The opinion of the court was delivered by: Aspen, District Judge:
MEMORANDUM OPINION AND ORDER
Plaintiff Richard Hoffman Corporation ("Hoffman") sued
Integrated Building Systems, Inc. ("Integrated") and the
Village of Glendale Heights ("Village") for violations of the
Sherman Antitrust Act, 15 U.S.C. § 1 et seq., the Illinois
Antitrust Act, Ill. Rev.Stat. ch. 38, § 60-3, and for breach of
the duty of good faith. On February 15, 1984, this Court
granted the Village's motion to dismiss under the doctrine of
"state action immunity." 581 F. Supp. 367 (N.D. Ill. 1984).
However, the Court denied Integrated's motion for dismissal.
The parties have since completed discovery, and Integrated has
moved for summary judgment. For the reasons set forth below,
Integrated's motion is granted.
The following material facts are undisputed. In early 1983,
the Village, without taking competitive bids, contracted with
Integrated to draw up architectural specifications for the
construction and remodelling of a Village recreational center.
Integrated and the City signed this contract even though
Integrated employed no registered architects. Integrated
sub-contracted with Pence and Schwartz, an architectural firm,
which then prepared the specifications. Pence and Schwartz's
plan specified the use of a pre-engineered building system,
manufactured by Kirby Building Systems ("Kirby"). Integrated
is the sole local distributor of Kirby systems.
After the specifications were finished, the Village
solicited bids for the construction of the project. The
reports about the bids appeared from May 18 through May 25,
1983, in a trade publication, the "Dodge Construction News
Report." The reports did not disclose that Integrated, which
had drawn up the plans, was also bidding on the construction
project. On May 26, 1983, Integrated's role as both designer
and bidder was first revealed.
Three firms, including Hoffman and Integrated, submitted
bids by May 31, 1983, the due date. The two firms other than
Integrated did not include a Kirby system in their bids. The
Village did not reject the bids because of that, however.
Hoffman bid $816,500, the third firm bid $818,751, and
Integrated bid $777,705. The Village accepted Integrated's
bid, the lowest one offered.
Hoffman claims that the above practices of Integrated and
the Village unreasonably restrained trade in violation of
Section 1 of the Sherman Act. Its theory can be summarized as
follows. Because Integrated received the specification
contract on March 25, 1983, it had at least nine weeks to
prepare its construction bid.*fn1 In contrast, Hoffman had
but 12 days to prepare its bid when the City went public about
the project in May 1983. This difference in preparation time
gave Integrated an unfair advantage, argues Hoffman. Moreover,
Integrated also derived an unfair advantage by drawing up the
architectural plans and then bidding on the construction
contract. This practice violated an industry custom. Finally,
Integrated enjoyed an unfair advantage because the
architectural plans specified the use of Kirby products, which
Integrated distributes. In sum, argues Integrated, the above
facts show that the bidding process was a sham; that the
process inherently and unfairly favored Integrated in a way
which unlawfully restrained
trade. Integrated counters in its motion for summary judgment
that its practices, even if considered unfair, did not violate
the Sherman Act.
In considering Integrated's motion, we are aware that
summary judgment is ordinarily inappropriate in antitrust
cases because the cases often turn on hidden motive and
intent. See Poller v. Columbia Broadcasting Co., 368 U.S. 464,
473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); O'Bryne v.
Checker Oil Co., 727 F.2d 159, 163 (7th Cir. 1984). However,
summary judgment is proper in antitrust cases where no
significant probative evidence tends to support the complaint.
O'Bryne, 727 F.2d at 163; Havoco of America v. Shell Oil Co.,
626 F.2d 549, 553 (7th Cir. 1980). As in any case, summary
judgment may be granted only if the record shows that "there is
no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law." Fed.R.Civ.P.
56(c). As the moving party, Integrated must show that no
genuine issue of material fact exists. Korf v. Ball State
University, 726 F.2d 1222, 1226 (7th Cir. 1984). We must view
the evidence, and the reasonable inferences drawn from the
evidence, in the light most favorable to Hoffman, the party
opposing the motion. Big O Tire Dealers, Inc. v. Big O
Warehouse, 741 F.2d 160, 163 (7th Cir. 1984). With these
standards in mind, we turn to Integrated's motion.
Section 1 of the Sherman Act, 15 U.S.C. § 1, provides in
relevant part, "[e]very contract, combination in the form of
trust or otherwise, or conspiracy, in restraint of trade or
commerce among the several States, or with foreign nations, is
declared to be illegal." To prevail on a Section 1 claim,
Hoffman must allege and prove a "conspiracy in restraint of
trade," resulting anticompetitive effects and "antitrust
injury," that is, injury of a type that antitrust laws were
designed to prevent. See, e.g., Independence Tube Corp. v.
Cooperweld Corp., 691 F.2d 310, 320-23 (7th Cir. 1982); rev'd
on other grounds, ___ U.S. ___, 104 S.Ct. 2731, 81 L.Ed.2d 628
(1984); Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d 549,
554-57 (7th Cir. 1980). It appears that a genuine factual
dispute exists on the first, or conspiracy, element.*fn2 But
even assuming that to be true, we think that Hoffman cannot
establish the second or third elements of its Section 1 claim.
