Spectrum Sports, Inc. v. McQuillan

Background

A maker of a patented shock-absorbing material and its related companies controlled manufacturing and distribution. Two regional distributors claimed they were forced out of markets after refusing to sell a portion of their distributorships. They sued the manufacturers and a rival distributor under federal antitrust law and state claims. A jury found against the defendants and awarded treble damages; the Ninth Circuit upheld the verdict by treating evidence of unfair or predatory conduct as enough to prove an attempt to monopolize.

Reasoning

The Court addressed whether proof of attempted monopolization can rest only on evidence of unfair conduct, or whether plaintiffs must also show a dangerous probability of achieving monopoly power. Reviewing earlier Supreme Court decisions, the Court concluded that attempt liability requires three elements: exclusionary conduct, specific intent to monopolize, and a dangerous probability of success. To assess that dangerous probability, courts normally must define the relevant market and evaluate the defendant’s ability to lessen or destroy competition. The Court rejected the Ninth Circuit’s Lessig rule that unfair or predatory conduct alone could substitute for market definition or proof of market power.

Real world impact

The decision makes it harder for plaintiffs to win attempted-monopolization claims without market evidence. Plaintiffs will generally need to show what market is affected and that the defendant could realistically dominate it. The ruling resolves a split among federal appeals courts and restricts when aggressive business conduct alone can lead to liability.