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词条 Interstate Circuit, Inc. v. United States
释义

  1. Background

  2. Ruling of Supreme Court

  3. Commentary

  4. See also

  5. References

  6. External links

{{Infobox SCOTUS case
|Litigants=Interstate Circuit, Inc. v. United States
|ArgueDate=January 11
|ArgueYear=1939
|DecideDate=February 13
|DecideYear=1939
|FullName=Interstate Circuit, Inc. v. United States
|USVol=306
|USPage=208
|ParallelCitations=59 S. Ct. 467; 83 L. Ed. 610
|Prior=
|Subsequent=
|Holding=It was an illegal hub-and-spoke conspiracy.
|Majority=Stone
|JoinMajority=Hughes, Stone, Black, Reed
|Dissent=Roberts
|JoinDissent=McReynolds, Butler
|NotParticipating=Frankfurter
|LawsApplied=
}}Interstate Circuit, Inc. v. United States, 306 U.S. 208 (1939), is a landmark 1939 decision of the United States Supreme Court establishing a framework for conspiracy inference and finding an antitrust price-fixing conspiracy based on what subsequently came to be known a hub-and-spoke conspiracy theory.[1] . The case is mostly known for a misguided account of its facts that courts and scholars have been using. In a 2019 article, antitrust scholar Barak Orbach showed that the facts of the case are fundamentally different from their descriptions in judicial opinions and the literature.[2]

In a hub-and-spoke conspiracy, one actor (the "hub") organizes a cartel among upstream or downstream firms, through coordination with each firm.[3] The cartel forms only when the coordination results in an explicit or implicit agreement among the competitors. In Interstate Circuit, the hub was Interstate Circuit, a group of two theater chains that was owned by Karl Hoblitzelle. The spokes were eight motion picture film distributors that supplied Interstate (and other theaters) with films. Orbach showed that the hub was vertically integrated with one of the spokes. In effect, Interstate Circuit was an arm of one company and organized a cartel among its parent company and the competitors of that company.[4]

Background

The Government sued two groups of defendants for engaging in a price-fixing conspiracy. One group of eight defendants were distributors (such as Paramount Pictures) of motion picture films, that distributed about 75 percent of all first-class feature films exhibited in the United States. A second group of defendants Interstate Circuit and its managers, which had a monopoly of first-run theaters in various Texas cities.[5] Interstate Circuit was a partially owned subsidiary of Paramount Pictures.[6]

R.J. O'Donnell, Interstate Circuit general manager, of the defendant theater owners sent two letters to each of the distributor defendants, in which he demanded as a condition of continued dealing in the distributor's films that the distributor (1) require that second-run theaters never exhibit such films at any time or in any theater at a smaller admission price than 25¢ for adults in the evening, and (2) on such films that are exhibited at night, minimum admission of 40¢ and that they shall never be exhibited in conjunction with another feature picture (so-called double features).[7] The letters were prepared with consultation with Interstate Circuit's parent company, Paramount Pictures.

O'Donnell and Hoblitzelle engaged in extensive negotiations with the distributors. Each distributor knew about the negotiations with its rivals, but there was no evidence of communication among the distributors. The case raised the question of whether the evidence permitted inference of conspiracy.

Ruling of Supreme Court

Justice Harlan F. Stone delivered the 5-3 opinion of the Court. Justice Owen Roberts filed a dissenting opinion in which Justices James C. McReynolds and Pierce Butler joined. Justice Felix Frankfurter did not participate.

The Supreme Court agreed with the district court that it was permissible to draw "the inference of agreement from the nature of the proposals made . . .[and] from the substantial unanimity of action taken upon them by the distributors." The letter making the demands named on its face as addressees the eight distributors, and so, from the beginning, "each of the distributors knew that the proposals were under consideration by the others." The Court added that each distributor knew that "without substantially unanimous action with respect to the restrictions for any given territory, there was risk of a substantial loss of the business and goodwill of the subsequent-run and independent exhibitors, but that, with it, there was the prospect of increased profits." The Court said that provided "strong motive for concerted action."[8]

The Court explained the legal requirements for finding a hub-and-spoke conspiracy, but did not use that term:

