Court Opinion

ID: 8911193
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:04:07.134594+00
Date Added: 2024-06-11T17:08:32.740356
License: Public Domain

SNEED, Circuit Judge,
concurring in part and dissenting in part:
I concur in the court’s opinion with the exception of that portion that finds a violation of section 202(a) of the Act, 7 U.S.C. § 192(a) (1964). As to this portion I would remand to the Administrator to determine the pro- and anti-competitive effects of the packers’ conduct the majority finds to amount to an “unfair, unjustly discriminatory, or deceptive practice or device in commerce.”
Courts in dealing with matters requiring application of the antitrust laws frequently resort to per se rules or their functional equivalent as has the majority in this case. One can speculate on the reasons for this tendency. Whatever the full array of reasons might be, one which surely is among the foremost is the desire to simplify the administration of the antitrust laws by the courts. The difficulty with zealous pursuit of this end is that often it results in judicial indifference to the actual economic effect of the practice branded with the per se iron.
I believe the majority’s section 202(a) holding reflects this indifference. Concerted activity alone is not a per se violation of the antitrust law. Whether it is or not depends on its purpose and effect. Joseph E. Seagram & Sons Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71 (9th Cir. 1969), established this principle for this circuit. The proscribed purposes were there described as “either to exclude a person or group from the market, or to accomplish some other anti-competitive objective, or both.” Id. at 76. On this record I can not say that the concerted activity of the packers, which the majority found to contravene section 202(a), served any such purpose. It is possible that “subject” terms would enhance competition with respect to the quality of animals offered for sale and reduce the costs of meat to consumers. It is also possible that they would be no more and no less anti-competitive than are “as is” terms. All we know for certain is that the farmers, stockyard owners, and the Department of Agriculture favor “as is” sales. The solidity of this front does not guarantee that its position is more competitive, or even less anti-competitive, than that favored by the packers.
The approach I suggest is not contrary to the authorities. This dissent shall not be lengthened by a critical analysis of the numerous relevant cases. In the margin are set out some authorities and sources that give support to the approach I believe should have been taken in this case as well as a brief analysis of Paramount Famous Lasky Corp. v. United States, 282 U.S. 30, 51 S.Ct. 42, 75 L.Ed. 145 (1930), and United States v. First National Pictures, Inc., 282 U.S. 44, 51 S.Ct. 45, 75 L.Ed. 151 (1930), that suggests these venerable oaks in the antitrust forest do not stand in the way of the direction I think we should have gone.1

