Antitrust 1986-87: Power and Access (Part II)

• Author: John Deq Briggs,Stephen Calkins
• Published date: 01 September 1987
• DOI: 10.1177/0003603X8703200307
• Date: 01 September 1987
• Subject Matter: Article

The Antitrust Bulletin/Fall 1987

Antitrust 1986-87:

power and access (Part II)

BY

JOHN

DEQ. BRIGGS·

and

STEPHEN

CALKINS··

699

This is the second part

of

a review of the year in antitrust. Two

themes emerge from a review of that year: power and access.

Part

I of this article, which was published in the previous issue of The

Antitrust Bulletin,Idiscussed issues

of

market power, institutional

power, and the power of ideas.

It

was seen that market power has

become the central issue in antitrust litigation, although few

courts thoroughly understand the concept. Among antitrust insti-

Partner, Howrey &Simon, Washington, D.C.

Visiting Associate Professor, University

of

Pennsylvania Law

School, Philadelphia, Pennsylvania, and Associate Professor, Wayne

State University Law School, Detroit, Michigan.

AUTHORS' NOTE: This article is a revised and updated version

of

re-

marks delivered at The Conference Board's 26th Conference on Anti-

trust Issues in Today's Economy, March 5, 1987. With contributions

from and revisions by Professor Calkins,

Mr.

Briggs prepared Part

II.

The author thanks Martin Adelman and C. N. C. Fishman

for

their

review

of

the manuscript, but

of

course absolves them

of

responsibility

for any errors.

Briggs &Calkins, Antitrust 1986-87: Power and Access (Part I),

32

ANTITRUST

BULL.

275 (1987).

S/ 1987 by

Federal

LegalPublications, Inc.

700 The antitrust bulletin

tutions, three

players-state

attorneys general, the Congress, and

the Federal Trade

Commission-are

more vigorous today than

they were before. And in academia, scholars are questioning the

benefits of mergers, refining the "Chicago school" analysis, and

continuing research in theoretical economics.

The focus

of

Part

II of this review shifts from "power" to the

second theme: access. The past year saw the continued develop-

ment and application of a number of legal principles that effec-

tively deny plaintiffs full access to the judicial machinery of

antitrust.

It

is becoming increasingly difficult to satisfy the

threshold requirement, in many antitrust suits,

of

establishing a

conspiracy, and courts are regarding summary motions with

favor. Standing continues to bar many complaints. Numerous

plaintiffs are being barred by the Noerr-Pennington' and state-

action exemptions, although here there are some notable excep-

tions. Even antitrust law's commerce requirement, once regarded

as largely irrelevant, is a basis on which some courts are dismiss-

ing suits. Courts also have begun dismissing suits in deference to

arbitration provisions, which enjoy newfound respectability.

Access

A.

Conspiracy

1. CAPACITY TO CONSPIRE Two years ago, in Copperweld

Corp. v. Independence Tube Corp.,' the Supreme

Court

held

that aparent and its wholly owned subsidiary do not have the

capacity to conspire, because they are a single economic entity.

This ruling has been almost uniformly followed in the federal

2See Eastern R.R. Presidents Conference v. Noerr Motor Freight,

Inc., 365 U.S. 127 (1961); United Mine Workers

of

Am. v. Pennington,

381 U.S. 657 (1965).

467 U.S. 752 (1984).

Antitrust 1986-87 701

courts,

and

has generally been extended to encompass mere

majority ownership.' However, state courts are not necessarily

required to follow federal antitrust principles, and two states'

courts have held that, in analyzing their own state laws, they

are not bound by federal

precedents-and

they have applied

neither the holding nor the rationale of

Copper

weld. 5

An unresolved question under Copperweld is the capacity of

commonly owned corporations to conspire. Although a Virginia

district court held that such subsidiaries are capable of conspir-

4E.g., Novatel Communications, Inc. v. Cellular Tel. Supply, Inc.,

1986-2 Trade Cas. (CCH)

~

67,412 (N.D. Ga. 1986) (parent corporation

is not capable

of

conspiring with its

51OJo-owned

subsidiary); Cutters

Exch., Inc. v. Durkoppwerke

GmbH,

1986-1 Trade Cas. (CCH)

~

67,039 (M.D. Tenn. 1986) (manufacturer, its wholly owned exclusive

distributor,

and

two

of

the distributor's employees were incapable

of

conspiring to terminate the manufacturer's previous distributor). But

see St.

Joseph's

Hosp., Inc. v. Hospital Corp.

of

Am.,

795 F,2d 948,

956

(lIth

Cir. 1986) (plaintiff should be able to amend complaint to

plead facts showing that wholly owned subsidiary with entirely separate

board

of

directors had an " 'independent personal stake' in the outcome

of the conspiracy") (quoting Tunis Bros. Co. v.

Ford

Motor Co., 763

F,2d 1482, 1496 (3d Cir. 1985), vacated, 106 S. Ct. 1509 (1986), rein-

stated on remand, 5

TRADE

REG.

REP.

(CCH)

~

67,636 (3d Cir. July 15,

1987»; cf. Rothery Storage &Van Co. v. Atlas VanLines, Inc., 792 F,2d

210,214-15 (D.C. Cir. 1986) (Bork,

J.)

(dictum

that

where moving com-

pany's

board

of

directors was comprised largely

of

competing carrier

agents,

board

action constituted aconspiracy), cert. denied, 107 S. Ct.

880 (1987); Sonitrol of Fresno, Inc. v. American Tel. &Tel. Co.,

1986-1

Trade Cas. (CCH)

~

67,080, at 62,566 n.2 (D.D.C. 1986) (noting ruling

by special master requiring ownership sufficient to compel a merger be-

fore treating partially owned subsidiary as effectively wholly owned).

Louisiana Power &Light Co. v. United Gas Pipe Line

Co.,

493

So. 2d 1149, 1986-2 Trade Cas. (CCH)

~

67,272 (La. 1986); People v.

Schwartz, 5

TRADE

REG.

REP.

(CCH)

~

67,581 (N.Y. Sup. Ct. Oct. 17,

1986) (Donnelly Act is broader than Sherman Act).

But

see American

Credit

Card

Tel. Co. v. National Pay Tel.

Corp.,

504 So. 2d 486 (Fla.

Dist. Ct. App. 1987) (applying Copperwe/d); Ford

Motor

Co. v. Lyons,

137 Wis. 2d 397, 405 N. W.2d 354 (Wis. Ct. App. 1987) (same).