Affirmation of 'Dangerous Probability' Standard in Attempted Monopolization under Sherman Act Section 2

Introduction

The case of Gary L. Pastore and National Security Systems Corporation (NASSCO) v. Bell Telephone Company of Pennsylvania addresses the critical issue of attempted monopolization under Section 2 of the Sherman Act. This appellate decision by the United States Court of Appeals for the Third Circuit, rendered on May 16, 1994, reaffirms the necessity for plaintiffs to demonstrate a "dangerous probability" of achieving monopoly power when alleging monopolistic practices. The parties involved include Pastore and NASSCO as appellants against Bell Telephone Company of Pennsylvania, Bell Atlantic Corporation, and several individual employees as appellees.

Summary of the Judgment

The appellants, Pastore and NASSCO, initiated litigation alleging that the defendants attempted to monopolize the market for custom-designed access control communications security networks (CDACCSN) in violation of Section 2 of the Sherman Act. The district court granted summary judgment in favor of the defendants, concluding that the appellants failed to provide sufficient evidence of a "dangerous probability" of achieving monopoly power. On appeal, the Third Circuit upheld this decision, emphasizing that the appellants did not establish the necessary market power or demonstrate that the defendants had engaged in conduct that would likely result in monopolization.

Analysis

Precedents Cited

The court extensively references prior case law to substantiate its decision:

SPECTRUM SPORTS, INC. v. McQUILLAN – Clarified the elements required to demonstrate attempted monopolization, namely predatory conduct, specific intent, and dangerous probability of monopoly.
Rea v. Ford Motor Co. – Established that a dangerous probability of monopoly must be shown even when there is evidence of specific intent to monopolize.
Lessig v. Tidewater Oil Co. and COLEMAN MOTOR CO. v. CHRYSLER CORP. – Highlighted the necessity of demonstrating market power beyond mere intent.
EDWARD J. SWEENEY SONS, INC. v. TEXACO, Inc. – Reinforced the requirement for a clear showing of market share and economic power.
RADICH v. GOODE – Discussed the standards for granting summary judgment and the importance of preserving objections through affidavits.

Legal Reasoning

The court's reasoning centers on the stringent requirements for establishing an attempted monopolization claim. Key points include:

Dangerous Probability: The appellants failed to demonstrate that the defendants possessed or were close to acquiring significant market power within the defined relevant market.
Market Definition: Plaintiffs defined the relevant market narrowly as the CDACCSN, asserting that NASSCO held a monopoly. However, the court held that this definition was insufficient without evidence of actual or imminent market share by the defendants.
Summary Judgment Standards: The appellants did not comply with Federal Rule of Civil Procedure 56(f) by failing to submit the necessary affidavit to justify the need for additional discovery, thereby forfeiting their objection to the summary judgment.
Pretended Monopolization: The court emphasized that intent alone is insufficient; there must be a tangible threat of monopoly power. The defendants did not demonstrate current or substantial plans to enter or dominate the market.

Impact

This judgment reinforces the stringent criteria that plaintiffs must meet to successfully claim attempted monopolization under the Sherman Act. It underscores the necessity of not only demonstrating anticompetitive intent but also providing concrete evidence of the defendant's capacity to achieve monopoly power. This decision serves as a precedent for future antitrust litigation, ensuring that summary judgments are appropriately granted when plaintiffs lack substantive evidence of monopolistic threats.

Complex Concepts Simplified

Section 2 of the Sherman Act: A fundamental antitrust law in the United States that prohibits monopolistic practices and attempts to monopolize any part of interstate commerce.

Summary Judgment: A legal decision made by a court without a full trial, typically when there is no dispute over the essential facts of the case.

Dangerous Probability: In antitrust law, this refers to a significant likelihood that a defendant will achieve monopoly power in the relevant market.

Relevant Market: A market defined by the product or service and geographic area in which competition takes place. Proper market definition is crucial for assessing monopolistic power.

Predatory Conduct: Anticompetitive actions taken by a company to eliminate competition, often through unfair pricing, exclusive contracts, or other exclusionary practices.

Conclusion

The Third Circuit's decision in Pastore v. Bell Telephone Company of Pennsylvania underscores the rigorous standards that must be met to prove attempted monopolization under the Sherman Act. By affirming the necessity of demonstrating a "dangerous probability" of achieving monopoly power, the court ensures that only well-substantiated antitrust claims proceed to trial. This judgment highlights the importance of thorough market analysis and the critical role of evidence in antitrust litigation, thereby contributing to the consistent application of competition laws aimed at preserving fair market practices.