Friday, January 13, 2006
On Tuesday, January 10, SCOTUS announced its decision in Volvo Trucks v Reeder-Simco, reversing a judgment against Volvo that had been affirmed by the 8th Circuit. The Court in a 7-2 decision, written by Justice Ginsburg, ruled that Reeder, the complaining dealer, had failed to show that (1) there was price discrimination among final purchasers of the product and (2) the concessions harmed competition in favor of the winning bidder. The majority emphasized that R-P's primary concern is with harms to interbrand competition. The decision suggested the act has limited application to intrabrand competition at issue in this case. Furthermore, the majority found that state franchise provided a remedy for Reeder in this case.
Justices Stevens and Thomas were the two dissenters. In an opinion written by Justice Stevens, the dissent stated that the majority was using a narrow transaction based notion of competition that ignored the text and the purpose of the Robinson-Patman Act to protect small retailers.
On January 10, 2006, SCOTUS heard oral arguments in the much anticipated Texaco v Dagher and Shell Oil v Dagher cases. Here's a link to some discussion and relevant case materials. I have written a short review of the arguments for the ABA's Supreme Court Preview and will provide a link soon. The case offers some important opportunities for the Court.
The first is to extend the Copperweld rule that a wholly owned subsidiary and a parent are one entity for Section One purposes to the case of a joint venture. The facts of Dagher involve the creation of a joint distribution and marketing venture by Shell Oil and Texaco. The joint venture charged the same price for oil manufactured by Shell and that by Texaco. Dagher, a station owner and named plaintiff in the class action, claimed that the single pricing by the joint venture constituted price fixing between Texaco and Shell Oil. The oil companies argued that pricing was the unilateral choice of a single entity. Although the oil companies cited Copperweld, I think it is unlikely that the court will extend the ruling to joint ventures. The argument remains, as accepted by the Ninth Circuit, that the creation of the venture itself constituted the price fixing.
The Court will also have a chance to revisit the issue of quick look rule of reason and the broader question of characterization. This tack could be an interesting aspect of the decision. A few years in California Dental, the Court seemed to sound the death knell for the quick look approach. But that case involved an FTC action, and the ruling may have rested on the agency's faulty assumptions and record about anti-competitive effects. The Dagher case is a private antitrust action and may allow the Court to clarify the viability of the quick look approach in private actions.