The Supreme Court and the Antitrust Laws: 1972–1973

• Author: J. G. Van Cise
• DOI: 10.1177/0003603X7301800401
• Published date: 01 December 1973
• Date: 01 December 1973
• Subject Matter: Article

THE

SUPREME

COURT

AND

THE

ANTITRUST

LAWS:

1972-1973

by

J.

G.

VAN

CISE-

Last

year, the Supreme Court reaffirmed old rulings con-

demning

trade

restraints, and created new precedents favor-

ing the consumer.' This year, the Court

has

noticeably ad-

vanced the frontier of

antitrust

law in the

areas

of monopoly,

mergers and patents,

and

has approved the use of rule making

-at

least

by the

FDA-to

protect the consuming public.

The Court also

has

dealt with regulated industries. Re-

versing the route made famous by the

King

of France,

our

Highest Tribunal first marched down the

hill-temporarily

abandoning much of the field of

antitrust

to the jurisdiction

of regulatory

agencies-and

thereafter

marched at least

part

way back.

RESTRAINTS

AND

MONOPOLY

In

Otter Tail Power Co. v, United States, 41 U.S.L.W. 4292

(1973), Otter Tail Power Company, an electric utility com-

pany, sold electric power

at

retail in 465 towns in Minnesota,

North

Dakota and South Dakota.

In

a civil action brought

by the Government challenging the conduct of this utility

under

the

antitrust

laws, the district court found

that

the

defendant had attempted to prevent communities in which its

arrangements to distribute power

at

retail

had

expired from

replacing them with municipal distribution systems,

and

with

this intent it

had

engaged

in:

(1) refusals to sell power

at

wholesale to the proposed new municipal systems, (2) re-

fusals to

transfer

from

other utilities (i.e. "wheel") power to

such proposed systems, (3) employment of litigation to pre-

vent

or

delay the establishment of such systems,

and

(4)

• Cahill Gordon and Reindel, New York, N.Y.

1Van Cise, "The Supreme Court and The Antitrust Laws, 1971-

1972," Vol.

XVII,

No.4,

Antitrust Bulletin (1972), p. 975.

691

692

THE

ANTITRUST

BULLETIN

invocation of provisions in

its

contracts with other power

suppliers to prevent access by these suppliers to the pro-

posed systems. The lower court held

that

Otter Tail thereby

had

attempted to monopolize and had monopolized the retail

distribution of electric power in

its

service areas in violation

of Section 2 of the Sherman Act.

The Supreme Court (with Chief Justice

Burger

and Jus-

tices Stewart and Rehnquist concurring in

part

and dissenting

in part, and with Justices Blackmun and Powell not partici-

pating) initially ruled

that

the limited authority and regula-

tory

responsibilities of the

Federal

Power Commission with

respect to interconnections did not immunize

Otter

Tail from

the application of the

antitrust

laws.

It

then upheld the de-

cision of the district court insofar as

it

had

ruled (a)

that

Otter Tail

had

violated Section 2 of the Sherman Act in

refusing either to sell or to "wheel" power from other utilities

to the proposed new municipal distribution systems and (b)

that

the utility's contracts

had

violated Section 1 of the Act

and so did not

justify

the foregoing Section 2violation:

The District Court determined

that

Otter

Tail

has

"a

strategic dominance in the transmission of power in most

of its service

area"

and

that

it used this dominance to

foreclose potential

entrants

into the retail

arena

from

obtaining electric power from outside sources of supply.

Use of monopoly power

"to

destroy threatened competi-

tion" is a violation of the

"attempt

to monopolize" clause

of

o§2

of the Sherman Act.

•••••

Otter Tail relies on its "wheeling" contracts with the

Bureau

of Reclamation

and

with cooperatives which it

says relieves

it

of any

duty

to wheel power to munici-

palities served at retail by

Otter

Tail

at

the time the

contracts were made. The District Court held

that

these

restrictive provisions were

"in

reality,

territorial

alloca-

tion schemes," 331 F.Supp.,

at

63, and were

per

se viola-

tions of the Sherman Act.

• • • • •