Legal Document

356 U.S. 1 78 Supreme Court Reporter 514 2 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 545 NORTHERN PACIFIC RAILWAY COMPANY and Northwestern Improvement Company, Appellants,v.UNITED STATES of America. Number 59. Argued Jan. 7 8, 1958. Decided March 10, [Syllabus from pages 1-2 intentionally omitted] Mr. M. L. Countryman, Jr., St. Paul, Minn., for appellants. Daniel Friedman, Washington, D.C., appellee. Justice BLACK delivered the opinion Court. In 1864 1870 Congress granted predecessor Northern Pacific Railway Company approximately forty million acres land in several Territories to facilitate its construction a railroad line Lake Superior Puget Sound.1 general terms, this grant consisted every alternate section belt 20 miles wide on each side track through 40 Territories. The lands were various kinds; some contained great stands timber, iron ore or other valuable mineral deposits, oil natural gas, while still sections useful agriculture, grazing industrial purposes. By 1949 he Railroad had sold about 37,000,000 holdings, but reserved rights 6,500,000 those acres. Most unsold was leased one purpose another. large number sales contracts most lease agreements inserted 'preferential routing' clauses which compelled grantee lessee ship over lines all commodities produced manufactured land, provided that rates (and instances service) equal competing carriers.2 Since many goods subject these provisions are shipped State another actual potential amount interstate commerce affected is substantial. Alternative means transportation exist portion shipments including facilities two major systems. Government filed suit under § 4 Sherman Act seeking declaration defendant's unlawful as unreasonable restraints trade Act.3 After pretrial proceedings moved summary judgment contending undisputed facts it entitled, matter law, relief demanded. district judge made numerous findings, set forth substance preceding paragraph, based voluminous pleadings, stipulations, depositions answers interrogatories case, then Government's motion (with an exception not relevant here). 142 F.Supp. 679. He issued order enjoining defendant enforcing existing entering into any future containing them. took direct appeal Expediting 1903, 32 Statutes-at-Large 823, amended, 15 Code KF62 29, Annotated KF65 U5 we noted probable jurisdiction. 352 980, 77 383, 364. 3 designed be comprehensive charter economic liberty aimed at preserving free unfettered competition rule trade. It rests premise unrestrained interaction competitive forces will yield best allocation our resources, lowest prices, highest quality greatest material progress, same time providing environment conductive preservation democratic political social institutions. But even open question, policy unequivocally laid down by competition. And end prohibits 'Every contract, combination * conspiracy, restraint among States.' Although prohibition literally all-encompassing, courts have construed precluding only combinations 'unreasonably' restrain Standard Oil company New Jersey versus States, 221 1, 31 502, 55 L.Ed. 619; Chicago Board Trade 246 231, 38 242, 62 683. However, there certain practices because their pernicious effect lack redeeming virtue conclusively presumed therefore illegal without elaborate inquiry precise harm they caused business excuse use. This principle per se unreasonableness makes type proscribed more benefit everyone concerned, also avoids necessity incredibly complicated prolonged investigation entire history industry involved, well related industries, effort determine whether particular has been unreasonable—an so often wholly fruitless when undertaken. Among heretofore deemed themselves price fixing, Socony-Vacuum Co., 310 150, 210, 60 811, 838, 84 1129; division markets, Addyston Pipe & Steel 6 Cir., 85 Federal KF105 F3 271, 46 L.R.A. 122, affirmed 175 211, 96, 44 136; group boycotts, Fashion Originators' Guild America Comm., 312 457, 668, 61 703, 949; tying arrangements, International Salt 332 392, 68 12, 92 20. 