STEVENS, Circuit Judge.
The question presented by this appeal is whether either the Robinson-Patman Act
Plaintiff has been a distributor of petroleum products for defendant, ARCO, or its predecessor, Sinclair, in Lawrence County, Indiana, and its environs for the past 20 years.
On February 15, 1973, defendant notified plaintiff that his distributorship was cancelled; the termination date, originally set for March 31, 1973, was extended to May 31, 1973.
There is no question about the sufficiency of plaintiff's proof of irreparable injury. His business, upon which he places a value of $500,000, involves the distribution of approximately 433,000 gallons of gas and 250,000 gallons of fuel oil per month. He services 20 retail gasoline stations, four of which he owns, and also supplies various governmental units, industrial customers and farms in and about Lawrence County, Indiana. Since he sells only ARCO petroleum products, and since he is unable to obtain a new supplier, it is reasonable to infer that termination of his distributorship will terminate his business.
Irreparable injury is not in itself a sufficient predicate for the entry of a preliminary injunction.
In this case it is perfectly clear that, even if plaintiff is able to prove a violation of the Robinson-Patman Act, there is no causal connection between that violation and his termination. We
ARCO sells gasoline directly to retail service stations in the Lawrence County area. These stations compete with the 20 stations that are supplied by plaintiff. Plaintiff has asserted that ARCO discriminates in favor of its own retail outlets and against plaintiff in two different ways.
First, in his complaint plaintiff apparently took the position that the termination itself was discriminatory since ARCO planned to continue supplying its own outlets while refusing to sell to him. It has long been settled, however, that such discrimination does not violate the Robinson-Patman Act.
Second, on appeal plaintiff's Robinson-Patman claim is solely that a two cent per gallon rebate made available to retailers participating in defendant's so-called "Mini Service" program illegally discriminated against him.
Alternatively, plaintiff contends that his termination during a period of shortage will totally exclude him from the market and, therefore, violate § 2 of the Sherman Act. He characterizes the alleged violation as an attempt to monopolize, although presumably, if his theory were valid, as soon as the termination becomes effective, the attempt would ripen into a completed monopolization. Plaintiff's theory is not entirely clear, but apparently rests upon the premise that the competition which has heretofore existed between plaintiff and defendant in the sale of ARCO products in Lawrence County will be replaced by
Whether a complaint alleges monopolization or an attempt to monopolize, it is incumbent upon the plaintiff to define the relevant market in which the defendant's actions are to be appraised.
Plaintiff apparently contends that the shortage requires a different result in this case because alternative sources of supply were not in fact available to him and, therefore, the relevant market must be narrowly defined to include only ARCO products sold in the Lawrence County area. In appraising the legal significance of the shortage, we first review the evidence in the record and then consider whether taking judicial notice of the severity of the energy crisis which ensued would affect that analysis.
The supply available in any market may, of course, be affected by legal factors as well as purely economic factors. As far as this record discloses, at the time ARCO made its decision to cancel plaintiff's distributorship, there were no legal barriers to price changes, to changes in methods of distribution or to shifting custom from one seller to another or from one buyer to another. The record evidence of a shortage consisted merely of plaintiff's testimony that each of the 20 competitors of ARCO whom he approached would not supply him and, further, that ARCO's regional manager had told him that jobber contracts were not being renewed "because of the shortage of the product."
Nothing in this evidence would justify the conclusion that the relevant competitive market should be treated as including only ARCO products. It is entirely possible that all 20 of ARCO's competitors had valid reasons, unrelated to any shortage, for not wishing to establish business relations with plaintiff. If that should not be true, no reason is apparent from the record why he was not free to offer to pay a higher price, or to perform superior services, than existing distributors of competing brands of gasoline, and thereby to secure product from one of ARCO's competitors. Unquestionably, the constriction of supply would tend to force the price level to rise, but presumably ARCO and its 20-odd competitors would all be affected in a roughly comparable way. The fact that in such a market plaintiff might have to offer an unusually high price, or unusually favorable terms, in order to obtain a new source of supply, is not a reason for redefining the market to include less than all of the firms competing within it.
