Legal Document

365 U.S. 320 81 Supreme Court Reporter 623 5 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 580 TAMPA ELECTRIC COMPANY, Petitioner,v.NASHVILLE COAL COMPANY et al. Number 87. Argued Dec. 15, 1960. Decided Feb. 27, 1961. Mr. William C. Chanler, New York City, for petitioner. Abe Fortas, Washington, D.C., respondents. Justice CLARK delivered the opinion of Court. 1 We granted certiorari to review a declaratory judgment holding illegal under § 3 Clayton Act1 requirements contract between parties providing purchase by petitioner all coal it would require as boiler fuel at its Gannon Station in Tampa, Florida, over 20-year period. 363 836, 80 1612, 4 1723. Both District court, 168 F.Supp. 456, and Appeals, 276 Federal Reporter, 2nd 766, Judge Weick dissenting, agreed with respondents that fell within proscription therefore was unenforceable. cannot agree suffers claimed anti-trust illegality2 and, therefore, do not find necessary consider respondents' additional argument such illegality is defense action bar enforceability. 2 Petitioner Tampa Electric Company public utility located Florida. It produces sells electric energy service area, including city, extending from Bay eastward 60 miles center State, some 30 width. As 1954 operated two electrical generating plants comprising total 11 individual units, which consumed oil their burners. In 1955 decided expand facilities construction an plant be comprised ultimately six known 'Francis Station.' Although every peninsular Florida burned time, try first units constructed Station. Accordingly, contracted respondents3 furnish expected units. The agreement, dated May 23, 1955, embraced Electric's 'total * operation installed less than 225,000 tons per unit year,' period 20 years. further provided 'if during 10 years term Buyer constructs (at Gannon) used fuel, shall give Seller notice thereof prior completion or upon same added this contract.' understood agreed, however, 'the has option exercised said determining whether other same.' had reducing, up 15%, amount purchases covered after giving months' intention use by-product any local customers. minimum price set $6.40 ton delivered, subject escalation clause based on labor cost factors. Deliveries were originally begin March 1957, unit, second construction. April soon before actually Electric, order equip coal, expended $3,000,000 more constructing oil-burning approximately $7,500,000 readying themselves perform contract, latter advised antitrust laws, performed, no delivered. This turn events required look elsewhere requirements. began operating August 1, using purchased temporary basis, but December made Love Amos Coal Company. indefinite cancellable 12 either party, immediately tender performance sued here. maximun $8.80 ton, depending freight rate. Company, estimated 350,000 1958; 700,000 1959 1960; 1,000,000 1961; increase thereafter, required, 'about 2,250,000 year.' commenced 14 months first, i.e., October 1958. Construction third have been original also begun. record indicates consumption 1958, aside Station, annually. shows there 700 suppliers producing area where operated, anticipated maximum 2,250 annually, approximate 1% type produced marketed area. brought suit pursuant 28 Code KF62 2201, Annotated KF65 U5 declaration valid, enforcement according terms. addition Act defense, contended violated both §§ Sherman which, claimed, likewise precluded enforcement. Court, motion summary sole ground undisputed facts, recited above, showed violation Act. Appeals agreed. Neither court found applicability 6 Decisions Appeals. 7 courts admitted 'does expressly contain 'condition" (276 771) deal competitors. Nonetheless, they reasoned, requirements' provision practical effect, prevented buying source station. Each cast 'irrelevant' arguments citing stations, utilities because fact possibility exercise reserved build too remote. Found equally remote Tampa's conversion existing stations followed, found, 'line commerce' (168 460) restraint tested coal—not fuels. compared tonnage pre-empted competition years, namely, year 1961, previous annual tons. Emphasizing well value term, $128,000,000, held volume 'insignificant insubstantial' effect 'be substantially lessen competition,' view executory nature judicial portion could without directing itself, was, denied.4 8 almost half century since Congress adopted Act, called times,5 present, pass questions arising 3. Standard Fashion company versus Magrane-Houston Co., 1922, 258 346, page 356, 42 360, 362, 66 L.Ed. 653, cases, 'sought reach agreements sphere incipiency, section consideration determine legality specific tests own *.' sum, declared, condemned sales 'where sale circumstances disclosed probably competition, create actual tendency monopoly.' pages 356—357, 362. say, emphasized, intended 'remote lessening' only those substantial—but did draw line 'remote' ended 'substantial' began. There evidence, activities two-fifths Nation's 52,000 pattern agencies affected challenged device. Then, one week later, followed Shoe Machinery Corporation States, 451, 363, 708, even though does 'not (goods) competitor,' if prevent use,' comes condition exclusivity. 457, 365. held, Fashion, supra, finding domination relevant market lessor seller sufficient support inference lessened contracts involved there. time seemed clear effect' lessee buyer products competitor thereby commerce, proscribed. A quarter International Salt 1947, 332 392, 68 12, 92 20, least tying necessity direct proof economic impact established business affected' 'to foreclose competitors substantial market.' 396, 15. Oil 1949, 337 293, 69 1051, 93 1371, again considered application exclusive supply or, are commonly known, contracts. proscribed lessees purchasers dealing goods, etc., 'competition foreclosed share commerce affected.' 314, 1602. 