1949) (separate Douglas, J., dissenting Jackson, J.). 49 respect, associated developing subdivision, view, subordinated Corporation operate comparatively low. prospective intimately end object Division. 'sale.' 50 limited provisions impact limited. Almost modern sale—delivery, installation, supplying fixtures, servicing, training customer's personnel material sold, display aids, Customarily lmost invariably—the bargain condemn out-of-hand rubric, suggest, 51 reasons, judge thought undeveloped county longer open sites p oducers built. insignificant .00032%. numerous vacant legally consolation once demand pre-empted seems Uniqueness confers way prevented distinctive legal, Loew's, physical, land, true economic, produce profitably, test somewhat confusing it. Reserve 24, 273, 371; CFR 545.6-14(c). Mufflers, U.S., 141-142, 982; Timken Roller Bearing 341 593, 598, 71 971, 974, 95 1199 (1951); Kiefer-Stewart Seagram & Sons, 340 211, 215, 259, 261, 219 Yellow Cab Co., 218, 227, 67 1560, 1565, 91 2010 (1947). reductions structure objective fringe E.g., 44-45, (1962); 6-7, 519, (1958); Pub. 611, 881, (1953). Report Attorney General's National Committee Study Antitrust Laws 145 (1955); Austin, Tying Arrangement: Critique Some Thoughts, 1967 Wis.L.Rev. 88; Bowman, Leverage Problem, Yale L.J. (1957); Day, Exclusive Dealing, Reciprocity—A Reappraisal, Ohio St.L.J. 539, 540-541 (1968); Turner, Validity Laws, 72 Harv.L.Rev. 50, 60-61 Theoretically, tier little position. exact maximum people definition, went lose customers. refuses link works magic. extracting Burstein, Theory Full-Line Forcing, 55 Nw.U.L.Rev. 62 (1960), marginal guaranteed refusal text, beneficial originator. uses underwrite below second, profitable. remains incentive nonetheless thinks well, permitting later fear recoup foregone. just firm whose deep pocket stems takeover, allow than, to, tier's restriction 19, 21—23 (1957). Id., 23-24. (1960). Tie-ins times Apart discussed text following. fields wedded habit custom. Brown Shoe 370 294, 330, 1502, 1526, 510 Note, Newcomer Defenses: Reasonable Use Tie-ins, Franchises, Territorials, Exclusives, Stan.L.Rev. 457 (1966). retaliation reputation failure conjunction misfunction. Compare Business Machines 298 131, 138-140, 56 701, 705, 80 1085 (1936), 306, (1949), Pick General Motors 641 (C.A.7th Cir. 1935), aff'd, 299 3, 57 81 (1936). And, tried related, reduce joint distribution. flow tie-ins, affirmative defense, avoid imposition proscription, demonstrated. market-power eliminated, do, absolute dimensions, unmitigated borne mind. inconsistent 'possibility ability.' taking notice operated legal lenders financing—a petitioner—the suggests element detailed description facet information whole relevant. remand applicable 731, 14. proscribed relate Robinson-Patman Price Discrimination seq. learn determined parts suggested stage pleadings. 'legitimate purposes' 'competitive advantage' (ante, 506) defense. earlier says explicitly 'it doctrine.' (Ante, 500-501.) sentence determines range issues background attacked effects, any, subsidiary's demonstrated automatic

Category: 7