Court Opinion

ID: 9466087
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:05:23.00813+00
Date Added: 2024-06-11T17:39:32.298572
License: Public Domain

BLUMENFELD, District Judge
(concurring and dissenting):
I am in agreement with the decision of the majority reversing the lower court’s grant of summary judgment against the plaintiffs on the issue of damages; however, contrary to the majority, I would hold that the alleged horizontal agreement among wholesalers to eliminate credit on sales of beer to retailers constitutes a per se violation of the antitrust laws.
It is clear enough by the citation to Northern Pac. Ry. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958),1 *1103that the majority does not intend to change the established rule of law in antitrust cases that price fixing is a per se violation. See also United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). Although recognizing that price fixing may be accomplished directly or indirectly, the majority finds that the alleged agreement to fix credit terms does not amount to either direct or indirect price fixing. I disagree.
The purchase of goods creates an obligation to pay for them. Credit is one component of the overall price paid for a product. The cost to a retailer of purchasing goods consists of (1) the amount he has to pay to obtain the goods, and (2) the date on which he has to make that payment. If there is a differential between a purchase for cash and one on time, that difference is not interest but part of the price. See Hogg v. Ruffner, 66 U.S. (1 Black) 115, 118-19, 17 L.Ed. 38 (1861). Allowing a retailer interest-free short-term credit on beer purchases effectively reduces the price of beer, when compared to a requirement that the retailer pay the same amount immediately in cash; and, conversely, the elimination of free credit is the equivalent of a price increase.2
To declare in the instant case that credit is “a ‘non-price’ condition of sale,” as the majority asserts supra, is too generalized to be entirely true, and disintegrates when exposed to the economic realities of the beer industry in California. Price competition in the beer industry in California is partially restricted by state law through a system of mandatory territorial restrictions and price posting. See Cal.Bus. & Prof. Code §§ 25000 et seq. While containers vary in material, and contents vary in taste, calories, and sometimes color, beer of one brand is substantially the same as that of another. It is common for retailers to buy and carry in stock for resale different brands from several distributors concurrently. Given the limits to competition on price and on product desirability, competition between wholesalers in extending credit takes on greater importance as a method by which wholesalers can effectively lower the price of beer in order to compete for the business of retailers. The majority acknowledges that where “competition with respect to price primarily center[s] on credit terms, ... an agreement to fix credit terms would amount to price fixing.” This was a naked agreement among competitors to fix credit — a restraint which serves no economic purpose other than to affect prices. It affects no other functional element in a sale of beer by a distributor to a retailer. I would therefore hold that the alleged agreement is illegal per se. Nearly 40 years ago the Supreme Court stated:
“Any combination which tampers with price structures is engaged in an unlawful activity. Even though the members of the price-fixing group were in no position to control the market, to the extent that they raised, lowered, or stabilized prices they would be directly interfering with the free play of market forces. The Act places all such schemes beyond the pale and protects that vital part of our economy against any degree of interference. Congress has not left with us the determination of whether or not particular price-fixing schemes are wise or unwise, healthy or destructive.
“Under the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se.”
United States v. Socony-Vacuum Oil Co., supra, 310 U.S. at 221, 223, 60 S.Ct. at 843, 844.
The suggestion in the majority opinion that the per se rule cannot be applied without proof that the purpose of the agreement was to affect prices finds no support *1104in the cases. What the purpose of the defendants was, and what they thought about the wisdom of cutting off credit, is irrelevant. The Supreme Court has recently emphasized:
“In construing and applying the Sherman Act’s ban against contracts, conspiracies, and combinations in restraint óf trade, the Court has held that certain agreements or practices are so ‘plainly anticompetitive,’ National Society of Professional Engineers v. United States, 435 U.S. 679, 692, 98 S.Ct. 1355, 1365, 55 L.Ed.2d 637 (1978); Continental TV, Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 50, 97 S.Ct. 2549, 2558, 53 L.Ed.2d 568 (1977), and so often ‘lack . . . any redeeming virtue,’ Northern Pac. R. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958), that they are conclusively presumed illegal without further examination under the rule of reason generally applied in Sherman Act cases.”
Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 7, 8, 99 S.Ct. 1551, 1556, 60 L.Ed.2d 1 (1979) (emphasis added). Even in the context of criminal liability under the Sherman Act, the Supreme Court has rejected the claim that a criminal conviction requires a finding of a purpose to produce anticompetitive effects. See United States v. United States Gypsum Co., 438 U.S. 422, 444 & n.21, 98 S.Ct. 2864, 57 L.Ed.2d 854; United States v. Continental Group, Inc., 603 F.2d 444 (3d Cir., 1979); Antitrust & Trade Reg.Rep. (BNA), No. 926, E-1, E-9. The agreement among the defendant competitors in the instant case fits comfortably within the classic mode of price fixing, and it is so plainly anticompetitive in its nature and necessary effect that no elaborate study is needed to establish its illegality. See National Society of Professional Engineers v. United States, supra, 435 U.S. at 692, 98 S.Ct. 1355.3
Paradoxically, our ruling that the plaintiffs’ alleged damages would constitute antitrust injury flowing from the withdrawal of credit under the liberal rule for proving damages gives added weight to the foregoing analysis. We hold that plaintiffs have made “an adequate showing of some damage flowing from the agreement” to terminate credit. How to measure the damage is left unresolved; however, it is clear that the damage claim is derived from the increase in the cost of purchasing beer due to the elimination of free short-term credit. To say that the overall cost of purchasing beer increased as a result of the elimination of credit is functionally the same as saying that the effective price of beer rose for these plaintiffs. Since the alleged agreement to fix credit terms raised the effective price of beer, the alleged agreement amounts to price fixing. As such, the per se rule of illegality should govern this case, and the district court’s ruling to the contrary should be reversed.

.“[T]here are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints which are proscribed by the Sherman Act more certain to the benefit of everyone concerned, but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable — an inquiry so often wholly fruitless when undertaken. Among the practices which the courts have heretofore deemed to be unlawful in and of themselves [is] price fixing, United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 210, 60 S.Ct. 811, 838, 84 L.Ed. 1129
356 U.S. at 5, 78 S.Ct. at 518.

. The defendants here do not argue that the purchase price of their beer decreased in proportion to the savings they realized from eliminating free short-term credit.

. Lest we be led to a false conclusion by the use of ambiguous concepts, it is necessary to point out that the statement of the majority that “an agreement to eliminate credit could sharpen competition with respect to price by removing a barrier perceived by some sellers to market entry,” is curiously inappropriate in this case. I am quite unpersuaded by this strange assertion, nor do I subscribe to the suggestion that it would justify an agreement to fix prices. No person seeking entry to the beer distributors’ market is a party to this case. Furthermore, how another distributor who would abide by the agreement could add to price competition is difficult to understand since the agreement would “cripple [his] freedom . . . and thereby restrain [his] ability to sell in accordance with [his] own judgment." Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 213, 71 S.Ct. 259, 260, 95 L.Ed. 219 (1951).