United States v. Griffith

Background

The United States sued a group of affiliated movie-theatre companies and two individuals who owned or ran theaters in Oklahoma, Texas, and New Mexico. The government said these exhibitors used a common buying system and seasonal “master” contracts to get first- and second-run films across their circuit. Many towns in the circuit had no competing theaters (“closed towns”) and the contracts often lumped closed and competitive towns together and set a single rental for the whole circuit. The District Court found no violation and dismissed the case.

Reasoning

The key question was whether using circuit buying power and those master agreements unlawfully foreclosed competition or created monopoly power in violation of federal antitrust law. The Court explained that even without a clear intent to monopolize, the necessary and direct result of using closed-town leverage to obtain exclusive film privileges can violate the law. The Court held that the exhibitors combined with the distributors to obtain exclusive rights by using circuit monopoly power, reversed the dismissal, and said the lower court must determine the actual effects and fashion relief.

Real world impact

The decision affects competing local theaters and film distribution practices by allowing the government to challenge circuit-wide buying practices that use closed-town leverage. The case was sent back to the District Court to measure harm and to craft orders that will undo and prevent anti-competitive conduct. The ruling does not itself set the final remedy; further proceedings will decide specific relief.

Dissents or concurrances

Justice Frankfurter dissented, agreeing with the District Court’s view that the practices were lawful; two Justices did not participate.