Court Opinion

ID: 9491248
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:08:14.64878+00
Date Added: 2024-06-11T17:54:35.708316
License: Public Domain

HEANEY, Senior Circuit Judge,
dissenting.
I cannot agree with the majority that there is no antitrust injury or no causal connection between the City’s injury and the defendants’ conduct: The defendants conspired to deprive- the City of the opportunity to obtain less- expensive electricity to assist in bringing-new jobs to the City. In my view, the majori*270ty opinion opens the door for similar anti-competitive practices to go unpunished.
I accept the statement of facts set forth by the majority, but supplement it in order to underscore the bad faith exhibited by Allegheny Power and Duquesne Light Company.1 Attempting to create new jobs in the Redevelopment Zones, the City recognized that high-cost electricity was a detriment to attracting new businesses. Estimating that the Redevelopment Zones would support up to 7,300 new jobs and approximately 1,400 new residences, the City began negotiating with Allegheny Power to provide less expensive electricity.
The City and Allegheny Power negotiated for several months and Allegheny Power assured the City that it would provide less expensive electricity than Duquesne Light Company to the Redevelopment Zones. Both Allegheny Power and the City knew that the permission of the PUC was required before Allegheny Power could furnish electricity. In July 1996, both the City and Allegheny Power agreed to apply to the PUC for the latter to provide electricity to the Redevelopment Zones. On September 4, 1996, the City filed a petition supporting Allegheny Power’s provision of electricity to the Redevelopment Zones. On September 9, 1996, Allegheny Power filed its own petition in this matter and represented to the PUC that an “alternative electric supply would attract economic development to the Redevelopment Areas and would foster economic growth[.]” (J.A. at 6.)
Claiming that it had the exclusive right to provide electricity to the City, Duquesne Light Company intervened on September 27, 1996, opposing the petitions filed by the City and Allegheny Power. On October 21, 1996, Allegheny Power filed an answer, claiming that it also had the right to provide electricity to the Redevelopment Zones. After these preliminary matters had been addressed, on October 28, 1996, Allegheny Power formally applied for a certificate of need, which would enable it to provide electricity to the Redevelopment Zones. In its application, Allegheny Power claimed that its prices would be substantially lower than Duquesne Light Company’s, stating: “It is certain that the potential for developing new, incremental electrical load in the Redevelopment Zones will be enhanced substantially if electricity prices therein are as low as possible.” (Id.)
On November 18, 1996, the City solicited bids from Allegheny Power and Duquesne Light Company to provide power to the Redevelopment Zones. As the majority points out, Allegheny Power significantly under-bid Duquesne Light Company. While the ALJ received testimony on the application in late March 1997, further hearings were scheduled for June 9,1997.
Less than two weeks later, on April 7, 1997, Duquesne Light Company and Allegheny Power announced that they had agreed to merge. Two days earlier, on April 5, 1997, Allegheny Power and Duquesne Light Company agreed not to make any filings with governmental entities until they consulted with each other; not to change their regulated charges or rates without first discussing it with each other; and not to make any agreement or filing with respect to a rate change or charge without first consulting each other.
After deciding to merge, on April 28, 1997, Allegheny Power and Duquesne Light Company requested a stay of the proceedings on Allegheny Power’s application for a certificate of need. The ALJ denied the stay, noting the need for an expeditious decision. On June 6, 1997, Allegheny Power petitioned the ALJ for leave to withdraw its application. The ALJ granted the petition on June 24, 1997. The City then commenced this action alleging, in substance, that Allegheny Power and Duquesne Light Company conspired to deprive the City of the opportunity to obtain less expensive electricity in violation of Section 1 of the Sherman Act and Section 7 of the Clayton Act.
The facts alleged by the City are sufficient to show that Allegheny Power and Duquesne Light Company conspired to deprive the City of an opportunity to obtain less expensive electricity. In my view, this conspiracy violated both the Sherman and Clayton Acts. *271Unlike the majority, I am not persuaded that the PUC’s failure to act on Allegheny Power’s application immunizes these conspirators from antitrust liability. After all, the conspiracy deprived the PUC of an opportunity to review the application.2 As'the Seventh Circuit aptly pointed out, “[w]e know of no rule that states that the parties must be in head-to-head competition in the relevant market (as opposed to head-to-head competition for the relevant market) before the antitrust laws will apply.” Fishman v. Estate of Wirtz, 807 F.2d 520, 531 (7th Cir.1986) (emphasis in original).
The Clayton Act prohibits mergers that substantially lessen competition or tend to create monopolies in any line of commerce in any section of the country. There can be no doubt that the proposed merger in this case violates the Clayton Act. Allegheny- Power and Duquesne Light Company are the only utility companies that could feasibly provide electricity to the Redevelopment Zones. Consequently, the proposed merger substantially lessens competition and creates a monopoly in the relevant market.
The Sherman Act addresses agreements in restraint of trade. In this case, there was such a restraint. The merger agreement destroyed the City’s opportunity to obtain less expensive electricity. In this case, the City’s allegations support the view that there was such a restraint. According to these allegations, the merger-agreement destroyed the opportunity to obtain less expensive electricity. A factfinder might well determine that this opportunity was more than speculative; it was real enough to cause Allegheny Power to file its application; it was real enough to cause Duquesne Light Company to oppose the application; and it was real enough to convince Allegheny Power and Duquesne Light Company, that a merger was the most effective way of avoiding cost competition.3 In short, “the injury alleged by [the City] was precisely the type of loss that the claimed violations of the antitrust laws would be likely to cause.” Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 125, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969).
I am concerned that today’s decision sends the wrong message that similarly situated conspirators will not be held accountable for their anti-competitive activities. After submitting bids, both Allegheny Power and Du-quesne Light Company knew the price at which each company would provide electricity to the City. When Allegheny Power withdrew its bid, Duquesne Light Company was assured that competition would be lessened and that its higher price would prevail. • ■
In my view, the majority does not -sufficiently distinguish between the City’s § 4 and § 16 claims under the Claytpn Act. Even if one concedes that the claim for monetary damages under the Clayton and Sherman Acts presents a close question, there can be no doubt that the City has standing to pursue its requested injunctive relief under § 16 of the Clayton Act. It is well settled in the Third Circuit that, unlike a claim under § 4 of the Clayton Act for monetary damages, “a claim for injunctive relief does not present the countervailing considerations — such as the risk of duplicative or ruinous recoveries and the spectre of a trial burdened with *272complex and conjectural economic analyses— that the Supreme Court emphasized when limiting the availability of treble damages” in a § 4 Clayton Act claim. Mid-West Paper Products Co. v. Continental Group, 596 F.2d 573, 591 (3d Cir.1979). Consequently,
In contradistinction to § 4, § 16 does not ground injunctive relief upon a showing that “injury” has been already sustained, but instead makes it available “against threatened loss or damage.” Furthermore, § 16 does not state that the threat must be to the plaintiffs “business or property,” and courts accordingly have held that non-commercial interests are also protected.... [Cjourts have held that for purposes of § 16 the complainant “need only demonstrate a significant threat of injury from an impending violation of the antitrust laws or from a contemporary violation likely to continue or recur,” and that a person may have standing to obtain in-junctive relief even when he is denied standing to sue for treble damages. Indeed, the test for standing under § 16 has been framed in terms of a proximate cause standard that is “less constrained” than that under § 4 and which might in fact be no more rigorous than the general rale of standing.
Mid-West Paper Prod. Co. v. Continental Group, 596 F.2d 573, 591-92 (3d Cir.1979) (emphasis in original) (footnotes omitted). Therefore, the district court can still fashion injunctive relief that will bar the merger, require Allegheny Power to reinstate its application to the PUC to furnish power to the City’s Redevelopment Zones, even if the merger is permitted to go through,4 or alternatively, to give such other relief as will ensure that the City obtains the advantage of competitive pricing.
For the reasons stated above, I respectfully dissent.

