Attempt to Monopolize: Dangerous Probability of Success as an Obstacle to Enforcing Section 2 of the Sherman Act

• Publication year: 1982

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 5, No.2SPRING 1982

COMMENTS

Attempt to Monopolize: Dangerous Probability of Success as an Obstacle to Enforcing Section 2 of the Sherman Act

John C. Bjorkman

Over the last seventy-five years judicial decisions and scholarly debate have failed to provide a uniform definition of "attempt to monopolize" under section 2 of the Sherman Act.(fn1)The Supreme Court has not dealt substantively with the attempt clause since 1951(fn2) and has consistently denied certiorari in some very pressing cases.(fn3) Thus, the federal courts of appeal have become courts of last resort for cases involving an attempt to monopolize, presenting significant problems for business planners who labor to conform their behavior to the laws of the various circuits.(fn4)

The debate over the elements forming an "attempt to monopolize" action reflects two contrary approaches. The majority of courts have held that an "attempt to monopolize" violation requires proof that the defendant was engaged in some anticompetitive conduct, had the specific intent to monopolize the relevant market, and had a market share(fn5) large enough to create a dangerous probability of successfully monopolizing that market.(fn6) A minority of courts, most notably, the Ninth Circuit Court of Appeals, has held that independent proof of "dangerous probability of success" is not always necessary for an attempt to monopolize action.(fn7) The Ninth Circuit, however, has not completely eliminated the "dangerous probability of success" element from the attempt analysis.(fn8) The courts should take the final step toward clearing up this confused area of the law and provide a uniform interpretation of "attempt to monopolize" by eliminating "dangerous probability of success" as an element of the offense.

This Comment analyzes the conflicting definitions of attempt to monopolize. First, the Comment outlines the majority position requiring proof of "dangerous probability of success" in an "attempt to monopolize" case under section 2 of the Sherman Act. Next, the Comment examines the minority position and finds that it raises countervailing concerns that warrant eliminating the "dangerous probability of success" requirement. Finally, this Comment concludes that the "dangerous probability of success" element adds nothing but confusion to the "attempt to monopolize" analysis and should therefore be eliminated.

I. The Majority Position: Proof of Dangerous Probability of Success a Requirement

The majority position requiring proof of specific intent, anticompetitive conduct, and dangerous probability of success for an attempt to monopolize rests on three grounds. First, the majority relies on several Supreme Court cases beginning with Justice Holmes' elucidation of the attempt offense in Swift Co. v. United States.(fn9) Second, the majority argues that the elimination of dangerous probability of success would promote a flood of nuisance cases. Finally, and most important, the majority raises economic policy considerations to demonstrate the need for the dangerous probability of success requirement.

The Supreme Court first defined attempt to monopolize in Swift and Co. v. United States.(fn10) The Court stated that where acts are not sufficient in themselves to produce a prohibited result, an intent to achieve that result is necessary to produce a dangerous probability that it will happen.But when that intent and the consequent dangerous probability exist, this statute [section 2], like many others and like the common law in some cases, directs itself against that dangerous probability as well as against the completed result . . . . . . . .. . . Not every act that may be done with intent to produce an unlawful result is unlawful, or constitutes an attempt. It is a question of proximity and degree. The distinction between mere preparation and attempt is well known in the criminal law. The same distinction is recognized in cases like the present.(fn11) Courts adhering to the majority view regard this language from Swift as establishing dangerous probability of success as a separate and essential element in an attempt to monopolize cause of action. While minority courts do not require dangerous probability of success, all courts generally agree that Swift was the first case to define the elements required for an attempt to monopolize cause of action.(fn12)

The Supreme Court has addressed attempt to monopolize in relatively few cases since its 1905 decision in Swift.(fn13) Courts adopting the majority position typically cite three cases as authority for requiring dangerous probability of success. In the first case, American Tobacco Co. v. United States,(fn14) the Court quoted from a jury instruction which stated "[t]he phrase 'attempt to monopolize' means the employment of means and procedures which would, if successful, accomplish monopolization, and which, though falling short, nevertheless approach so close as to create a dangerous probability of it . . . ."(fn15) In the second case, Lorain Journal Co. v. United States(fn16) the Court upheld an attempt to monopolize conviction, citing the dangerous probability langauge of Swift.(fn17) In Walker Process Equipment, Inc. v. Food Machine and Chemical Corp.,(fn18) the third case, the Court stated that monopolization and attempt to monopolize causes of action require assessing the defendant's ability to lessen or destroy competition in the relevant market. Most lower courts adopting the majority view rely on these cases as authority for requiring independent proof of dangerous probability of success.(fn19)

In addition to referring to these Supreme Court cases, courts adopting the majority view argue that maintaining the dangerous probability of success requirement is necessary to prevent a flood of nuisance cases. The antitrust laws authorize treble damages for plaintiffs who successfully prove injury resulting from an attempt to monopolize.(fn20) The majority courts fear that plaintiffs seeking treble damages will bring actions for alleged violations involving only a de minimus effect on commerce and competition. The benefits received by preventing the alleged illegal behavior would not offset the considerable judicial resources devoted to litigating the claims. The majority argues that the dangerous probability of success element, by requiring proof of a sufficiently high market share, filters out the frivolous cases that would otherwise unnecessarily burden the already congested courts. This stricter standard of proof, then, reduces the amount of unnecessary complex antitrust litigation.

Finally, courts adopting the majority position assert that eliminating the dangerous probability of success element would chill the aggressive competitive conduct Congress intended the Sherman Act to promote.(fn21) A plaintiff in an attempt to monopolize case proves a dangerous probability of success by showing that the defendant possesses a sufficiently high share of the relevant geographic and product market.(fn22) The majority argues that requiring such proof shelters firms with no real potential for monopolizing the market from antitrust liability. Small firms can thus vigorously compete with larger firms without the threat of antitrust liability.

Related to the alleged deleterious effect on smaller firms is the majority's concern that elimination of dangerous probability of success would also chill aggressive pricing by the dominant firms in a market. For example, eliminating dangerous probability of success might encourage lower federal courts to crack down on aggressive business conduct.(fn23) Thus, larger firms will shy away from aggressive pricing to avoid risking antitrust liability. Dominant producers will hold back production,(fn24) raise prices, and create a "price umbrella" under which smaller firms may produce inefficiently yet still exist. This results in a noncompetitive market, and higher consumer prices.

To summarize, the majority first argues that Supreme Court cases beginning with Swift support the requirement of dangerous probability of success as an essential element of a prima facie attempt to monopolize case. Second, the majority fears that elimination of this element will increase de minimus nuisance cases. Last, majority courts reason that eliminating the dangerous probability of success element would create a chilling effect on competition. Very simply, courts adopting this approach view the courts and society as better off with the present state of the law.

II. The Minority Position: Independent Proof of Dangerous Probability of Success Not Necessarily Required

The minority position, as developed in the Ninth Circuit has in various cases deemphasized or eliminated the dangerous probability of success element. The leading Ninth Circuit case, Lessig v. Tidewater Oil Co.,(fn25) involved a service station owner who sued his supplier, alleging antitrust violations including an attempt to monopolize the market. The Lessig court expressly rejected dangerous probability of success as an essential element of an attempt action, and focused instead on intent. The court held that in an attempt to monopolize case, dangerous probability of success may be inferred from specific intent.(fn26)

The most recent Ninth Circuit cases have retreated somewhat from the broad sweep of Lessig and have generally given the dangerous probability of success element an inferential role...