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345 U.S. 594



Together with No. 375, United States v. Times-Picayune Publishing Co. et al., also on appeal from the same court.

No. 374. Argued March 11, 1953. -- Decided May 25, 1953.

A publishing company owns and publishes in New Orleans a morning and an evening newspaper. Its sole competitor in the daily newspaper field is an independent evening newspaper. Classified and general display advertisers in the company's publications may purchase only combined insertions appearing in both its morning and evening papers, not in either separately. The United States brought a civil suit against the company under the Sherman Act, challenging the use of these "unit" contracts as an unreasonable restraint of trade in violation of 1, and as an attempt to monopolize trade in violation of 2.

Held: The record in this case does not establish the charged violations of 1 and 2 of the Sherman Act. Pp. 596-628.

(a) The challenged activities of the company constitute interstate commerce within the meaning of the Sherman Act. P. 602, n. 11.

(b) A "tying" arrangement violates 1 of the Sherman Act when a seller enjoys a monopolistic position in the market for the "tying" product and a substantial volume of commerce in the "tied" product is restrained. International Salt Co. v. United States, 332 U.S. 392. Pp. 608-609.

(c) Since the charge against the company was not of tying sales to its readers but only to buyers of general and classified space in its papers, dominance in the New Orleans newspaper advertising market, not in the readership, is the decisive factor in determining the legality of the company's unit plan. P. 610.

(d) Section 2 of the Sherman Act outlaws monopolization of any "appreciable part" of interstate commerce, and 1 bans unreasonable restraints irrespective of the amount of commerce involved. P. 611.

(e) The essence of illegality in tying agreements is the wielding of monopolistic leverage; a seller exploits his dominant position in one market to expand into another. Solely for testing the strength of that lever, the whole and not part of a relevant market must be assigned controlling weight. P. 611.

(f) The company's morning newspaper did not enjoy in the newspaper advertising market in New Orleans that position of "dominance" which, together with a "not insubstantial" volume of trade in the "tied" product, would result in a Sherman Act offense under the rule of International Salt Co. v. United States, 332 U.S. 392. Pp. 608-613.

(g) The common core of the adjudicated unlawful tying arrangements is the forced purchase of a second distinct commodity with the desired purchase of a dominant "tying" product, resulting in economic harm to competition in the "tied" market. Pp. 613-614.

(h) In the absence of evidence demonstrating two distinct commodities sold by the publishing company, neither the rationale nor the doctrines of the "tying" cases can dispose of the company's advertising contracts challenged here. They must therefore be tested under the Sherman Act's general prohibition on unreasonable restraints of trade. Pp. 613-615.

(i) The inquiry to determine reasonableness under 1 in this case must focus on the percentage of business controlled, the strength of the competition, and whether the challenged activity springs from business requirements or from purpose to monopolize. P. 615.

(j) The factual data in the record in this case do not demonstrate that the company's advertising contracts unduly handicapped the existing competing newspaper. Pp. 615-622.

(k) The Government has proved in this case neither actual unlawful effects nor facts which radiate a potential for future harm. P. 622.

(l) While even otherwise reasonable trade arrangements must fall if conceived to achieve forbidden ends, the company's adoption of the unit plan in this case was predominantly motivated by legitimate business aims. P. 622.

(m) Although emulation of a competitor's illegal plan does not justify an unlawful trade practice, that factor is relevant in determining intent, particularly when planned injury to that competitor is the crux of the charge of Sherman Act violation. P. 623.

(n) Although long-tolerated trade arrangements acquire no vested immunity under the Sherman Act, that consideration is relevant when monopolistic purpose rather than effect is to be gauged. Pp. 623-624.

(o) The record in this case shows neither unlawful effects nor aims. Pp. 615-624.

(p) The company's refusal to sell advertising space except en bloc, viewed alone, in the circumstances of this case, does not constitute a violation of the Sherman Act. Pp. 624-626.

(q) A specific intent to destroy competition or to build monopoly is essential to guilt of an attempt to monopolize in violation of 2 of the Sherman Act, and such intent is not established by the record in this case. Pp. 626-627.

105 F. Supp. 670, reversed.

MR. JUSTICE CLARK delivered the opinion of the Court.

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