Court Opinion

ID: 9480340
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:45:08.511242+00
Date Added: 2024-06-11T17:47:37.397783
License: Public Domain

QUACKENBUSH, District Judge,
concurring:
I concur in the result reached in Parts 1 and 2 of the opinion since I agree that the district court’s findings were supported by the record and were not clearly erroneous. I further agree that the district court did not err in its conclusion that Syufy did not have monopoly power over the first-run movie distributors.
I do not agree with those portions of Parts 1 and 2 which state that if there are no significant barriers to entry, there can be no monopoly as a matter of law. I believe that the issue of barriers to entry is just one of the factors which should be considered by the court in determining whether monopoly power exists.
The offense of monopolization under Section 2 of the Sherman Act has two elements: “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966). In the instant case, there is no contention that Syufy did not willfully acquire 100 percent of the first-run movie market in Las Vegas in 1985. Syufy clearly accomplished that position by the purchase of its competitors.
If the opinion stands for the proposition that a finding of lack of barriers to entry mandates a finding of lack of monopoly power, then I disagree with the opinion. While I agree that the issue of monopoly power often depends heavily upon market share and barriers to entry, the analysis should also include consideration of the extent of the alleged monopolist’s market share, the ability to maintain that share, the power to control prices, the capability *674of excluding competitors, and the intent of the alleged monopolist, along with the existence of barriers to entry. Oahu Gas Serv., Inc. v. Pacific Resources Inc., 838 F.2d 360, 366 (9th Cir.), cert. denied, — U.S. -, 109 S.Ct. 180, 102 L.Ed.2d 149 (1988).
If lack of barriers to entry precluded a finding of monopoly power, then the existence of less than 100 percent of market share would seem to preclude a finding of a monopoly, regardless of other factors, since the existence of competitors in the market would apparently establish the lack of barriers to entry. I do not believe this to be the proper interpretation of Section 2 of the Sherman Act, nor has the Supreme Court so interpreted monopoly power.
If absence of barriers to entry mandated a finding of lack of monopoly, the United States Supreme Court could not have held, as it did, that Standard Oil Company of New Jersey and John D. Rockefeller and their associates, with between 50 percent and 90 percent of the petroleum business, were monopolists, since there was no finding of barriers to entry and others were in competition in the petroleum business. Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). Likewise, if absence of barriers to entry required a finding of lack of monopoly power, the Supreme Court could not have held, as it did, in FTC v. Proctor & Gamble Co., 386 U.S. 568, 87 S.Ct. 1224, 18 L.Ed.2d 303 (1967), that the merger of Proctor & Gamble with Clorox would violate the laws prohibiting monopolies where the merged company would have control of 65 percent of the country’s sales of liquid bleach, since there were many other existing competitors in the liquid bleach market.
I do not believe that Congress intended to isolate a business or industry from the strictures of § 2 of the Sherman Act solely because there are no barriers to entry. All relevant factors should be considered in the monopoly determination. If Congress intended to except markets from scrutiny solely by reason of absence of barriers to entry, it would have done so. “[Wjhere exceptions are made, Congress should make them.” United States v. Line Material Co., 333 U.S. 287, 310, 68 S.Ct. 550, 92 L.Ed. 701 (1948).
I am unable to concur in Part 3 of the opinion which takes the Justice Department to task for the expenditure of government funds and the initiation of this action against an alleged “paper tiger.” I do not agree that Syufy was a “paper tiger” or that there was not a reasonable basis for the initiation of this action.
In 1985, shortly before the commencement of this case, Syufy had completed the acquisition of all of its first-run theatre competitors. Syufy’s final acquisition was of the 11-screen Red Rock theatres for which he paid $4,850,000 in cash, giving him ownership of all first-run theatres in Las Vegas. In 1985, Syufy had over 93 percent of the total box office receipts from first-run films. The only reason Syufy did not have 100 percent of the market was because of a dispute which arose between Syufy and Orion Pictures when Syufy, 7 days after acquiring Red Rock the-atres, cancelled guarantees he had previously made to Orion.
The foregoing circumstances appear to have warranted the Antitrust Division in initiating this action. Syufy’s prior actions belied a conclusion that it was a completely innocent party. Not only had Syufy spent large amounts of money to buy up all of its competitors in the first-run theatre business in Las Vegas, but it had a track record of monopolization, having been found, shortly before the commencement of this action, to have monopolized the exhibition of major feature films in the San Jose area. Syufy Enterprises v. American Multicinema, Inc., 793 F.2d 990 (9th Cir.), cert. denied, 479 U.S. 1031, 107 S.Ct. 876, 93 L.Ed.2d 830 (1987). While I concur in the opinion that Judge Orrick's decision in this case was not erroneous, I do not concur in Part 3 of the opinion.1

. In Part 3 of the opinion, the majority, in footnote 21, construes my citation of a prior *675case involving Syufy Enterprises, in which Syufy was found to be a monopolist, as a suggestion on my part that such a finding of prior monopolistic action, in and of itself, justified the initiation of this action. That was not my intent. The citation of the case in question, Syufy Enterprises v. American Multicinema, Inc., 793 F.2d 990 (9th Cir.1986), was for the purpose of demonstrating that Syufy, who spent almost 5 million dollars in cash in purchasing all of his competitors, was not a “paper tiger” as suggested by the majority.
In footnote 22, the majority also contends that the finding of monopolistic actions by Syufy in the San Jose major feature films market was reversed by the Ninth Circuit in American Multi-cinema for insufficient evidence. To the contrary, this jury finding was found to have been supported by substantial evidence. At page 996 of American Multicinema, the court stated: "In conclusion, we hold that there is substantial evidence to support a jury verdict in favor of AMC on its first Section 2 monopolization theory; that Syufy monopolized the market for the exhibition of industry anticipated top-grossing films in the San Jose area.”