. We accept all of the City’s allegations as true in reviewing the motion to dismiss. Fuentes v. South Hills Cardiology, 946 F.2d 196, 201 (3d Cir.1991) (citation omitted).

. The majority, however, argues "now that all parties, including the City, have withdrawn from the regulatory proceedings, an injunction would not alter the City’s current situation.” In essence, the majority argues that because the City withdrew from the PUC proceedings, the issue is moot as to whether an injunction should be granted. However, once Allegheny withdrew its application,- there was no point for the City to continue with its application. As the appellees point out themselves, Allegheny had to obtain approval from the PUC to enlarge its certificate of convenience. See Makovsky Bros., Inc. v. Pennsylvania Public Utility Com'n, 55 Pa. Cmwlth. 435, 423 A.2d 1089, 1092 (1980). The City alone, as the consumer,' could not petition the PUC to obtain lower utility prices. Lukens Steel Co. v. Pennsylvania Public Utility Com'n, 92 Pa.Cmwlth. 530, 499 A.2d 1134, 1140 (1985). Thus, once Allegheny withdrew, under Pennsylvania law, there was no point for the City to continue with its application. Instead, the City filed suit in federal district court. Although the law is changing in Pennsylvania, as utility competition becomes a reality, there is no indication that the City could have proceeded ex parte before the PUC to ensure that Allegheny provide lower electricity rates.

. Certainly the amount of damages that the City might recover may be limited by the fact that the PUC would not have approved the application, but this fact goes to the amount of damages that can be recovered rather than whether an antitrust'violation has been committed.

. In an October 17, 1997 letter from Allegheny Power’s president, Alan Noia, to Pittsburgh May- or Thomas Murphy, Noia states: "I am, therefore, committing to you that, if the ... PUC grants the City’s request ... to allow utilities other than Duquesne Light Company to provide electric service to the two economic development zones, subject to PUC approval, ... [Allegheny Power] will expand its service territory to include the economic development zones.” (J.A. at 499a.) This letter was sent after the proposed merger.