Legal Document

429 U.S. 610 97 Supreme Court Reporter 861 51 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 80 UNITED STATES STEEL CORPORATION et al., Petitioners,v.FORTNER ENTERPRISES, INC. Number 75-853. Argued Nov. 1, 1976. Decided Feb. 22, 1977. Syllabus In exchange for respondent real estate development corporation's promise to purchase prefabricated houses be erected on certain land, petitioner Steel Corp.'s Home Division (the manufacturer of the houses) and Credit Corp., a wholly owned subsidiary that provides financing Division's customers, agreed finance respondent's cost acquiring developing land. After difficulties arose while was in progress, brought treble-damages action against petitioners, alleging transaction tying arrangement forbidden by Sherman Act, because competition tied product) restrained petitioners' abuse power over credit product). this Court, prior review case upon reversing summary judgment favor, held agreement affected "not insubstantial" amount commerce product entitled an opportunity prove petitioners possessed "appreciable economic power" market product, District ultimately evidence justified conclusion did have sufficient make unlawful, Appeals affirmed. That related four propositions: (1) Corporation were one Nation's largest corporations; (2) entered into arrangements with significant number customers addition respondent; (3) charged noncompetitive price its houses; (4) provided "unique," primarily it covered 100% acquisition costs. Held: The record does not support had appreciable credit, product. Where merely shows terms are unique seller willing accept lesser profit or incur greater risks than competitors, such uniqueness give rise any inference market. unusual bargain offered proves nothing more willingness provide cheap order sell expensive houses, without some advantage competitors could offer form significantly differentiated from which other lenders if they so elected character lower courts' kind burden proving prevail. Pp. 614-622. 523 Federal Reporter, 2nd 961, reversed. Macdonald Flinn, New York City, petitioners. Kenneth L. Anderson, Louisville, Ky., respondent. Mr. Justice STEVENS delivered opinion Court. 1 land near Difficulties (Fortner) commenced action, claiming Act. Fortner alleged A favor reversed Enterprises versus Co., 394 495, 89 1252, 22 495 (Fortner & N Dec. Immigration Nationality Decisions ). We question now presented is whether supports market.1 2 violation § Act2 been proved only reached after two trials. At first trial following our remand, directed verdict issue liability, submitted damages jury. jury assessed damages, before trebling, $93,200. remanded new liability. 452 1095 (CA6 1971), cert. denied, 406 919, 92 1773, 32 119. parties then waived jury; judge heard additional evidence, extensive findings fact affirmed appeal. 961 (6 Cir. 1975). Both courts unlawful. 3 Before explaining why we disagree ultimate below, describe summarize economic-power issue. 4 * Only essential features between need described. corporation activated experienced developer purpose buying improving residential lots. One petitioner, operates "Home Division" manufactures assembles components second "Credit Corp.," subsidiary, promote sales. Although their common ownership control appropriate regard as single seller, separate products credit. extended homes. Petitioners lend $2,000,000 Fortner's 210 homes about $689,000. borrowed funds intended cover vacant estate, erecting houses. 5 impact (prefabricated dispute. On hand, there no claim nor dominance housing business. indicates moderately successful, sales represented small fraction industry total.3 already dollar value meet test described earlier cases. See U.S., at 501-502, 1257-58. therefore confine attention source "economic II 6 supporting relates Fortner; homes; 7 established 1954 Division. equity capital, but also allowed use borrow money banks prime rate. Thus, although itself particularly large company, supported corporate parent great financial strength. 8 loan policies help products.4 It Division, two-thirds obtained financing. With few exceptions, all agreements contained clause comparable challenged case. Petitioner's home 1960 amounted $6,747,353. Since $4,600,000 these Corp.,5 apparent used Fortner. 9 least house package purchased $3,150. witness testified $455 higher conventional home; another witness, whom made reference findings, $443 Whether differential 15% entirely clear, contract required pay 10 finding based factors emphasized testimony expert Dr. Masten, professor special knowledge lending practices Kentucky area. Masten mortgage loans equal otherwise available area; even though deficit $16,000, guaranteed shareholder, officer, person interested business; interest rate 6% low under prevailing conditions.6 Moreover, he explained stable levels time risk lender somewhat would period rising prices. concluded granted almost inconceivable acquired source. fair his testimony, Court's say accepted high borrower assumed cost. 11 found federally insured savings associations generally prohibited law making loans, "that since prudent due risk, involved." App. 1596. 