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ARNOLD PONTIAC-GMC, INC. v. GMC

November 21, 1988

ARNOLD PONTIAC-GMC, INC., Plaintiff,
v.
GENERAL MOTORS CORPORATION, Defendant



The opinion of the court was delivered by: MENCER

 HON. GLENN E. MENCER, UNITED STATES DISTRICT JUDGE.

 In this action, Arnold Pontiac-GMC, Inc. alleges that General Motors Corporation violated section one of the Sherman Act, 15 U.S.C. § 1. Both parties have filed motions for summary judgment which are presently before this court.

 Facts

 For purposes of these cross-motions, the relevant facts can be summarized briefly. Arnold Pontiac-GMC, Inc. (Arnold Pontiac) applied to General Motors Corporation (GMC) for a Buick dealership. GMC took several actions potentially indicating that it was going to award the dealership to Arnold Pontiac, such as leaving an application and automobile order forms. These actions have enhanced significance because Arnold Pontiac had applied for a Buick dealership numerous times over the previous ten years and GMC had never given Arnold Pontiac an application or order forms.

 Before GMC had made a final determination about Arnold Pontiac's application, four members of the Pittsburgh-Area Buick Dealers approached the GMC representative and stated that the association did not want GMC to award a dealership to Arnold Pontiac, and that they would refuse to participate in GMC's promotional programs if GMC gave Arnold Pontiac the dealership. The GMC representative summarized this conversation in an internal memorandum.

 Legal Analysis

 A. Cross-Motions for Summary Judgment

 The standard for cross-motions for summary judgments is the same as for individual motions for summary judgment. The court handles cross-motions as if they were two distinct, independent motions. Rains v. Cascade Industries, Inc., 402 F.2d 241, 245 (3d Cir. 1968). Thus, in evaluating each motion, the court must consider the facts and inferences in the light most favorable to the non-moving party. Goodman v. Mead Johnson & Co., 534 F.2d 566 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977). Rule 56 (c) of the Federal Rules of Civil Procedure provides that a court shall grant summary judgment if it finds that, "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

 B. Burden of Proof

 In antitrust cases, there are two basic routes by which liability can be imposed. Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 99 L. Ed. 2d 808, 816, 108 S. Ct. 1515 (1988). The normal route is called the "rule of reason." Under the rule of reason, "the factfinder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition." Id. Under some circumstances, however, the court takes a shortcut and holds the conduct to be per se illegal, obviating the need to prove an unreasonable restraint on competition. Id. A court will find agreements illegal per se if their "nature and necessary effect are so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality." Id. (quoting National Soc. of Professional Engineers v. United States, 435 U.S. 679, 692, 55 L. Ed. 2d 637, 98 S. Ct. 1355 (1978)).

 An important distinction to make when evaluating a potentially anticompetitive agreement is whether the agreement is "vertical" or "horizontal." Id. at 820-21. Vertical agreements are those between parties at different levels of the distribution chain, such as a manufacturer and distributor. Horizontal agreements are those among parties at the same level of the distribution chain, such as an agreement among distributors. Horizontal agreements are generally per se illegal, whereas non-price vertical agreements may be subject to the rule of reason. For example, if the various distributors reach a horizontal agreement to divide the market geographically, it is a per se violation, whereas if a manufacturer and a dealer agree to an exclusive franchise, it is not a per se violation. Id.

 In this case, we have elements of both horizontal agreements and vertical agreements. The agreement between the members of the Pittsburgh-Area Buick Dealers resembles a pure horizontal agreement. The agreement between GMC and the association resembles a vertical agreement. A central issue in the trial of this ...


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