of the Complaint, Exhibit 3 attached to the Radice affidavit).
Christianson contends that this alleged agreement constitutes a group
boycott which is a per se violation of § 1 of the Sherman Act.
Colt contends that the per se rule is completely inapplicable because
the evidence shows no horizontal agreement among competitors at any level
and no vertical agreements as to price. Colt maintains that the evidence
only shows agreements between Colt and its suppliers restricting the use
of trade secrets and Colt's trade secrets enforcement efforts.
Colt argues that boycotts are illegal per se only if they are used to
enforce agreements that are themselves illegal per se— for
example, price fixing agreements. Collins v. Associated Pathologists,
Ltd., 676 F. Supp. 1388, 1398-1399 (C.D.Ill. 1987) (quoting Marrese v.
American Academy of Orthopaedic Surgeons, 706 F.2d 1488, 1495 (7th Cir.
1983), vacated on other grounds, 726 F.2d 1150 (7th Cir. 1984), rev'd,
470 U.S. 373, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985)), aff'd, 844 F.2d 473
(7th Cir.), cert. denied, 488 U.S. 852, 109 S.Ct. 137, 102 L.Ed.2d 110
In the Collins case, Id. at 1398, this Court noted that the Seventh
Circuit explained its own understanding of illegal boycotts in cases such
as US. Trotting Ass'n v. Chicago Downs Ass'n, Inc., 665 F.2d 781 (7th
Cir. 1981). In US. Trotting, the court began its discussion of the
plaintiff's antitrust claims by stating that the Rule of Reason is the
standard traditionally applied for the majority of alleged
anticompetitive practices challenged under § 1 of the Sherman Act;
however, a particular course of conduct will be termed a per se violation
after courts have had considerable experience with the type of conduct
challenged and application of the Rule of Reason has inevitably resulted
in a finding of anticompetitive effects. Id. at 787-788. The court in
US. Trotting further explained that the Supreme Court has found certain
group boycotts illegal per se, but that a per se rule had never been
applied by the Supreme Court to concerted refusals to deal which were not
designed to drive out competitors. Id.
Christianson cites two Supreme Court cases in which group boycotts were
found to be per se illegal. See, Fashion Originators Guild of America,
Inc. v. FTC, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941) and Klor's,
Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d
In response, Colt cites Kling v. St. Paul Fire and Marine Insurance
Co., 626 F. Supp. 1285 (C.D.Ill. 1986), another case decided by this
Court. In the Kling case, the plaintiffs alleged an agreement between the
defendant hospital and the defendant St. Paul Fire and Marine Insurance
Co. which required all doctors and dentists with staff privileges at the
hospital to carry a minimum of $1 million in medical malpractice
insurance coverage. Id. at 1288-1289. This Court found that application
of the per se rule was inappropriate in that case because the Supreme
Court has found group boycotts per se illegal only in cases involving
either price fixing or agreements among competitors. Id. at 1291. In the
Kling case it was clear that there was no price agreement and that the
insurance company was not in competition with the hospital. Id. Colt
asserts that in this case, as in Kling, there is no evidence of a price
fixing agreement or an agreement among competitors.
Colt also cites Business Electronics v. Sharp Electronics, 485 U.S. 717,
108 S.Ct. 1515, 99 L.Ed.2d 808 (1988). In Business Electronics, Id. at
730, 108 S.Ct. at 1522, the court stated that:
Restraints imposed by agreement between competitors
have traditionally been nominated as horizontal
restraints, and those imposed by agreement between
firms at different levels of distribution as vertical
Id. at 730, 108 S.Ct. at 1522. In this case, if there were any
restraints, the evidence shows that the restraints were vertical
restraints because the restraints were imposed by Colt, which is at a
different level of the distribution chain than the suppliers of component
parts for the M16.
The Business Electronics Court concluded that a vertical restraint is
not illegal per se unless it includes some agreement on price or price
levels. Id. at 735-736, 108 S.Ct. at 1525-1526. Since this case involves
vertical restraints and there is no allegation that there was an
agreement on Price or price levels, there is no per se violation,
Christianson cannot rely on United States v. General Motors Corp.,
384 U.S. 127, 86 S.Ct. 1321, 16 L.Ed.2d 415 (1966) or Klor's, Inc. v.
Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741
(1959), because the Supreme Court stated in Business Electronics that
these cases involved horizontal combinations. Id. 485 U.S. at 734, 108
S.Ct. at 1525. Even further, Christianson cannot rely on United States
v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960)
because the Court determined in Business Electronics that Parke, Davis
did not support a rule that an agreement on price or price levels is not
required for a vertical restraint to be per se illegal. Id. 485 U.S. at
735, 108 S.Ct. at 1525. Christianson asserts that there is a horizontal
conspiracy in this case. He asserts that at least Casting Engineers and
Aerospace Nylok agreed with Colt to cease doing business with
Christianson after receiving Colt's letters, which made it obvious that
they, along with other Colt suppliers, were being solicited in a common
purpose. (See, Stillwell affidavit at ¶ 7, Exhibits D, E, and F and
Plaintiff's Exhibit 8, ¶ 11). This Court disagrees. Although there is
evidence that Colt attempted to force all of its component suppliers to
cease doing business with Christianson, there is no evidence that the
component suppliers themselves had any agreement at the component
supplier level, and there is no evidence that Colt had agreed with anyone
else at its level of production and distribution. Thus, the only
agreement asserted in this case is on the vertical level.
Christianson then contends that Business Electronics is distinguishable
because it involved a concerted refusal to deal rather than a classic
boycott such as the present case. Christianson quotes from the case of
Northwest Stationers v. Pacific Stationery, 472 U.S. 284, 105 S.Ct.
2613, 86 L.Ed.2d 202 (1985), which explained when a per se approach was
applied to a group boycott. The Court stated:
Cases to which this Court has applied the per se
approach have generally involved joint efforts by a
firm or firms to disadvantage competitors by "either
directly denying or persuading or coercing suppliers
or customers to deny relationships the competitors
need in the competitive struggle." (Citations
omitted). In these cases, the boycott often cuts off
access to a supply, facility, or market necessary to
enable the boycotted firm to compete (citations
omitted), and frequently the boycotting firms
possessed a dominant position in the relevant market.
(Citations omitted). In addition, the practices were
generally not justified by plausible arguments that
they were intended to enhance overall efficiency and
make markets more competitive. Under such
circumstances, the likelihood of anticompetitive
effects is clear and the possibility of countervailing
pro-competitive effects is remote.
Id. at 294, 105 S.Ct. at 2619.