9 application, exclusive-dealing arrangement, violate unless believes probable will affected. Following guidelines earlier decisions, certain considerations must taken. First, wares, merchandise, determined, controversy, basis facts peculiar case.6 Second, effective charted careful selection operates, purchaser can practicably supplies. short, threatened foreclosure relation supra: 'It clear, course, need nationwide, cannot, matter, outside quantitatively given industry's assumed covered, sources industry whole particular region, purely quantitative measure inadequate narrower greater comparative area's Since preservation stake, significant proportion coverage competition.' 299, note 5, 1055. case, market—was 75 sold petroleum products. Conveniently identified Western Area, included Arizona, California, Idaho, Nevada, Oregon, Utah Washington. Similarly, Columbia Steel 1948, 334 495, 1107, 1533, competitive Consolidated products, States. Consolidated's nationwide rolled steel 1/2 1%, fraction market,' 508, 1114; narrow market, 3%, described 'a small part,' 511, 1116, injure elsewhere. Third, last, constitute market. That opportunities traders enter into remain significantly limited pointed out supra. studied setting large number gasoline stations—5,937 16% retail outlets market—and contracts, 8,000, together great involved. combination dictated 'Standard's (created) just potential clog purpose remove' where, there, substantial. 1062. we noted substantiality judged part' when weighed against product 13 To weigh taking account relative strength parties, proportionate immediate future effects pre-emption might therein. follows mere showing itself involves dollars ordinarily little consequence. Application Here. 15 applying these case us, appears controlling factor case—the omission, requires reversal, for, out, prime ultimate question, forecloses involved, decided. For purposes decide threshold pressed Electric. They satisfies initial requirement 3, truly one, secondly, fuels, gas, rather alone.7 We, assume, decide, arrangement compass bituminous coal. 16 nor detail question seem, satisfied inquiring 'Peninsular Florida.' year, about equal accounted 6% entire State.8 concluded producers who serve excluded trade. Respondents contend Bituminous Georgia 'finger,' most, Georgia. If proposed 18% says error, '700 serve' it, recognized trial respondents, Appalachian production producers; willing compete consumer potential. 17 persuaded neither State combined constituted competition. believe pie slice so thinly. By far bulk overwhelming serves 'eager' sell States.9 While susceptible 'metes bounds' definition, cf. Times-Picayune Pub. 345 594, 611, 73 872, 881, 97 1277, course effectively compete. that, like 'suitable (Tampa's) requirements,' mined parts Pennsylvania, Virginia, West Kentucky, Tennessee, Alabama, Ohio Illinois. take (and lignite) districts 359,289,000 tons, 290,567,000 open market.10 Of 78,716,000 utilities.11 2,304,000 1,100,000 utilities, mines seven States.12 marketing districts, assumedly available commercially feasible currently par years.13 point statistical fact, Florida-Georgia increased 1954. 3,775,000 consumed, 2,913,000 being including, presumably, petitioner.14 continued come States.15 From statistics clearly is, conservatively speaking, quite insubstantial. accurate figure, assuming extent requirements, .77%. 18 may context legislation protracted suspect, declared se. Even single fall broad section, suffer qualifying disability, work substantial—not remote—lessening urged present pre-empts worth perhaps $128,000,000,16 'is, insignificant insubstantial.' $128,000,000 considerable sum money, days, dollar volume, test, already out. 19 remaining determination, tends think not. sees trade excess 250,000,000 billion dollars—multiplied runs astronomical figures. here dominant position Fashions, supra; myriad coupled industry-wide practice relying Oil, plainly restrictive Salt, On contrary, seem 'may advantage buyers sellers.' 306, 1058. assure supply,' while part make possible reduction selling expenses, protection fluctuations, offer predictable Id., 306 307, singled principal vice, assurance steady ample interest. Otherwise consumers left unprotected failures owing shutdowns; increasingly unjustified costs result burdensome rate structures eventually reflected consumer's bill. compelling validity fully natural gas field. say immunized proscriptions, merely judging particularized parties' operations irrelevant. weighing various factors, tend discuss contention violates broader forbidden former. 608—609, 880. 21 reversed remanded proceedings inconsistent opinion. 22 ordered. 23 Judgment proceedings. 24 BLACK DOUGLAS correctly affirm judgments. unlawful person engaged lease goods use, consumption, resale condition, understanding seller, lease, sale, monopoly commerce.' 14, 14. claim argue 2, 2. Facts. Potter Towing subsequent responsibility thereunder respondent Kentucky Cf. Kelly Kosuga, 358 516, 79 429, 475. discussion see 300—305, 1055—1058, 1371. See Boxing Club York, Incorporated 242, 245, 270. contentions urges us remains free convert coal-burning market; permitted plants, so, too, construct burners; event 15% by-products argues novel reliance created new theretofore relied exclusively lesser extent, gas. Relevant Market Effective Competition. primary fuels Peabody offered western another prompted renegotiation paying then Bureau Census. Census Mineral Industries: 1954, Series: MI-12B, Page (1957). 12B—6. 1,569,000 counties Tennessee North Carolina; 412,000 Tennessee; balance Virginia Kentucky. 12B—10. Dept. Interior, Mines, II Minerals Yearbook (Fuels), 1959. Report, M.M.S. 3035, (1960). These taken cited 1,787,000 1,321,000 665,000 fields; 2,000 Virginia. Ibid. Effect Competition Market. connection incidentally Coals, Inc., 1933, 288 344, 369, 53 471, 477, 77 825, Chief Hughes quoted testimony 1932 nothing days 'for interest concern buy several million coal.' At 7. findings 339, 2,485,000 year. Other concerns running 30,000 250,000 textile manufacturer 600,000 370, 8, 478. stated his (in operate) 'there 1,620,000 acres bearing land, containing 9,000,000,000 net recoverable 477.

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