The parties agree that Hoffman cannot prove a per se
violation of the Sherman Act. Instead, the usual test, "the
rule of reason," controls our analysis of whether Integrated's
acts violated Section 1. See Continental T.V., Inc. v. GTE
Sylvania, Inc., 433 U.S. 36, 49-50, 97 S.Ct. 2549, 2557, 53
L.Ed.2d 568 (1977); Standard Oil Co. v. United States,
221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). As the test's name
suggests, "reasonableness" of the challenged practice is the
touchstone. Under the Rule, the factfinder must weigh all the
circumstances of a case to decide whether a practice
unreasonably restrains competition. Continental T.V., 433 U.S.
at 49, 97 S.Ct. at 2557; Bunker Ramo Corp. v. United Business
Forms, Inc., 713 F.2d 1272, 1283 (7th Cir. 1983). The Rule of
Reason requires that the plaintiff show anti-competitive
effects, or actual harm to competition. Bunker Ramo, 713 F.2d
at 1283. The question is not whether the defendant's practices
were unfair or tortious, but whether those practices hobbled
competition. Id.; see .also Havoco of America, Ltd. v. Shell
Oil Co., 626 F.2d 549, 558 (7th Cir. 1980). After weighing all
of the material facts, we conclude below that Integrated's
practices, while arguably unfair and unethical, did not
unreasonably restrain competition. Thus, Hoffman cannot recover
on its Sherman Act claim.
Hoffman's most significant argument, we think, was that
Integrated's specification of Kirby pre-engineered materials,
which it distributed, eliminated competition from the bidding
process. This concern in large part motivated our denial of
Integrated's motion to dismiss. See 581 F. Supp. at 373-74. But
the facts now in the record do not support a claim that the
specifications had any significant anticompetitive effects.
Hoffman's Vice-President admitted in his deposition that Kirby
systems "are essentially the same as" or "interchangeable" with
other systems, including the Mitchell system that it had
submitted in its bid. The Village did not reject Hoffman's bid
as not conforming to specifications, even though Hoffman had
based its bid on the Mitchell system. In fact, the Village had
not limited the project to Kirby systems, as it had specified:
The Village hereby reserves the right to approve
as an equal, or reject as not being equal, any
article the bidder proposes to furnish which
contains major or minor variations from
Moreover, Hoffman had attached to its bid more than a hundred
pages of materials "touting the virtues" of the Mitchell
system. Thus, Security Fire Door Co. v. County of Los Angeles,
484 F.2d 1028 (9th Cir. 1973), which we distinguished in our
earlier opinion, see 581 F. Supp. at 373-74, is no longer
distinguishable,*fn3 since Hoffman and other bidders were free
to "tout the virtues" of similar building systems. Finally, it
is also significant that the part of Hoffman's bid based on the
Mitchell system was actually about $24,000 lower than the part
of Integrated's bid which was based on the Kirby system. Thus,
Integrated ultimately derived no actual benefit from specifying
use of the Kirby system. In sum, the above uncontroverted facts
reveal that Integrated's specification of a Kirby system
hindered competition little, if at all.
Hoffman also argues that the additional time Integrated had
to prepare its bid supports its antitrust claim. Looked at in
the light most favorable to Hoffman, the facts reveal that
Integrated had perhaps as much as four months to prepare its
bid, while Hoffman had less than two weeks to do so.
Integrated gained this advantage because it had known it was
going to bid on the construction contract after preparing the
specifications. According to Hoffman, industry custom forbids
this practice of a firm bidding on a project for which it had
prepared specifications. The purpose of this custom is
apparently to prevent collusion or the appearance of
collusion. Hoffman relies heavily on the fact of the violation
of industry custom. However, as
we noted in our opinion last year, we have found no support in
case law for the proposition that a violation of industry
custom amounts to a violation of antitrust law. 581 F. Supp. at
373. Hoffman has still not cited us any authority to the
contrary. The relevant question is not whether the practice
violated industry custom, but whether it significantly
hindered competition in the industry. Cf. Havoco of America v.
Shell Oil Co., 626 F.2d at 556 (unfair competitive practices do
not automatically violate federal antitrust law; conduct may be
actionable only if effect is to restrain free competition
unreasonably). It might be that in some cases violation of the
custom would also substantially hinder competition. As noted
above, Integrated's position as designer of the specifications
allowed it to specify Kirby systems. If Kirby were exclusive,
Integrated could have frozen out competition for the later bid.
But Kirby systems were not in fact required, as Hoffman was
free to "tout the virtues" of its Mitchell system. And Hoffman
has not submitted evidence that twelve days was too little time
for it to prepare a competitive bid. Thus, while Integrated
might have derived some advantage from having had more time to
prepare its bid, no evidence suggests that this advantage
affected competition to the extent necessary to support a
federal antitrust claim.
In sum, we conclude that Hoffman cannot prove on this record
that Integrated's practices had significant anticompetitive
effects. As such, Integrated is entitled to summary judgment
on Hoffman's Section 1 claim. Although we express no opinion
on the issue, it could be that Integrated's conduct was
tortious under some state law ...