5 For purposes arrangement may defined agreement party sell product condition buyer purchases different (or tied) product, least agrees purchase supplier.4 Where such conditions successfully exacted merits with respect tied inevitably curbed. Indeed 'tying serve hardly beyond suppression competition.' California Stations 337 293, 305—306, 69 1051, 1058, 93 1371.5 They deny competitors access market imposing requirements better lower his power leverage market. At buyers forced forego choice between products. reasons fare harshly laws forbidding trade.' Times-Picayune Publishing 345 594, 606, 73 872, 879, 97 1277. whenever sufficient appreciably 'not insubstantial' affected. Cf. Paramount Pictures, 334 131, 156—159, 915, 928—929, 1260; Griffith, 100, 941, 1236. Of course where seller no control dominance does represent effectual weapon pressure taking item attributable arrangements would obviously insignificant most. As simple example, if dozen food stores community refuse flour unless sugar tend ready able itself. case believe clearly correct declaring We agree established genuine question possessed substantial extensive landholdings used induce numbers purchasers lessees give preference, exclusion competitors, carrying produce transferred Nor can real doubt restrictive provisions. pointed out before, initially acreages now run. strategically located checkerboard fashion amid private holdings within distance facilities. Not testimony witnesses common sense evident prized who purchased frequently essential activities. disposing entered sale covering included clauses.6 very existence host itself compelling evidence power, where, here, explanation offered restraints. conferred lessees. While got wanted yielding freedom deal carriers, claim came cheaper than omitted. fact reduction return rail quite plainly constituted rebate shipper.7 So far concerned fence stifle exceedingly beneficial business, thing condemns. short, convinced prerequisites treating 'per se' below prove nothing here alter conclusion. 8 view 20, unqualifiedly approved subsequent decisions, ample authority affirming below. refused salt-dispensing machines agreed salt defendant. 900 leases year $500,000 worth use machines. On basis unanimously finding guilty violating Act. ruled 'unreasonable, se, foreclose market' arrangements. later analyzed decision, 'it equivalent unobtainable, indicated what proportion supplying controlled defendant, irrelevant upon 305, 1371. 9 attempts evade force ground patented not. do distinction has, should have, significance. arriving decision placed reliance patent involved nor did slightest intimation outcome case. If anything, held challenged despite patented, it. 'By contracting close against competition, engaged patents afford immunity antitrust laws.' page 396, 15. cases confined situations involving patents. 1236; v Inc., 156, 928, 1277.8 10 argues holding limited There unit system advertising local newspapers violate before majority found problem since that, event, possess bring unreasonableness. extremely careful confine narrow record Id., 627—628, 890. repudiating principles vigorously reasserted them broadly condemning inconsistent fundamental laws. Court's forceful 'Tying flout Act's marts conditioning commodity another, coerces abdication buyers' independent 'tied' product's insulates stresses intrinsic superiority convince freely choosing select others, anyway.' 605, 878. 11 language speaks 'monopoly power' 'dominance' necessary precondition application construe requiring anything impose appreciable (assuming time, course, affected). To accord opinion's cogent analysis nature baneful effects incompatibility policies underlying Times-Picayune, must viewed context decisions concerning agreements. warrant departure cases. purport thing; rather simply restate governing considerations area prior doing clear, cases, vice lies restrict regardless source derived takes form monopoly 12 contends exceptions administered leniently significantly points permit vendee carrier service better) defendant's.9 merely harmless sieves tendency argument seems imply, hard understand why expended much obtaining vast upholding validity, how anyone, however be, remains binding obligations heads vendees fenced-off terms defendants similarly argued inoffensive allowed buy suppliers International. answer equally apt here. 13 '(This exception) does, measure protection lessee, avoid stifling appellant times priority prices. A competitor undercut appellant's hope capturing market, could hold meeting think concession relieves contract being trade, albeit less harsh result absence provision.' 397, 14 All aggravated, regulated rate effective actually thrives forms. Affirmed. 16 CLARK part consideration 17 HARLAN, whom FRANKFURTER WHITTAKER join, dissenting. 18 affirms concluding 'the *.' my view, established, remanded District trial issue appellants' gave past make violative Further, light disposition findings below, N Dec. Immigration Nationality Decisions discussion confusion proof show illegality 19 Because necessarily complaint Act, 26 State. 