Spectrum Sports, Inc. v. McQuillan
122 L. Ed. 2d 247, 113 S. Ct. 884 (1993)
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Rule of Law:
To establish a claim of attempted monopolization under § 2 of the Sherman Act, a plaintiff must prove not only that the defendant engaged in predatory or anticompetitive conduct with a specific intent to monopolize, but also that there was a dangerous probability of the defendant achieving monopoly power in a relevant market.
Facts:
- Shirley and Larry McQuillan, doing business as Sorboturf Enterprises, were regional distributors for sorbothane, a patented polymer manufactured by subsidiaries of BTR, Inc.
- Spectrum Sports, Inc., co-owned by Kenneth B. Leighton, Jr., was another regional distributor. Leighton, Jr.'s father was the president of the BTR subsidiaries Hamilton-Kent and Sorbothane, Inc. (S.I.).
- In 1980, the McQuillans entered into an agreement to develop and distribute equestrian products, including a horseshoe pad, using sorbothane.
- In 1982, Hamilton-Kent and its successor, S.I., demanded that the McQuillans relinquish their profitable athletic shoe distributorship as a condition of retaining their equestrian product rights.
- Kenneth B. Leighton, Jr. threatened Shirley McQuillan that if she did not agree to sell the athletic distributorship to him, she would be "'looking for work.'"
- After the McQuillans refused to sell, S.I. appointed a different national distributor for equestrian products, began marketing a horseshoe pad nearly identical to the one designed by the McQuillans, and eventually terminated all business with them.
- Spectrum Sports then became the national distributor for sorbothane athletic shoe inserts, and the McQuillans' business failed.
Procedural Posture:
- Shirley and Larry McQuillan sued Spectrum Sports, Inc. and its co-owner in the U.S. District Court, alleging violations of the Sherman Act and other state and federal laws.
- A jury returned a general verdict for the McQuillans on the Sherman Act § 2 claim, finding the defendants liable for 'monopolizing, attempting to monopolize, and/or conspiring to monopolize.'
- The District Court entered judgment in favor of the McQuillans.
- The defendants, as appellants, appealed the judgment to the U.S. Court of Appeals for the Ninth Circuit.
- The Court of Appeals affirmed, holding that the jury's verdict was supported by the evidence for attempted monopolization because the defendants' predatory conduct allowed an inference of both specific intent and a dangerous probability of success, without requiring separate proof of the relevant market or market power.
- The U.S. Supreme Court granted certiorari to resolve a conflict among the circuit courts on this issue.
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Issue:
Does a claim for attempted monopolization under Section 2 of the Sherman Act require proof of a relevant market and a dangerous probability of achieving monopoly power, or can these elements be inferred solely from evidence of a defendant's unfair or predatory conduct?
Opinions:
Majority - Justice White
Yes. A claim for attempted monopolization under § 2 of the Sherman Act requires a plaintiff to prove a dangerous probability of actual monopolization, which cannot be inferred from predatory conduct alone. The Court rejected the Ninth Circuit's position that evidence of unfair or predatory conduct can satisfy both the specific intent and dangerous probability elements of the offense. Citing precedent from Swift & Co. v. United States, the Court affirmed that while intent is necessary, it is not sufficient; there must be a 'dangerous probability' of success, which is a 'question of proximity and degree.' To assess this probability, a court must define the relevant market and analyze the defendant's market power to determine its ability to lessen or destroy competition. The purpose of the Sherman Act is to protect competition, not competitors, and a rule that punishes aggressive but ultimately non-threatening conduct could chill pro-competitive behavior.
Analysis:
This decision resolved a significant circuit split, formally rejecting the Ninth Circuit's more lenient standard for attempted monopolization claims established in Lessig v. Tidewater Oil Co. The Court solidified the three-part test—(1) predatory conduct, (2) specific intent, and (3) dangerous probability of success—as the uniform national standard. By explicitly requiring plaintiffs to prove the third element through an analysis of the relevant market and the defendant's market power, the ruling raises the evidentiary bar for such claims. This makes it more difficult for smaller competitors to use antitrust laws to sue larger, more aggressive rivals unless they can demonstrate a genuine threat to the market as a whole, thereby protecting firms from liability for vigorous competition.
