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.
Additional Resources
- Brief for the United States as Amicus Curiae Supporting the Petitioner
- Brief of the Chamber of Commerce of the United States of America and the American Forest and Paper Association as Amici Curaie Supporting Petitioner
- Brief Amici Curiae of Law Professors in Support of Petitioner
- Brief for Amici Curiae Business Roundtable and National Association of Manufacturers in Support of Petitioner
- Brief of Amici Curiae Timberland Owners and Managers Supporting Petitioner
- Brief for the American Antitrust Institute as Amicus Curiae in Support of Respondent
- www.alderantitrust.com: links to all briefs, exhibits, and joint appendix, as well as proceedings in other cases against Weyerhaeuser for antitrust violations.
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