209, Clayton Act,1 required see 619. result, raise legal issues presented legislatively invalidated prohibitions 1277, clear dispute both showing volume restrained judicial condemnation clause violation Act.2 608—611, 880—881. These firm derive awareness 'is wielding monopolistic leverage; exploits dominant position expand empire next.' 611, 882. not, intimates point opinion, se; results vendor's interest interest. My primary difficulty affirmance appellants 'dominant position' or, puts it, 'sufficient power,' Such indicate character owned driven thereby putting medium clauses, shipping leased. conceived need shown score tracts clause. Thus said (142 684): 21 'Defendants argue first element, i.e., domination N.P. (Northern Pacific) types total defendants' operations. 22 contention ignores plain cited ('tying clause' Court), commodity' required. property second tied; certainly include similar 23 'The present presently formerly Unrestricted fee-simple title vests owner absolute land. ownership resulting therefor traffic grantees land.' (Italics added.) 24 conformity views ultimate 'control' these: 25 '37. Defendants, sellers lessors, reason fee simple, lands. '38. Defendants require Pacific's service, stated 10.' (Finding relates clauses.) 27 ad hoc suffice meet by-passed requirement validity depend entirely commercial accomplished taken relative strength vis-a -vis others appropriate appellants,3 'uniqueness' put, extent location near line, circumstances, put strategic lessors Short determined occupied cf. E. I. du Pont de Nemours 351 377, 76 994, 100 1264, 28 Explanation failure remand instructions pursue apparently statement 'very coercion vendor inferred, dominance, mere themselves, suffer detriment precluded purchasing elsewhere. cast terms. indicates thus might expected utilize course. substantially Court, provisos leaving railroads either superior service. circumstances appear inclusion largely indifference hence needed inference acceptance resulted exercised 29 Particularly inadequate record, further treatment Salt, principally relies. regards making interest, me rest issue. considered element supplied 'conferred monopolistic, lawful, control' 608, 880, indeed suggested prefacing '(defendant's) confer invention reward.' 395, Still today states struck patented. insofar appears treated control—a supported 304, 307, 1057, 30 new scope gives puzzling express recognition freight servives heightens paradox satisfy assertion 'undisputed facts' power. concluding, rely market-dominance which, tried show, rested misconception Times-Picayune. adopting brought analogy patent, tract constitutes event support theory. No uniqueness location4 peculiar qualities enabling production mineral, agricultural Without inquiry, supposed theory 'unique.' Finally, leaves unsettling word implies product.' abstraction quarrel piece surgery, 2, product. already indicated, shoring kind variety factors, significant percentage desirability purchaser, likely lessees, suggest comparison patent. venture predict conjunction approval leave lawyers proper standards judging 33 action sanctions deem serious abuse procedures. Sartor Arkansas Natural Gas Corp., 321 620, 64 724, 88 967. barren adequate unique constitute remedied 'common sense' notice commanding position. poor substitutes put. 'dominance.' 365, 378. details statutory grants extensively discussed R. 256 51, 41 439, 65 825, 311 317, 264, 210. detail hereafter. See note 6, infra. §§ 4, 4. Actually subsidiary sells, manages Railroad's , convenience completely shall speak single 'defendant' 'Railroad.' take though offer items price. previously nonanticompetitive asserted adequately inimical See, e.g., Business Machines Corporation 298 56 701, 80 1085; here) (1) 1,000 1,000,000 (2) 72 timberland 1,244,137 acres, (3) timber 100,585 (4) gas 135,000 (5) 5,261 (6) coal (acreage specified), (7) 6,810 clauses. leases, contracts, obligated products way lower; remainder better; rates, line. 49 6(7), 41(3), 41(3). knowledge always commodity. Often improvement privileges slight. readily available satisfactory (a controvert), regarded irrelevant. supra. relate 'goods, wares, merchandise, machinery, supplies 731, 14, 14. presence factor invalidation 608—609, 880. reference contains instance statistics bearing problem. period 1935 1942, merchantable Montana, Idaho, Washington 5% States. Affidavits appellants, particularly lands, pattern giving landholders acquire fill gaps ranges. appear, affidavits justify short-circuiting broad dominance.

Classification Label: 7