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SUPREME COURT OF THE UNITED STATES

Syllabus

NATIONAL SOCIETY OF PROFESSIONAL ENGINEERS v. UNITED STATES

435 U.S. 679

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT.

No. 76-1767. Argued January 18, 1978 -- Decided April 25, 1978

The United States brought this civil antitrust suit against petitioner, the National Society of Professional Engineers, alleging that petitioner's canon of ethics prohibiting its members from submitting competitive bids for engineering services suppressed competition in violation of 1 of the Sherman Act. Petitioner defended on the ground, inter alia, that under the Rule of Reason the canon was justified because it was adopted by members of a learned profession for the purpose of minimizing the risk that competition would produce inferior engineering work endangering the public safety. The District Court, granting an injunction against the canon, rejected this justification, holding that the canon on its face violated 1 of the Sherman Act, thus making it unnecessary to make findings on the likelihood that competition would produce the dire consequences envisaged by petitioner. The Court of Appeals affirmed, although modifying the District Court's injunction in certain respects so that, as modified, it prohibits petitioner from adopting any official opinion, policy statement, or guideline stating or implying that competitive bidding is unethical.

Held:

1. On its face, the canon in question restrains trade within the meaning of 1 of the Sherman Act, and the Rule of Reason, under which the proper inquiry is whether the challenged agreement is one that promotes, or one that suppresses, competition, does not support a defense based on the assumption that competition itself is unreasonable. Pp. 686-696.

(a) The canon amounts to an agreement among competitors to refuse to discuss prices with potential customers until after negotiations have resulted in the initial selection of an engineer, and, while it is not price fixing as such, it operates as an absolute ban on competitive bidding, applying with equal force to both complicated and simple projects and to both inexperienced and sophisticated customers. Pp. 692-693.

(b) Petitioner's affirmative defense confirms rather than refutes the anticompetitive purpose and effect of its canon, and its attempt to justify, under the Rule of Reason, the restraint on competition imposed by the canon on the basis of the potential threat that competition poses to the public safety and the ethics of the engineering profession is nothing less than a frontal assault on the basic policy of the Sherman Act. Pp. 693-695.

(c) That engineers are often involved in large-scale projects significantly affecting the public safety does not justify any exception to the Sherman Act. Pp. 695-696.

(d) While ethical norms may serve to regulate and promote competition in professional services and thus fall within the Rule of Reason, petitioner's argument here is a far cry from such a position; and, although competition may not be entirely conducive to ethical behavior, that is not a reason, cognizable under the Sherman Act, for doing away with competition. P. 696.

2. The District Court's injunction, as modified by the Court of Appeals, does not abridge First Amendment rights. Pp. 696-699.

(a) The First Amendment does not "make it . . . impossible ever to enforce laws against agreements in restraint of trade," Giboney v. Empire Storage & Ice Co., 336 U.S. 490, 502, and, although the District Court may consider the fact that its injunction may impinge upon rights that would otherwise be constitutionally protected, those protections do not prevent it from remedying the antitrust violations. Pp. 697-698.

(b) The standard against which the injunction must be judged is whether the relief represents a reasonable method of eliminating the consequences of the illegal conduct, and the injunction meets this standard. P. 698.

(c) If petitioner wishes to adopt some other ethical guideline more closely confined to the legitimate objective of preventing deceptively low bids, it may move the District Court to modify its injunction. Pp. 698-699.

181 U. S. App. D. C. 41, 555 F.2d 978, affirmed.

Stevens, J., delivered the opinion of the Court, in which Stewart, White, Marshall, and Powell, JJ., joined, and in Parts I and III of which Blackmun and Rehnquist, JJ., joined. Blackmun, J., filed an opinion concurring in part and concurring in the judgment, in which Rehnquist, J., joined, post, p. 699. Burger, C. J., filed an opinion concurring in part and dissenting in part, post, p. 701. Brennan, J., took no part in the consideration or decision of the case.


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