ATLANTIC RICHFIELD CO. v. USA PETROLEUM CO.

Print this Page
Case Basics
Docket No. 
88-1668
Petitioner 
Atlantic Richfield Co.
Respondent 
USA Petroleum Co.
Advocates
(on behalf of the Petitioner)
(on behalf of the United States as amicus curiae urging reversal)
(on behalf of the Respondent)
Tags
Term:
Facts of the Case 

Atlantic Richfield Company (ARCO) is an integrated oil company that sells gasoline to consumers through its own retail stations as well as independent ARCO-brand stations. USA Petroleum (USA), a competitor of ARCO, is an independent retail marketer that purchases gasoline from major petroleum companies and resells it under its own brand name. USA sued ARCO under the Clayton Act in the U.S. District Court for the Central District of California, alleging that ARCO had violated Section 1 of the Sherman Act by conspiring with the independent ARCO-brand stations to sell gasoline at below-market prices (the Clayton Act allows private parties to bring suit when they have been harmed by anticompetitive practices that violate the Sherman Act).

The District Court ruled for ARCO, finding that even if USA could prove the conspiracy, it would not be an "antitrust injury" to USA under the Clayton Act unless it could also prove that the pricing was predatory (that is, that it was intended to drive USA and other competitors out of business). It would be impossible to prove this, the District Court concluded, because ARCO was not dominant enough in the market to exert that sort of power.

A divided panel of the 9th Circuit Court of Appeals reversed, finding that it was not necessary to show predatory intent to prove an "antitrust inquiry." All that was necessary was a showing that the party bringing the suit had been harmed by price fixing carried out by the party being sued.

Question 

Must a competitor alleging an "antitrust injury" under the Clayton Act prove predatory intent in addition to showing that the defendant conspired to fix prices in violation of the Sherman Act?

Conclusion 
Decision: 7 votes for Atlantic Richfield Co., 2 vote(s) against
Legal provision: Clayton

Yes. In a 7-to-2 decision, the Supreme Court held that it was necessary to prove predatory intent in order for a competitor to establish a private cause of action under the Clayton Act. According to Justice William J. Brennan, Jr.'s majority opinion, the standard for competitors is different than for affiliated dealers or consumers because competitors would only bring suit when the low prices that resulted from the price-fixing scheme hurt their business. As long as these prices are not predatory, however, they are actually good for consumers and increase competition. Allowing competitors to sue without showing predatory intent would therefore decrease competition, exactly the opposite of the intent of the Sherman and Clayton Acts.

Cite this Page
ATLANTIC RICHFIELD CO. v. USA PETROLEUM CO.. The Oyez Project at IIT Chicago-Kent College of Law. 11 November 2014. <http://www.oyez.org/cases/1980-1989/1989/1989_88_1668>.
ATLANTIC RICHFIELD CO. v. USA PETROLEUM CO., The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1980-1989/1989/1989_88_1668 (last visited November 11, 2014).
"ATLANTIC RICHFIELD CO. v. USA PETROLEUM CO.," The Oyez Project at IIT Chicago-Kent College of Law, accessed November 11, 2014, http://www.oyez.org/cases/1980-1989/1989/1989_88_1668.