Summary
The United States Court of Appeals for the Second Circuit reversed a jury verdict and judgment against National Retail Transportation, Inc. and related defendants in an antitrust action brought by International Distribution Centers, Inc. The court held that attempted monopolization requires anticompetitive conduct, specific intent to monopolize, and a dangerous probability of success, which was not established given NRT's limited market share, competition, and low barriers to entry. The court also concluded that the evidence was insufficient to support the alleged conspiracies to restrain trade and to monopolize.
Topics
Practice areas
Questions Presented
- Whether NRT's alleged anticompetitive conduct and specific intent to monopolize established a dangerous probability that NRT would successfully monopolize the relevant market for purposes of attempted monopolization under Sherman Act section 2.
- Whether the evidence was sufficient to support a finding that NRT and the individual defendants formed a conspiracy to restrain trade under Sherman Act section 1.
- Whether the evidence was sufficient to support a finding that the defendants formed a conspiracy to monopolize under Sherman Act section 2.
Holdings
- An attempted-monopolization claim requires proof of anticompetitive or exclusionary conduct, specific intent to monopolize, and a dangerous probability that monopoly will be achieved. Strong evidence of anticompetitive conduct and specific intent does not permit the dangerous-probability element to be inferred where the defendant lacks significant market power and would not likely obtain such power even if the competitor exited the market.
- A section 1 conspiracy requires an agreement or meeting of minds among a plurality of actors to restrain trade, and the evidence must support a reasonable inference of that agreement rather than require impermissible speculation. Evidence that one employer intended a predatory price war, combined with employees' hiring and customer-solicitation activities, was insufficient to establish that the employees agreed to participate in the scheme.
- A conspiracy to monopolize requires concerted action deliberately entered into with the specific intent to achieve an unlawful monopoly and an overt act in furtherance of the conspiracy; unlike attempted monopolization, it does not require proof of a dangerous probability of success.
Key quotations
“We, therefore, adhere to the traditional rule that an action under section 2 of the Sherman Act for attempting to monopolize a market will lie only where there is anticompetitive conduct, a specific intent to monopolize and a dangerous probability that monopoly will be achieved.” (791)
“Thus, we conclude that IDC failed as a matter of law to establish that NRT, which had at most a seventeen percent market share one year after it entered an intensely competitive market with low entry barriers, had a dangerous probability of successfully monopolizing that market.” (793)
“Ultimately, the salient point remains that plaintiff did not offer a scintilla of evidence that any of the IDC defendants knew of or participated in the predatory pricing scheme.” (795)
“Once a plaintiff establishes a conspiracy with a specific intent to monopolize, proof of success or impending success is irrelevant” (796)
Factual background
IDC and NRT competed in the less-than-truckload carriage of garments on hangers in the Pennsylvania Corridor between New York, New Jersey, and Pennsylvania. NRT entered that market in 1983 after modifying vans, leasing terminals, training personnel, and hiring several IDC employees. According to IDC's evidence, NRT president Francis Walsh stated that he intended to obliterate IDC, hired key IDC employees, and planned a price war; however, the evidence did not reasonably establish that the hired employees knew of or joined any predatory pricing scheme. One year after entry, NRT had at most a seventeen-percent market share, while other carriers were competing or entering the market and barriers to entry were relatively low.
Procedural history
IDC sued NRT and related defendants under sections 1 and 2 of the Sherman Act and for misappropriation of trade secrets. After a six-week trial, the jury found for IDC on the three antitrust claims and for NRT on the trade-secrets claim. The district court denied NRT's motion for judgment notwithstanding the verdict and entered judgment awarding IDC $38,261,967 in treble damages, a permanent injunction, and attorneys' fees. The Second Circuit reversed and remanded with instructions to enter judgment for NRT.
Remand instructions
The district court was instructed to enter judgment in favor of NRT and the defendants.