Term: 2006
Docket: 05-381
Weyerhaeuser Company v. Ross-simmons Hardwood Lumber Company, Inc.
- Pro
05-381 WEYERHAEUSER CO. V. ROSS-SIMMONS HARDWOOD LUMBER CO. DECISION BELOW:411 F3d 1030 CERT. GRANTED 6/26/2006 QUESTIONS PRESENTED: In Brooke Group Ltd. v. Brown & Williamson Tobacco orp., 509 U.S. 209 (1993), the Court held that an antitrust plaintiff alleging predatory selling must prove that the defendant (I) sold its product at a price level too low to cover its costs and (2) had a dangerous probability of recouping its losses once the scheme of predation succeeded. The question in this case is whether a plaintiff alleging predatory buying may, as the Ninth Circuit held, establish liability by persuading a jury that the defendant purchased more inputs "than it needed" or paid a higher price for those inputs "than necessary," so as "to prevent the Plaintiffs from obtaining the [inputs] they needed at a fair price"; or whether the plaintiff instead must satisfy what the Ninth Circuit termed the "higher" Brooke Group standard by showing that the defendant (I) paid so much for raw materials that the price at which it sold its products did not coyer its costs and (2) had a dangerous probability of recouping its losses. LOWER COURT CASE NUMBER: 03-35669, 03-35984
In the case of Weyerhaeuser Company v. Ross-Simmons Hardwood Lumber Company, Inc., 2006, the U.S Supreme Court ruled in favor of Weyerhaeuser. The dispute arose when Ross-Simmons accused Weyerhaeuser of monopolistic practices by overbidding for raw materials to drive competitors out of business. However, the court held that a company cannot be held liable under antitrust laws simply for bidding up prices if it has no intent or ability to recoup losses through higher market prices later on. This decision was based on an earlier ruling (Brooke Group Ltd v Brown & Williamson Tobacco Corp) which established that predatory pricing claims require proof that alleged predator could recoup its investment in below-cost pricing.
In the dissenting opinion for Weyerhaeuser Company v. Ross-Simmons Hardwood Lumber Company, Inc., Justice Stevens argued that predatory pricing and overbidding should not be treated identically because they are fundamentally different practices with distinct impacts on competition. He contended that while both can lead to monopolization, overbidding has a more immediate effect by driving competitors out of business due to inflated costs rather than reduced prices. Moreover, he pointed out that the majority's decision could potentially protect anti-competitive behavior under certain circumstances which contradicts antitrust laws' purpose of promoting competition and protecting consumers from abusive business practices. Therefore, he disagreed with applying the same legal standard used in predatory-pricing cases (the Brooke Group test) to this case involving alleged predatory bidding.