12 Accordingly, elements illegal tie-in exist present, insubstantial interstate possess leverage effect restraint." Id., 1602. III 13 Without clear insufficient 14 manufacturing corporations, indicate enabled favorable those competing lenders, able operate efficiently institutions. short, affiliation appear given Instead, tells us extent 15 same may said obtain others. situations disproportionately volume ofthe resulting strategic reflect "leverage" probative If, economists suggested, often facilitate discrimination, imply existence free tolerate.7 But lots received produced commitment varying quantities time. This record, therefore, decisions condemning arrangements.8 16 presumably well paid lends court. Proof consistent possibility unusually inexpensive9 entire to, competitive price. And equally strong financing.10 17 most important has critical illegality statutory grant patent monopoly International Salt company States, 332 392, 68 12, L.Ed. 20; copyright monopolies Paramount Pictures, Inc., 334 131, 915, 1260, Loew's 371 38, 83 97, 11; holdings Northern Pacific R. 356 78 514, 545,11 regarded sufficiently presumption power.12 18 As plainly stated case, do require defendant dominant position throughout 502-503, 1258. They do, however, focus power, within raise prices purchasers burdensome exacted completely market.13 shared 19 differentiating seller's considered relevant tying-clause cases.14 point explicitly when trial: 20 "We mean petitioner's argument can inferred simply 'unique unusual.' mean, uniquely advantageous creditor's advantages competitors." 505, 1259. An accompanying footnote explained: 21 "Uniqueness confers way prevented offering distinctive themselves. Such barriers legal, patented copyrighted products, e. g., Salt; Loew's, physical, Pacific. true economic, unable produce profitably, confusing rather producing it." 505 n. 2, S.Ct., Quite clearly, will Yet is, substance, indicates. 23 houses.15 prevail litigation. 24 25 So ordered. 26 Chief BURGER, REHNQUIST joins, concurring. 27 concur write emphasize what involve; join basis my understanding scope holding. Today's decision implicate ordinary cannot constitute subject per se scrutiny contrast transactions, dealing here peculiar expressly involve sold corporations. 507, (1969). Consequently, read assumption existed cast doubt legality manufacturers distributors. outset opinion, involved "a variety questions concerning proper standards applied district court passing motion civil antitrust action." 496, 1255. ask re-examine I, left open proved. pursued suggestion might rule-of-reason standard. 500, 1257. respect us. noted violation, namely, "conspired together . houses." reach issue, remand unnecessary. neither violated. "the defendants combine conspire increase packages numerous builders containing provision" sole programs specifically deliberately share ." 1603 (emphasis added). "increasing sales" share" normal business goals, intent monopolize. bridge gap legal conspiracy position. 3, infra. No monopolize drawn firm engaged nonpredatory conduct hope increasing conclude, infra, 621-622, shows. Statutes-at-Large 209, amended, Code KF62 1. 1960, example, total 1,793 There larger manufacturers, 16,804 year. year declined each principal remained steady increased. reviewing taken files including memorandum stating "our shipping houses," much concerned 1588-1589. figure findings; derived 68% dealers receiving assistance id., 1589-1590. 5% 51/2%. Bowman, Tying Arrangements Leverage Problem, 67 Yale L.J. (1957). See, Shoe Machinery 258 451, 42 363, 66 708; Business Machines 298 56 701, 1085; 20. article 1969 Review 16, Professor Dam suggests present 545. statement: "The percentage collateral security element determining borrower. include charged, discounts loaned charges service (sic ) fees maturity repayment." 1686. Relying Advance Systems Supply SCM 415 55 (CA4 1969), 397 920, 90 928, 101, contends acceptance power. approach depends absence explanations buyers package. F.2d, 68. instance, very host compelling defendant's where, here, explanation restraints. 'preferential routing' clauses conferred benefit lessees. While got wanted yielding freedom deal carriers, makes came cheaper restrictive omitted. reduction return rail shipments quite constituted unlawful rebate shipper. far Railroad obviously fence out stifle competition." 7-8, 519. (footnote omitted). passage demonstrates, differs whereas unavailable Railway. railroad "possessed substantial virtue landholdings" follows: "As pointed before, initially acreages Congress several North-western through lines run. strategically located checkerboard fashion amid private distance transportation facilities. Not various witnesses sense evident particular prized who leased frequently activities." 7, "Since objectives laws reward uniqueness, principle cases carried theory valid more, establishes distinctiveness conclude involving anti-competitive consequences." 46, 103, 11. "Accordingly, concern prices, impose tie-in, market." 504, correctly analyzed proof imposed language. Review, 25-26, reasoned: "One interpreting meaning Taken context, thought that, just 'host arrangements' 'compelling evidence' 'great power' Pacific, inclusion contracts 'any numbers buyers' context warrant interpretation. For immediately preceding sentence must still exist. If raised demanded lieu price, requisite despite broad language quotation later cases, treatment close reading consonant precedents ways less far-reaching actual irrelevant." (Footnotes omitted.) commentator noted: adequate identify type foreclosure likely occur. Whenever find attractive, premium above nearest substitute, tie good." Note, Logic Foreclosure: Tie-In Doctrine U. S. Steel, 79 86, 93-94 notes smaller companies "financial strength arrangements." 509, 1261. unaware sellers homes, 1691-1692, suggest chose so.

Classification Label: 7