Court Opinion

ID: 8930070
Source: CourtListenerOpinion
Date Created: 2022-11-27 07:03:39.648031+00
Date Added: 2024-06-11T17:09:30.430883
License: Public Domain

SNEED, Circuit Judge,
concurring in part and dissenting in part:
I concur in the opinion of the court in all respects except that part, II.A, which holds that a violation of Section 1 of the Sherman Act has been alleged.
Section 1 of the Sherman Act forbids every “contract, combination ..., or conspiracy, in restraint of trade or commerce.” I agree that the complaint alleges a conspiracy. I do not believe, however, that the alleged conspiracy was “in restraint of trade or commerce.” The majority reasons that the required element of restraint existed because the alleged object of the conspiracy was to drive VSL’s competitors, including Western, out of business. I believe that such a motive renders the alleged conduct a conspiracy to monopolize or an attempt to monopolize within the meaning of Section 2 of the Sherman Act, but not a restraint of trade within the meaning of Section 1.
The improper conduct alleged in this case is a conspiracy to sell at prices below those that other competitors, acting within the law, could offer. This is no more and no less than a form of predatory pricing. The only difference between the conduct alleged in this case and ordinary predatory pricing is that here it is the law, rather than costs, that prevents the defendant’s competitors from matching the defendant’s price.
Our cases have always treated predatory pricing as a violation of Section 2, not Section 1. See, e.g., RFD Publications, Inc. v. Oregonian Publishing Co., 749 F.2d 1327 (9th Cir.1984); Transamerica Computer Co. v. International Business Machines Corp., 698 F.2d 1377 (9th Cir.1983); California Computer Products, Inc. v. International Business Machines Corp., 613 F.2d 727, 739-43 (9th Cir.1979); Janich Bros., Inc. v. American Distilling Co., 570 F.2d 848 (9th Cir.1977). I have found no case in this circuit that has extended Section 1 coverage to a conspiracy to engage in predatory pricing. One case from the Third Circuit, In re Japanese Electronic Products Antitrust Litigation, 723 F.2d 238 (3d Cir.1983), concerned a conspiracy to fix prices in one market while selling products at unlawfully low prices in another market. The court found that one defendant, Sears, had conspired with its supplier to import products at unlawfully low prices, but had not been part of the price-fixing conspiracy. Sears was held not to have violated Section 1. See id. at 312-13.
This paucity of authority should caution us not to leap to the conclusion that a Section 1 violation has been alleged in this case. Ordinarily, an arrangement between a seller and his supplier designed to improve the seller’s position in his market is not a violation of the Sherman Act. The purpose of competition from the merchant’s point of view is to expand his market without regard to whether he thereby shrinks that of another merchant. The Sherman Act was designed to foster precisely that kind of activity.
The activity becomes a matter of concern under the Sherman Act only when the seller threatens to monopolize his market. Thus, Section 2 provides an appropriate test of the lawfulness of the conduct alleged. The analysis under Section 2 is straightforward, unstrained, and easy to grasp.
The majority’s intent in declaring such an arrangement to be a “restraint of trade” under Section 1 is unclear. If the arrangement is unlawful under Section 1 only when it threatens to monopolize the market, then Section 1 simply duplicates Section 2 in this context. If, however, Sec*1021tion 1 is applicable even when the arrangement does not threaten to result in monopoly, then Section 1 becomes a “code of fair competition” that brings under the antitrust laws any unfair or unlawful scheme by which a seller seeks to improve his position in the market at the expense of his rivals.1 Antitrust law has always had a tendency to drift in this direction, but it is a drift to which I do not wish to add my weight.
The majority’s interpretation of Section 1 could be far-reaching. For example, a business linked in some advantageous way with organized crime might well be made an antitrust target by its competitors. Or a supplier's violation of the minimum wage laws, when known to his purchaser, might render the latter subject to an antitrust suit by a competitor. Or a knowing purchaser from one who is violating the antitrust laws might also be liable under Section 1. Perhaps the majority intends to reach this far. Perhaps not. Not knowing whether they do or not, I respectfully dissent from Part II.A.

. True, the plaintiff must allege a conspiracy of some sort, but we know from our experience in the criminal law that such an allegation is easily made and proven.