Court Opinion

ID: 9471776
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:41:03.544509+00
Date Added: 2024-06-11T17:42:34.684083
License: Public Domain

HEANEY, Circuit Judge,
with whom LAY, Chief Judge, and BRIGHT, Circuit Judge, join, dissenting.
I would adhere to the majority panel opinion and affirm the district court. Pasc-hall v. Kansas City Star Co., 695 F.2d 322 (8th Cir.1982). This dissent is written to emphasize my reasons for believing that the Star violated Section 2 of the Sherman Act by refusing to deal with the 250 independent carriers.
At the outset, it is important to note that the en banc opinion is consistent with the panel opinion regarding several important factors, namely:
(1) That the Star could not deliver its newspapers more efficiently than the independent carriers.
(2) That the Star possesses monopoly power achieved in violation of the antitrust laws of the United States.
(3) That the Star does not have an unfettered right to vertically integrate its operation.
(4) That the elimination of the Star as a potential competitor to the 250 independent carriers will eliminate the beneficial competitive interaction between business entities in the retail market that the antitrust laws were enacted to preserve.
(5) That the central issue in the case is whether the Star’s refusal to sell to independent carriers will result in unreasonable anticompetitive effects in the market or, to put it another way, whether the procompet-itive effects are sufficient to overshadow the anticompetitive effects of removing the competition from the market, thus resulting in no unreasonable anticompetitive effects.
The majority finds that the carriers “have not borne their burden as plaintiffs of proving that the procompetitive effects generated by optimum monopoly pricing and the unique nature of a newspaper’s *705revenues are outweighed by the anticom-petitive effect of eliminating potential competition from the retail market.” It appears to place primary reliance on the following conclusions in the original dissenting opinion to support this finding:
(1) That while many readers will pay more for their subscriptions, many readers will pay less.
The fact is that 92% of the readers will pay more and only 8% pay less.
(2) That the price increase may be attributable to a general increase in costs unrelated to the Star’s decision to vertically integrate.
The fact is that the price comparison was made as of the date that the Star fixed to discontinue dealing with the 250 carriers. There is no evidence in the record that the new price schedule had any relationship to a general increase in costs. To the contrary, the evidence indicates that uniformly higher prices were to be put into effect to increase revenues and profits from circulation.
(3) That the range of services provided to individual readers will be greater than what exists under the contract system.
There is no evidence in the record to support this statement. Rather, many of the divergent services that were being offered to residential, commercial, and rack subscribers were to be curtailed.
(4) The Star’s forward integration will not raise barriers to first level entry (publication of daily metropolitan newspapers).
This statement is factually true but it is irrelevant. The Star has already erected, by unlawful means, every barrier that is realistically necessary to prevent any informed potential competitor from entering the market.
The majority finds an additional reason to reverse the district court in “the fact that every other antitrust case brought against a newspaper publisher challenging the newspaper’s decision to forwardly integrate into distribution has been resolved in favor of the newspaper.” Assuming without conceding the validity of this statement,1 the facts are: (1) that this case is the only one in which the newspaper refusing to sell to independent distributors stood convicted of having achieved a monopoly in the newspaper publishing business in a relevant market by illegal means; and (2) that this case is the only one in which the plaintiffs proved that the new delivery system would not be more efficient than the old one, that prices to consumers would *706rise as a result of the takeover, and that the range of services would be narrower under the new system than the old.
What remains then to support the reversal of the district court is the theory developed by the “Chicago school” of economists that absent circumstances not present here, consumers are not harmed when a monopolist extends its monopoly forward into retail distribution — the reasoning being that inasmuch as the monopolist has the power to obtain maximum monopoly profits by charging as much as it chooses at the wholesale level, consumers will not be further harmed if the monopolist takes over distribution. Notwithstanding the Department of Justice’s embrace of this theory, we should not be willing to substitute theory for hard evidence in the record. Here, the Star had been unable to maximize its profits under the independent distribution system. The reason is obvious. The Star could not, without violating antitrust laws, control the price at which the independent carriers sold the papers to consumers; and absent a uniform price, the pressure from those paying more than those in an adjacent territory would vent their displeasure on the Star. Thus, notwithstanding the “Chicago” theory, the independent distribution system of 250 carriers operated to hold down prices to the ultimate consumers, and to protect them from the full exercise of unlawfully achieved monopoly power.
One further point deserves emphasis. It was made by Chief Justice Warren in Brown Shoe Co. v. United States, 370 U.S. 294, 344, 82 S.Ct. 1502, 1534, 8 L.Ed.2d 510 (1962):
It is competition, not competitors, which the Act protects. But we cannot fail to recognize Congress’ desire to promote competition through the protection of viable, small, locally owned businesses. Congress appreciated that occasional higher costs and prices might result from the maintenance of fragmented industries and markets. It resolved these competing considerations in favor of decentralization. We must give effect to that decision.
Here, we should, as Judge Bright points out in his dissent which I join, show concern for the 250 viable, small, locally owned businesses who are affected by the decision of the Star. For years, they have delivered the newspapers economically and efficiently. They have treated their customers fairly and have given them excellent service. Now they stand to lose their businesses simply because the Star, a highly profitable newspaper, wants to maximize their monopoly prices by establishing a uniformly higher retail price.
The views of Chief Justice Warren and his concurring colleagues in Brown Shoe are under assault by those who would destroy the effectiveness of our antitrust law. We should take this opportunity to repel that assault.

. White v. Hearst Corp., 669 F.2d 14 (1st Cir.1982), was brought under Section 1 of the Sherman Act and failed because plaintiffs failed to prove a conspiracy; in Auburn News Co. v. Providence Journal Co., 659 F.2d 273 (1st Cir.1981), cert. denied, 455 U.S. 921, 102 S.Ct. 1277, 71 L.Ed.2d 461 (1982), the independent distributors sought to raise their prices to distributors; Hardin v. Houston Chronicle Publishing Co., 572 F.2d 1106 (5th Cir.1978), involved only a denial of a preliminary injunction; in Byars v. Bluff City News Co., 609 F.2d 843, 853 (6th Cir. 1980), the Court noted:
If the court below does find that Bluff City possesses monopoly power, the record before us suggests that at worst, such power was thrust upon Bluff City by the national periodical distributors who, for valid business reasons, chose to deal only with it. This is significant because mere possession of monopoly power is not illegal. A monopolist which achieves that status because of “a superior product, business acumen, or historic accident,” United States v. Grinnell Corp., supra, 384 U.S. at 571, 86 S.Ct. at 1704, cannot be faulted. Such monopolists are “tolerated but not cherished” because of “considerations of fairness and the need to preserve proper economic incentives.” Ber-key Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 274 (2d Cir.1979). However, if a monopolist abuses its monopoly power and acts in an unreasonably exclusionary manner vis-a-vis rivals or potential rivals, then § 2 is violated. If, after the additional fact-finding ordered on remand, the district court finds that Bluff City did in fact possess monopoly power, it must then determine whether Bluff City abused this power by refusing to deal with Byars. [Footnote omitted.];
in Knutson v. Daily Review, Inc., 548 F.2d 795 (9th Cir.1976), cert. denied, 433 U.S. 910, 97 S.Ct. 2977, 53 L.Ed.2d 1094 (1977), no showing was made that the defendant was a monopolist; in Neugebauer v. A.S. Abell Co., 474 F.Supp. 1053 (D.Md.1979), there was neither a monopoly nor a refusal to deal; and in McGuire v. Times Mirror Co., 405 F.Supp. 57 (C.D.Cal.1975), the newspaper was not a monopoly.