Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), was a United States Supreme Court case in which the court required that an antitrust plaintiff alleging predatory pricing must show not only changes in market conditions adverse to its interests, as a threshold matter, but must show on the merits that (1) the prices complained of are below an appropriate measure of its rival's costs, and (2) that the competitor had a reasonable prospect or a "dangerous probability" of recouping its investment in the alleged scheme.
| Brooke Group Ltd. v. Brown & Williamson Tobacco Corp. | |
|---|---|
 | |
| Argued March 29, 1993 Decided June 21, 1993 | |
| Full case name | Brooke Group Ltd. v. Brown & Williamson Tobacco Corp. |
| Citations | 509 U.S. 209 (more) 113 S. Ct. 2578; 125 L. Ed. 2d 168 |
| Holding | |
| Brown & Williamson is entitled to judgment as a matter of law because it did not engage in predatory pricing in violation of §2 of the Sherman Antitrust Act. | |
| Court membership | |
| |
| Case opinions | |
| Majority | Kennedy, joined by Rehnquist, O'Connor, Scalia, Souter, Thomas |
| Dissent | Stevens, joined by White, Blackmun |
| Laws applied | |
| Clayton Act §2 | |
Holding
editAn oligopoly's interdependent pricing may provide a means for achieving recoupment, and thus may form the basis of a primary-line injury claim. Predatory pricing schemes, in general, are implausible, and are even more improbable when they require coordinated action among several firms. They are least likely to occur where, as alleged here, the cooperation among firms is tacit, since effective tacit coordination is difficult to achieve.
Since there is a high likelihood that any attempt by one oligopolist to discipline a rival by cutting prices will produce an outbreak of competition; and since a predator's present losses fall on it alone, while the later supracompetitive profits must be shared with every other oligopolist in proportion to its market share, including the intended victim.
Ultimately, Justice Kennedy, held that:
- There is no per se rule of nonliability under Robinson-Patman Act for predatory price discrimination when recoupment is alleged to take place through supracompetitive oligopoly pricing, but
- Competitor's alleged below-cost sales of generic cigarettes through discriminatory volume rebates did not create competitive injury in violation of Robinson-Patman Act.
See also
edit- Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co. (applying the same analysis to "predatory buying")
External links
edit- Text of Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) is available from: Cornell Google Scholar Justia Library of Congress Oyez (oral argument audio)