The Supreme Court clarified federal antitrust laws yesterday by ruling that business cooperatives that refuse to deal with an individual business do not automatically violate antitrust statutes unless that boycott reduces market competition.
The unanimous decision, written by Justice William J. Brennan, involved Northwest Wholesale Stationers, a purchasing cooperative of about 100 office supply retailers in the Pacific Northwest. Northwest threw out a member, Pacific Stationery & Printing Co., and Pacific sued, charging that the cooperative's "concerted refusal to deal" was a group boycott and therefore an automatic, or per se, violation of the Sherman Act.
A trial judge ruled that the correct legal approach in this case was to determine whether the cooperative unreasonably restrained trade. He found it did not and ruled in favor of Northwest Wholesale. The 9th U.S. Circuit Court of Appeals, saying such group boycotts generally were per se antitrust violations, ruled in favor of Pacific Stationery. The justices yesterday said the appeals court used the wrong analysis.
"A plaintiff seeking application of the per se rule must present a threshold case that the challenged activity . . . [is] likely to have predominantly anticompetitive effects," Brennan said.
"The mere allegation of a concerted refusal to deal does not suffice because not all such actions are predominantly anticompetitive," Brennan said, sending the case back to the appeals court for further review. Justices Thurgood Marshall and Lewis F. Powell Jr. did not participate in the decision.