Commercial Bribery and the Antitrust Laws
| Date | 01 December 1995 |
| DOI | 10.1177/0003603X9504000402 |
| Published date | 01 December 1995 |
| Author | Arthur H. Travers |
| Subject Matter | Domestic Antitrust |
The Antitrust BulletinlWinter 1995
Commercial bribery and
the antitrust laws
BY
ARTHUR
H.
TRAVERS*
779
In the late 1930s the president of the Kentucky-Tennessee Light
and Power Company accepted a bribe
of
15 cents for each ton
of
coal
sold and delivered to the utility by the coal
company
to
which the contract to supply the utility had been awarded. Repre-
hensible and disloyal conduct on the part
of
the president, to be
sure, and the utility could certainly recover from the president and
the coal company under any of several common law theories.IBut
does this situation present an antitrust problem? Is this a matter
for the federal courts? For treble damages?
As a matter of fact, yes. The utility sued both the ex-president
(as he then had become) and the coal company under section 2(c)
of
the Robinson-Patman Act.? The Sixth Circuit ruled that that
section did indeed apply to commercial bribery,3 thus becoming
*
Professor
of
Law, University
of
Colorado
School
of
Law.
Authoritative
statements
include
RESTATEMENT
OF
TORTS
§
759
(1938);
RESTATEMENT
(Second)
OF
AGENCY,
§
312
(1959). See also, gener-
ally, J.
NOONAN,
BRIBES
425-680
(1984).
15
U.S.c.
§13(c).
3
Fitch
v.
Kentucky-Tennessee
Light
&
Power
Co.,
136
F.2d
12
(6th
Cir. 1943).
©1995 by Federal Legal Publications, Inc.
780 The antitrust bulletin
the first
of
several circuits to so rule.s Although some
of
these
decisions
display
a
distinct
lack
of
enthusiasm
for
using
the
antitrust
laws
in this fashion, and more recent decisions
have
begun to toughen the standards for plaintiffs seeking to recover
treble damages for commercial bribery." I have not unearthed any
cases that squarely reject the notion that section 2(c) is applicable,
at least in some cases, to commercial bribery.
In addition, the Supreme Court has, on two occasions, made
statements consistent with the view that section 2(c) applies to
commercial bribery, although it has never directly ruled on the
issue." It also seems to have been the case that using section 2(c)
to attack commercial bribery was once in vogue with the Federal
Trade Commission."
Litigants have also tried to use sections I and 28of the Sher-
man Act as bases for treating commercial bribery as an antitrust
matter. Although it has been argued that the Sherman Act is to be
4Other circuits are the Third, Environmental Tectonics v. W.S.
Kirkpatrick, Inc., 847 F.2d 1052, 1066 (3d Cir. 1988),
aff'd
on other
grounds, 110 S. Ct. 701 (1990); Seaboard Supply Co. v. Congoleum
Corp.,
770
F.2d
367 (3d Cir. 1985) (dictum; dubitante); the Fourth,
Stephen Jay Photography Ltd. v. Olan Mills, Inc., 903 F.2d 988 (4th Cir.
1990) (dictum), affirming, 713 F. Supp. 937 (E.D. Va. 1989); the Sev-
enth, Grace v. E.J. Kozin Co., 538 F.2d 170 (7th Cir. 1976); and the
Ninth, Rangen, Inc. v . Sterling Nelson &Sons, Inc., 351 F.2d 851 (9th
Cir. 1965).
5E.g., Federal Paper Board Co. v. Amata, 693 F. Supp. 1376 (D.
Conn. 1988); Stephen Jay Photography Ltd. v. Olan Mills, Inc., 713 F.
Supp. 937 (E.D. Va. 1989), affirmed, 903 F.2d 988 (4th Cir. 1990);
Burge v. Bryant Public School Dist., 520 F. Supp. 328 (E.D. Ark. 1980),
affirmed
per
curiam, 658 F.2d 611 (8th Cir. 1981); Harris v. Duty Free
Shoppers, Trade Reg. Rep. (CCH)
~
68,684 (N.D. Calif. 1989).
6See California Motor Transp. Co. v. Trucking Unlimited, 404 U.S.
508, 513 (1972); FTC v. Henry Broch &Co., 363 U.S. 166, 169 n.6
(1960), discussed below.
See Yeager, Brokerage Problems and Commercial Bribery, 53
ANTITRUST L.J. 1029, 1041 (1985).
815 U.S.C. §§ 1&2.
Commercial bribery 781
preferred to
the
Robinson-Patman
Act
as such abasis." these
efforts have proved rather less successful;'? for reasons that I hope
to make clear later in this article."
When one looks at the facts
of
the cases in which these issues
have been ventilated, it is hard not to conclude that they are any-
thing
but
cosmic,
and
at
least
three
articles
have
already
addressed some
of
them.P
Nevertheless, it seems to me that the
topic can
bear
another discussion. In recent years, commercial
bribery cases have made up the lion's share of the relatively small
number of cases deciding questions under section 2(c), once the
darling of the Federal Trade Commission." More importantly, I
believe that reaching satisfying conclusions about the extent to
which commercial bribery should be regarded as an antitrust prob-
lem requires one to address questions about the proper role
of
the
antitrust laws in general. Thus, analysis
of
this narrow question
may help illuminate some more
basic
issues as well. As will
appear, my analysis has led to conclusions rather different from
those of other analysts. Contrary to the case law, I believe that
section 2(c) does not, in general, apply to commercial bribery.
Conversely, Ibelieve that commercial bribery may be a violation
of sections 1 and 2 of the Sherman Act, but that it is not a per se
Gevurtz, Commercial Bribery and the Sherman Act: The Case for
Per Se Illegality, 42 U.
MIAMI
L.
REV.
365,
367-68
(1987).
10 E.g., Rangen, Inc. v. Sterling Nelson &Sons, Inc., 235 F. Supp.
393 (D. Idaho 1964), affirmed on other grounds, 351 F.2d 851 (9th Cir.
1965); Calnetics Corp. v. Volkswagen
of
America, Inc., 532 F.2d 674
(9th Cir.), cert. denied, 429 U.S. 940 (1976); Parmelee Transp. Co. v.
Keeshin, 186 F. Supp. 533 (N.D. Ill. 1960), affirmed, 292 F.2d 794 (7th
Cir.),
cert. denied, 368 U.S. 944 (1961);
Federal
Paper
Board
Co. v.
Amata, 693 F. Supp. 137 (D. Conn. 1988).
11 Iexclude from the scope of this article any issues relating to the
applicability of RICO to commercial bribery.
12 See, in addition to the Gevurtz and Yeager articles cited above,
Allen &Williams, Commercial Bribery, Antitrust Injury and Section 2( c)
of
the Robinson-Patman Anti-Discrimination Act, 26
GONZAGA
L.
REV.
167 (1990/91).
13 See R.
POSNER,
THE
ROBINSON-PATMAN
ACT
29-34
(1976).
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