Per Se Rule Against Group Boycotts Does Not Apply to Single Seller-Single Buyer

Per Se Rule Against Group Boycotts Does Not Apply to Single Seller-Single Buyer

Description Supplier to NYNEX was cut out in favor of another supplier, who allegedly charged a higher price and gave the buyer, a regulated firm, a rebate at the end of the year. Supreme Court held that the per se rule against horizontal group boycotts does not apply in vertical relationships involving single parties.

Topic Antitrust

Key Words Boycotts; Per Se Rule

C A S E S U M M A R Y

Facts Discon provided certain services to a subsidiary to NYNEX. The buyer quit using Discon and bought the services from AT&T Technologies instead. Discon sued, claiming the switch violated §1 of the Sherman Act, as buyer paid AT&T more than it paid Discon. NYNEX passed on the higher cost via its regulated telephone market. Discon claimed that AT&T gave the buyer and NYNEX a rebate at the end of the year. Discon claimed it was driven out of business by this anti-competitive boycott. Lower court decisions were mixed; NYNEX appealed.

Decision Reversed in favor of NYNEX. The per se group boycott rule does not apply to a single buyer's decision to buy from one seller rather than another. The per se rule does not apply because the case concerns a vertical agreement, in the form of depriving a supplier of a potential customer; it is not a horizontal boycott among direct competitors. Even if the buyer does not pick the low-cost seller, there is no case unless the plaintiff can prove harm to the competition itself, not just the plaintiff.

Citation NYNEX Corp. v. Discon, Inc., 119 S.Ct. 493 (Sup. Ct., 1998)

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Per Se Rule Against Group Boycotts Does Not Apply to Single Seller-Single Buyer
Description	Supplier to NYNEX was cut out in favor of another supplier, who allegedly charged a higher price and gave the buyer, a regulated firm, a rebate at the end of the year. Supreme Court held that the per se rule against horizontal group boycotts does not apply in vertical relationships involving single parties.
Topic	Antitrust
Key Words	Boycotts; Per Se Rule
C A S E S U M M A R Y
Facts	Discon provided certain services to a subsidiary to NYNEX. The buyer quit using Discon and bought the services from AT&T Technologies instead. Discon sued, claiming the switch violated §1 of the Sherman Act, as buyer paid AT&T more than it paid Discon. NYNEX passed on the higher cost via its regulated telephone market. Discon claimed that AT&T gave the buyer and NYNEX a rebate at the end of the year. Discon claimed it was driven out of business by this anti-competitive boycott. Lower court decisions were mixed; NYNEX appealed.
Decision	Reversed in favor of NYNEX. The per se group boycott rule does not apply to a single buyer's decision to buy from one seller rather than another. The per se rule does not apply because the case concerns a vertical agreement, in the form of depriving a supplier of a potential customer; it is not a horizontal boycott among direct competitors. Even if the buyer does not pick the low-cost seller, there is no case unless the plaintiff can prove harm to the competition itself, not just the plaintiff.
Citation	NYNEX Corp. v. Discon, Inc., 119 S.Ct. 493 (Sup. Ct., 1998)