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Justices Rule in California Case, Making it Harder to Prove Monopoly

January 25, 1993

WASHINGTON (AP) _ The Supreme Court today made it harder to prove that businesses have tried to create a monopoly.

The court, ruling unanimously in a California case, set aside a $6.2 million damage award to a company that said it was victimized by an illegal scheme to monopolize sales of a shock-absorbing insole for athletic shoes.

Businesses may not be held liable for attempting to monopolize a market unless there is proof of a ″dangerous probability″ that they will succeed, Justice Byron R. White wrote for the court.

″Proof of unfair or predatory conduct alone″ is not enough to prove that businesses have tried to monopolize a market, White said.

Shirley and Larry McQuillan were Western region distributors from 1981 to 1983 of products made from Sorbothane, an elastic substance used to cushion impact.

The McQuillans filed a lawsuit in San Diego against the companies that developed and distributed Sorbothane, saying the companies conspired to force them out of the Sorbothane business.

The McQuillans contended the companies also denied them a national distributorship for horseshoe pads made of Sorbothane.

A federal jury awarded them $1.74 million in damages. A judge tripled the award to $5.2 million and added about $1 million in legal fees.

All of the companies that were sued had corporate ties and were headed by Kenneth M. Leighton or his son, Kenneth B. Leighton.

The 9th U.S. Circuit Court of Appeals upheld the damage award, ruling that the jury could decide in the McQuillans’ favor even if there was no proof that an actual monopoly occurred or likely would result from the companies’ conduct.

An attempt to monopolize violates antitrust law even if there is no actual proof of anti-competitive harm, the appeals court said.

The 9th Circuit court also said that commonly owned companies may be judged to have conspired to violate antitrust law.

The Supreme Court reversed that decision today, saying the federal law makes a company’s conduct unlawful ″only when it actually monopolizes or dangerously threatens to do so.″

″The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself,″ the court said.

The Justice Department backed the companies that sought to overturn the damage award.

Other federal appeals courts had used the standard announced by the justices today.

The case acted on today is Spectrum Sports vs. McQuillan, 91-10.

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