Accordingly, if we assume that the competitive market remained free of any artificial restraint, the mere fact that
Realistically, we recognize that, during periods of acute shortage or national emergency, the free market is often restrained by regulatory controls. A variety of restrictions may preclude the price changes which normally occur in response to fluctuations in supply and which may in turn have their impact upon the flow of capital and, ultimately, output. Plaintiff may appropriately ask us to take judicial notice of the fact that, during the energy crisis, oil companies were not entirely free to adjust prices or to take on a new distributor simply because it would be good business to do so. Conceivably, therefore, emergency controls might either require ARCO to retain plaintiff as a distributor or, if his cancellation had already become effective, prevent any of ARCO's competitors from accepting him as an additional or as a substitute distributor. Accordingly, depending upon the impact of those controls, plaintiff might be in a position to argue that the relevant market should be narrowly defined to include only the product which is in fact available to him.
Although exceptional regulatory controls may significantly restrain competition within the relevant market, we do not believe they justify a redefinition of the market. For the various brands of gasoline would retain the physical characteristics that make them readily interchangeable for essentially the same uses. Indeed, such factors as advertising of particular brands, which tend to differentiate otherwise similar products, become less significant in times of shortage. Whether viewed from the standpoint of the ultimate consumer, or of a distributor such as plaintiff, it would be less important to obtain a particular kind of gasoline than to purchase any gasoline at all. The so-called "cross elasticity of demand" would tend to enlarge the relative product market as the competition among buyers of petroleum.
The fact that an injury to a particular competitor may be unusually severe is not a justification for adopting a market definition which only considers the particular product line which he has previously sold or purchased. For in Sherman Act litigation we must adhere to the admonition that the statute is concerned "with the protection of competition, not competitors."
If the artificial restraints imposed by the government during a period of shortage make it appropriate to characterize ARCO as a monopolist for purposes of construing the Sherman Act, it would seem to follow that each of the 20 other oil companies, and perhaps each of the independent jobbers who sell to retail service stations in the same area, is equally a monopolist. For, conceivably, if the shortage is sufficiently acute, any one of those distributors might have the power—assuming that no contract or regulatory objection interferes—to discontinue sales to a retailer and, therefore, to put him completely out of business. If each such action were violative of § 2, the Sherman Act would, in effect, outlaw any change in existing patterns of distribution until after an acute shortage was ameliorated.
From a broad policy standpoint, perhaps such a temporary freeze would serve the public interest. Such a freeze might be an appropriate, even a necessary, counterpart to an emergency price control program. Historically, however, that kind of regulation of the economy has only been undertaken by a public agency pursuant to express legislative authorization. The Sherman Act has never been construed as a broad charter authorizing the judiciary to fashion such controls.
To the extent that the antitrust laws remain applicable in an industry which is partially regulated by the government, their office remains the same as in an industry which is totally unregulated.
We therefore conclude that, whether we just consider the evidence of shortage in the record, or whether we also take cognizance of the distortions that may be produced by emergency measures, the injury of which plaintiff complains is not remediable under the Sherman Act. That statute does not authorize the judiciary to supplement imperfect regulatory controls imposed by other branches of government.
W. Kerr, Injunctions 15 (6th ed., J. Patterson ed. 1927).
365 F.Supp. 1067, 1071-1072 (D.Minn.1973) (citations omitted).
415 F.2d 1279, 1284 (7th Cir. 1969), cert. denied, 397 U.S. 912, 90 S.Ct. 911, 25 L.Ed. 2d 92 (emphasis added). In Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177-178, 86 S.Ct. 347, 15 L.Ed.2d 247, Justice Clark, speaking for the Court, made it clear that the basic importance of defining the relevant market is as applicable to an attempt case as to other § 2 claims. See also Acme Precision Products, Inc. v. American Alloys Corp., 484 F.2d 1237 (8th Cir. 1973), holding at page 1242 that the burden of proof as to the relevant market rests upon the claimant.
The kind of market analysis which the Committee understood the statute to require was employed by the Supreme Court in United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 389-396, 76 S.Ct. 994, 100 L. Ed. 1264.
351 U.S. at 393, 76 S.Ct. at 1006 (footnotes omitted).
When the Court has referred to situations in which the ready availability of competitive products precludes a conclusion that the Sherman Act has been violated, see, e.g., United States v. Arnold, Schwinn & Co., 388 U.S. 365, 376, 87 S.Ct. 1856, 18 L.Ed.2d 1249, the reference has been directed at what is "available in the market," United States v. du Pont, supra note 15, 351 U.S. at 394, 76 S.Ct. 994, rather than at what is available to any particular competitor.
483 F.2d 1014, 1017 (1973).