US SUPREME COURT DECISIONS

BRUNSWICK CORP. V. PUEBLO BOWL-O-MAT, INC., 429 U. S. 477 (1977)

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U.S. Supreme Court

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977)

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.

No. 75-904

Argued November 3, 1976

Decided January 25, 1977

429 U.S. 477

Syllabus

Respondents, bowling centers in three distinct markets, brought this antitrust action against petitioner, one of the two largest bowling equipment manufacturers and the largest operator of bowling centers, claiming that petitioner's acquisitions of competing bowling centers that had defaulted in payments for bowling equipment that they had purchased from petitioner might substantially lessen competition or tend to create a monopoly in violation of § 7 of the Clayton Act. Respondents sought treble damages pursuant to § 4 of the Act, as well as injunctive and other relief. At trial, they sought to prove that petitioner, because of its size, had the capacity to lessen competition in the markets it had entered by driving smaller competitors out of business. To establish damages, respondents attempted to show that, had petitioner allowed the defaulting centers to close, respondents' profits would have increased. The jury returned a verdict for damages in favor of respondents, which the District Court trebled in accordance with § 4. The Court of Appeals, while endorsing the legal theories upon which respondents' claim was based, reversed the case and remanded for further proceedings because of errors in the trial court's instructions to the jury. The court concluded that a properly instructed jury could have found that a "giant" like petitioner entering a market of "pygmies" might lessen horizontal retail competition. The court also concluded that there was sufficient evidence to permit a jury to find that, but for petitioner's actions, the acquired centers would have gone out of business. The court held that, if a jury were to make such findings, respondents would be entitled to damages for threefold the income they would have earned. Petitioner's petition for certiorari challenged the theory that the Court of Appeals had approved for awarding damages.

Held:

1. For plaintiffs in an antitrust action to recover treble damages on account of § 7 violations, they must prove more than that they suffered injury which was causally linked to an illegal presence in the market; they must prove injury of the type that the antitrust laws were intended to prevent and that flows from that which makes the defendants' acts unlawful. The injury must reflect the anticompetitive effect chanrobles.com-red

Page 429 U. S. 478

of either the violation or of anticompetitive acts made possible by the violation. Pp. 429 U. S. 484-489.

(a) Section 4 is essentially a remedial provision, and, to recover damages, respondents must prove more than that petitioner violated § 7. Pp. 429 U. S. 485-487.

(b) Congress has condemned mergers only when they may produce anticompetitive effects; yet, under the Court of Appeals' holding, once a merger is found to violate § 7, all dislocations that the merger caused are actionable regardless of whether the dislocations have anything to do with the reason the merger was condemned. Here, if the acquisitions were unlawful it, is because they brought a "deep pocket" parent into a market of "pygmies," but respondents' injury is unrelated to the size of either the acquiring company or its competitors; it would have suffered the identical loss, but without any recourse had the acquired centers secured refinancing or had they been bought by a "shallow pocket" parent. Pp. 429 U. S. 487-488.

2. Petitioner is entitled under Fed.Rule Civ.Proc. 50(b) to judgment on the damages claim notwithstanding the verdict, since respondents' case was based solely on their novel theory, rejected herein, of damages ascribable to profits they would have received had the acquired centers been closed, and since respondents have not shown any reason to require a new trial. Pp. 429 U. S. 489-490.

3. Respondents remain free on remand to seek equitable relief. P. 429 U. S. 491.

523 F.2d 262, vacated and remanded.

MARSHALL, J., delivered the opinion for a unanimous Court.



























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