Union Processing Corp. v. Atkin Et Al.

Background

Union Processing Corporation, a scrap-metal dealer in Auburn, New York, and three brothers operating in Rochester negotiated so that only one metal shredder would operate in Rochester. Atkins agreed to assign a shredder purchase contract to Union and promised not to operate a shredder in the Rochester area in exchange for 2% of Union's gross sales for seven years. Union stopped payments and Atkins sued to collect.

Reasoning

The lower courts examined whether the oral promise not to compete was a per se illegal division of territory under the federal antitrust law. The trial court found a horizontal market division and held it per se illegal. The New York Appellate Division disagreed, saying the per se rule applies only when the entire geographic market is allocated, so it used a rule-of-reason inquiry and found little competitive harm because Atkins could sell shredded metal elsewhere. The New York Court of Appeals affirmed and noted no evidence that the raw-materials market was limited to Rochester.

Real world impact

Because the Supreme Court denied review, the state courts’ analysis stands for this dispute. Local scrap dealers and similar businesses are affected because this ruling allows limited, local market allocations to be judged under a full competitive inquiry rather than automatically treated as illegal. The denial is not a final federal judgment on the antitrust rule and could be revisited in a future case.

Dissents or concurrances

Justice White, joined by the Chief Justice and Justice Powell, dissented from the denial and said the question conflicts with this Court’s precedents and warranted review and possible summary reversal.