While the District Court's finding of an agreement of the distributors among themselves is supported by the evidence, we think that, in the circumstances of this case, such agreement for the imposition of the restrictions upon subsequent-run exhibitors was not a prerequisite to an unlawful conspiracy. It was enough that, knowing that concerted action was contemplated and invited, the distributors gave their adherence to the scheme and participated in it. Each distributor was advised that the others were asked to participate; each knew that cooperation was essential to successful operation of the plan. They knew that the plan, if carried out, would result in a restraint of commerce,  . . and, knowing it, all participated in the plan.[9]

The dissent found the challenged conduct merely the right of a copyright owner to exploit and profit from the ownership of its statutory monopoly. and disagreed with the conspiracy theory:

The Government stresses the fact that each of the distributors must have acted with knowledge that some or all of the others would grant or had granted Interstate's demand. But such knowledge was merely notice to each of them that, if it was successfully to compete for the first-run business in important Texas cities, it must meet the terms of competing distributors or lose the business of Interstate. It could compete successfully only by granting exclusive licenses to Interstate and injuring subsequent-run houses by refusing them licenses -- a course clearly lawful -- or by doing the less drastic thing of agreeing to protect the goodwill of its pictures by putting necessary and not severely burdensome restrictions upon subsequent-run exhibitors, which I think equally lawful.

[10]

Commentary

Richard Givens in a 1960 article in The Antitrust Bulletin called Interstate Circuit "the leading case establishing that consciously parallel business conduct might form the basis for a finding of antitrust violation."[11] This case and American Tobacco Co. v. United States,[12] he asserts, established that parallel business conduct, which would be unlikely to occur but for some express or tacit agreement, may satisfy the requirement of combination or conspiracy under the Sherman Act. He states the qualification, however, that subsequent cases make clear that parallel conduct with knowledge of the similar action of others is evidence of a combination or conspiracy, but that a "plus factor," which might be the unusual quality of the conduct itself, such as a radical departure from past practice or a price rise during a depression is necessary for the inference of conspiracy to be made, and other evidence can rebut that inference.[13] Givens emphasizes that it is reasonable to infer conspiracy when parallel business action is "drastic or predatory as in Interstate Circuit " but not "where the conduct is in itself normal and logical."[14]

See also

  • Hub-and-spoke conspiracy

References

{{BBstyle}}
1. ^See {{ussc|name=Kotteakos v. United States|volume=328|page=750|pin=755|year=1946}}.
2. ^Barak Orbach, [https://ssrn.com/abstract=3332447.journals/antibull5&div=19&g_sent=1&collection=journals# Interstate Circuit and (Other) Antitrust Myths] {{smallcaps|University of Illinois Law Review}} (2019).
3. ^Barak Orbach, [https://www.americanbar.org/content/dam/aba/publishing/antitrust_source/apr16_orbach_4_11f.authcheckdam.pdf.journals/antibull5&div=19&g_sent=1&collection=journals# Hub-and-Spoke Conspiracies] {{smallcaps|Antitrust Source}} (October 2016).
4. ^Orbach (2019).
5. ^{{ussc|name=Interstate Circuit, Inc. v. United States|volume=306|page=208|pin=214-15|year=1939}}.
6. ^Orbach (2019).
7. ^306 U.S. at 216-18.
8. ^306 U.S. at 221–22.
9. ^306 U.S. at 226-27.
10. ^306 U.S. at 240.
11. ^Richard A. Givens, Parallel Business Conduct under the Sherman Act, 5 {{smallcaps|Antitrust Bull.}} 271, 277 (1960).
12. ^{{ussc|name=American Tobacco Co. v. United States|link=|volume=328|page=781|pin=|year=1946}}.
13. ^Givens at 278.
14. ^Givens at 282-83.

External links

  • {{caselaw source

| case = Interstate Circuit, Inc. v. United States, {{ussc|306|208|1939|el=no}}
| courtlistener =https://www.courtlistener.com/opinion/103152/interstate-circuit-inc-v-united-states/
| justia =https://supreme.justia.com/cases/federal/us/306/208/
| loc =http://cdn.loc.gov/service/ll/usrep/usrep306/usrep306208/usrep306208.pdf{{DEFAULTSORT:Interstate Circuit, Inc. v. United States}}

4 : United States antitrust case law|1939 in United States case law|United States Supreme Court cases|United States Supreme Court cases of the Hughes Court

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