. A tidy constellation of Supreme Court decisions stands for the proposition that group boycotts are per se illegal. United States v. General Motors Corp., 384 U.S. 127, 86 S.Ct. 1321, 16 L.Ed.2d 415 (1966); Silver v. New York Stock Exchange, 373 U.S. 341, 83 S.Ct. 1246, 10 *1339L.Ed.2d 389 (1963); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656, 81 S.Ct. 365, 5 L.Ed.2d 358 (1961); Klor’s, Inc. v. Broadway-Hale Stores, 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959); Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953); United States v. Columbia Steel Co., 334 U.S. 495, 68 S.Ct. 1107, 92 L.Ed. 1533 (1948); see also L. Sullivan, Antitrust 229-30 (1977); R. Posner, Antitrust Law: An Economic Perspective 207 (1976); von Kalinowski, 11 Antitrust Laws and Trade Regulation ¶ 76.01, at 76-1 to 76-2 (1969); Barber, Refusals to Deal Under the Federal Antitrust Laws, 103 U.Pa.L.Rev. 847 (1955); Comment, Per Se Illegality and Concerted Refusals to Deal, 13 B.C.Ind. & Com.L.Rev. 484 (1972). If every group refusal to deal were a boycott, then all attempts to pool bargaining power would fall under the per se prohibition, for a group bargaining posture necessarily depends on overt or implicit threats of group refusal to deal. In a number of decisions, however, the Court has indicated that the concept of unlawful boycott does not extend so far. Fashion Originators’ Guild of America, Inc. v. FTC, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941); Appalachian Coals, Inc. v. United States, 288 U.S. 344, 53 S.Ct. 471, 77 L.Ed. 825 (1933); Chicago Bd. of Trade v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683 (1918); Eastern States Retail Lumber Dealers’ Ass’n v. United States, 234 U.S. 600, 34 S.Ct. 951, 58 L.Ed. 1490 (1914). Further retreat from peremptory condemnation of the concerted refusal to deal seems inevitable given the unexplored range of differently motivated practices that would otherwise be outlawed. For a discussion of some joint activities yet to be examined by the courts, see L. Sullivan, supra, at 247-311.
Paramount Famous Lasky Corp. v. United States, supra, and United States v. First Nat’l Pictures, Inc., supra, both decided under the Sherman Act, convinced the majority that it is an antitrust violation for competitors jointly to exact more favorable terms of trade from their suppliers than they could otherwise obtain “through the normal play of competitive forces.” 618 F.2d at 1336. The majority applies the principle just stated to the packers’ conduct. This of course assumes that the conduct deviated from the competitive norm, but more importantly, it puts forward a reading of Paramount Famous Lasky and First National Pictures, and an assessment of their place in antitrust jurisprudence, that are highly questionable.
Neither Paramount Famous Lasky nor First National Pictures uses the term “boycott” or explicitly applies a per se rule. Indeed, Mr. Justice McReynolds’ opinions for the Court in these cases are hardly specific in their criticism of the condemned joint activities. Judge Friendly has recently described the “somewhat inscrutable opinion” in Paramount Famous Lasky as leaping to a result “[ajfter quoting from a miscellany of largely irrelevant opinions about the purposes of the Sherman Act.” Drayer v. Krasner, 572 F.2d 348, 354 (2d Cir. 1978). Film distributors in Paramount Famous Lasky agreed to use a standard contract form in dealing with exhibitors and not to deal with any exhibitor who breached the form’s arbitra-; tion clause. The clause was the focus of the parties’ and the Court’s attention. The opinion does not emphasize the combination by the distributors at all. It stresses instead that the contract “cannot be classed among ‘those normal and usual agreements in aid of trade and commerce’ ” which, though restraints of trade, are deemed reasonable and permissible. 282 U.S. at 43, 51 S.Ct. at 45; cf. Drayer v. Krasner, supra, 572 F.2d at 355 (suggesting that the Court’s generally low opinion of arbitration at the time may account for the result). Nevertheless, Mr. Justice McReynolds went on to shift the blame from arbitration as such to its anti-competitive effect in this setting. “It may be that arbitration is well adapted to the needs of the motion picture industry; but when under the guise of arbitration parties enter into unusual arrangements which unreasonably suppress normal competition their action becomes illegal.” Id. Although this hints that the Court saw a weakening of competition not in the mere pooling of the distributors’ bargaining power but in the design of this particular arbitration clause, the opinion goes no further. Judge Friendly offers the following hypothesis:
The details of the arbitration clause . were indeed harsh and had operated harshly on exhibitors, as revealed in the Court’s' statement of the facts, .282 U.S. at 37-41, 51 S.Ct. 42, and further in the Government’s brief, see 282 U.S. at 35-36, 51 S.Ct. 42. A further factor which, although not mentioned, must have lurked in the background, was that many of the distributors themselves were important exhibitors and, indeed, were later found to have conspired with the goal of attaining a monopoly in exhibition, see United States v. Paramount Pictures, Inc., 334 U.S. 131, 167-71, 68 S.Ct. 915, 92 L.Ed. 1260 (1948).
Drayer v. Krasner, supra, 572 F.2d at 354-55.
First National Pictures dealt with a similar agreement of film distributors to impose a credit check on exhibitors. The agreement allowed a credit committee appointed by the distributors to exact a security deposit from exhibitors with low credit ratings. The Court explained the evil of this combination very briefly:
The obvious purpose of the arrangement is to restrict the liberty of those who have representatives on the Film Boards and secure their concerted action for the purpose of coercing certain purchasers of theaters by excluding them from the opportunity to deal in a free and untrammeled market.
282 U.S. at 54, 51 S.Ct. at 48. While this may imply disapproval of joint negotiation by the distributors, it also disapproves the restraint on *1340distributors’ freedom to vary the terms of their contracts with exhibitors. The Court may therefore have been concerned about the limitation on competitive variations of substitutable “goods,” about the distributors’ increased bargaining strength, or both.
Professor Sullivan comments:
Arrangements like those in Famous Laskey and First National are more like price fixing agreements than they are like classic boycotts. Indeed, if a concerted agreement, say, to include a security deposit in all contracts is a “boycott” because it excludes all buyers who won’t agree to it, then by parity of reasoning every price fixing agreement would be a boycott also. The use of the single concept, boycott, to cover agreements so varied in nature can only add to confusion. But there is an even more important reason for not referring to an agreement which conceitedly sets non-price terms of trade as a boycott, to which the per se doctrine applies. Such agreements may not be as consistently adverse to competition as their price fixing agreements or classic boycotts. In some situations — for example if there are large numbers of small sellers and buyers — an agreement fixing collateral terms, like an agreement standardizing product, might tend to increase price competition by reducing confusing variations between the offerings of competing sellers. In other situations concerted decisions about the terms on which competitors will trade may advance other social objectives and be competitively neutral. Though courts should look at all such arrangements critically, a per se response may be too severe.
L. Sullivan, supra, at 257-58 (footnote omitted); see also R. Posner, supra, at 207-08. In the light of these and related thoughts about the vitality of Paramount Famous Lasky, the Second Circuit held that a collective attempt to impose a standard arbitration clause, which did not “inhibit the freedom of any firm in competing for business or of any investor in seeking the firm that will give him the best and cheapest service,” Drayer v. Krasner, supra, 572 F.2d at 354, was “within the rule of reason,” id. at 355. Thus one circuit, at least, is unwilling to extrapolate from Paramount Famous Lasky even to all concerted efforts to impose arbitration clauses, to' say nothing of other forms of joint negotiation.