antitrust

Oneok v. Learjet

Issues

Does the Natural Gas Act, which regulates wholesale prices of natural gas, preempt state antitrust liability when accusations concern not wholesale, but retail prices?

The Supreme Court will decide whether the Natural Gas Act (“NGA”) preempts state laws that regulate the retail of natural gas. Oneok and other sellers of natural gas argue that the NGA preempts the claims that these sellers of natural gas violated antitrust laws by illegally manipulating the retail price of natural gas and engaging in wash sales. Learjet, however, contends that while wholesale rates are regulated by the NGA, the NGA does not preempt state law that regulates retail rates. The Supreme Court’s resolution of this case could impact federalism concerns as well as the future of the natural gas market. 

Questions as Framed for the Court by the Parties

Does the Natural Gas Act preempt state-law claims challenging industry practices that directly affect the wholesale natural gas market when those claims are asserted by litigants who purchased gas in retail transactions?

Starting in 2005, Respondents Learjet, Inc. and other retail gas purchasers (collectively, “Learjet”), filed claims in both federal and state court alleging that Petitioners Oneok, Inc. and other natural gas traders (collectively, “Oneok”), skewed the market for natural gas and inflated gas prices by “engaging in wash

Written by

Edited by

Submit for publication
0

Sherman Antitrust Act

Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc.

Issues

Whether a business can be held to violate antitrust laws if it is shown that the business purchases too many or pays too much for materials in order to keep competitors from purchasing those materials at a fair price, or whether another standard should apply, such as the standard in Brooke Group, which requires showing that the business sustained a loss as a result of its action but was likely to make the money back once it had a monopoly.

 

Ross-Simmons Hardwood Lumber Co., Inc., a sawmill, went out of business when Weyerhaeuser, a giant in the forest industry, used its market share to drive up the price of sawlogs. The issue is in this case is whether the jury used the proper standard to find that Weyerhaeuser had violated the antitrust provisions of the Sherman Act. Weyerhaeuser argues that the Brooke Group standard should have applied, whereby a plaintiff must show that the defendant: (1) paid so much for raw materials that the price at which it sold its products did not cover its costs; and (2) had a “dangerous probability” of subsequently recouping those losses. Ross-Simmons advocates for the looser standard applied by the Ninth Circuit, whereby liability may be established by showing that the defendant purchased more raw materials “than it needed” or paid a higher price for those inputs “than necessary” so as to prevent competitors buying the materials at a “fair price.” The Court’s decision could result in a dramatic shift in either of two directions: it could either shield large corporations from suits related to the corporation’s influence on the market, or give small businesses a powerful weapon to wield against the pressures that a large corporation can exert.

Questions as Framed for the Court by the Parties

In Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), the Court held that an antitrust plaintiff alleging predatory selling must prove that the defendant (I) sold its product at a price level too low to cover its costs and (2) had a dangerous probability of recouping its losses once the scheme of predation succeeded.

The question in this case is whether a plaintiff alleging predatory pricing may, as the Ninth Circuit held, establish liability by persuading a jury that the defendant purchased more inputs "than it needed" or paid a higher price for those inputs "than necessary," so as "to prevent the Plaintiffs from obtaining the [inputs] they needed at a fair price"; or whether the plaintiff instead must satisfy what the Ninth Circuit termed the "higher" Brooke Group standard by showing that the defendant (I) paid so much for raw materials that the price at which it sold its products did not [cover] its costs and (2) had a dangerous probability of recouping its losses.

From a bird’s eye view, a patchwork of green and hazy brown shapes weaves together much of the Pacific Northwest, especially the area surrounding the Columbia River, which serves as the border between Oregon and Washington. The logging industry has been active in the area for over a century, leaving that trademark quilt pattern as tracts of forest are harvested.

Submit for publication
0
Subscribe to antitrust