428 U.S. 579 (1976), 75-122, Cantor v. Detroit Edison Co.

Docket Nº:No. 75-122
Citation:428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141
Party Name:Cantor v. Detroit Edison Co.
Case Date:July 06, 1976
Court:United States Supreme Court
 
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Page 579

428 U.S. 579 (1976)

96 S.Ct. 3110, 49 L.Ed.2d 1141

Cantor

v.

Detroit Edison Co.

No. 75-122

United States Supreme Court

July 6, 1976

Argued January 14, 1976

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

Respondent, a private utility that is the sole supplier of electricity in southeastern Michigan, also furnishes its residential customers, without additional charge, with almost 50% of the most frequently used standard-size light bulbs under a longstanding practice antedating state regulation of electric utilities. This marketing practice for light bulbs is approved, as part of respondent's rate structure, by the Michigan Public Service Commission, and may not be changed unless and until respondent files, and the Commission approves, a new tariff. Petitioner, a retail druggist selling light bulbs, brought an action against respondent, claiming that it was using its monopoly power in the distribution of electricity to restrain competition in the sale of light bulbs in violation of the Sherman Act. The District Court entered a summary judgment against petitioner, holding on the authority of Parker v. Brown, 317 U.S. 341, that the Commission's approval of respondent's light bulb marketing practices exempted the practices from the federal antitrust laws, and the Court of Appeals affirmed.

Held: Neither Michigan's approval of respondent's present tariff nor the fact that the light bulb exchange program may not be terminated until a new tariff is filed, is sufficient basis for implying an exemption from the federal antitrust laws for that program. Pp. 592-598.

(a) The State's participation in the decision to have a light bulb exchange program is not so dominant that it is unfair to hold a private party responsible for its conduct in implementing the decision, but rather the respondent's participation in the decision is sufficiently significant to require that its conduct, like comparable conduct by unregulated businesses, conform to applicable federal law. Pp. 592-595.

(b) Michigan's regulation of respondent's distribution of electricity poses no necessary conflict with a federal requirement that respondent's activities in competitive markets satisfy antitrust

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standards. Merely because certain conduct may be subject to state regulation and to the federal antitrust laws does not necessarily mean that it must satisfy inconsistent standards, but, even assuming inconsistency, this would not mean that the federal interest must inevitably be subordinated to the State's; moreover, even assuming that Congress did not intend the antitrust laws to apply to areas of the economy primarily regulated by a State, the enforcement of the antitrust laws would not be foreclosed in an essentially unregulated area such as the electric light bulb market. Pp. 595-598.

513 F.2d 630, reversed and remanded.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, WHITE, and MARSHALL, JJ., joined, and in which (except as to Parts II and IV) BURGER, C.J., joined. BURGER, C.J., filed an opinion concurring in the judgment, and concurring in part, post, p. 603. BLACKMUN, J., filed an opinion concurring in the judgment, post, p. 605. STEWART, J., filed a dissenting opinion, in which POWELL and REHNQUIST, JJ., joined, post, p. 614.

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STEVENS, J., lead opinion

MR. JUSTICE STEVENS delivered the opinion of the Court. *

In Parker v. Brown, 317 U.S. 341, the Court held that the Sherman Act was not violated by state action displacing competition in the marketing of raisins. In this case, we must decide whether the Parker rationale immunizes private action which has been approved by a State and which must be continued while the state approval remains effective.

The Michigan Public Service Commission pervasively regulates the distribution of electricity within the State, and also has given its approval to a marketing practice which has a substantial impact on the otherwise unregulated business of distributing electric light bulbs. Assuming, arguendo, that the approved practice has unreasonably restrained trade in the light bulb market, the District Court1 and the Court of Appeals2 held, on the authority of Parker, that the Commission's approval exempted the practice from the federal antitrust laws. Because we questioned the applicability of Parker to this situation, we granted certiorari, 423 U.S. 821. We now reverse.

Petitioner, a retail druggist selling light bulbs, claims that respondent is using its monopoly power in the distribution of electricity to restrain competition in the sale of bulbs in violation of the Sherman Act.3 Discovery

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and argument in connection with defendant's motion for summary judgment were limited by stipulation to the issue raised by the Commission's approval of respondent's light bulb exchange program. We state only the facts pertinent to that issue, and assume, without opining, that, without such approval, an antitrust violation would exist. To the extent that the facts are disputed, we must resolve doubts in favor of the petitioner, since summary judgment was entered against him. We first describe respondent's "lamp exchange program," we next discuss the holding in Parker v. Brown, and then we consider whether that holding should be extended to cover this case. Finally, we comment briefly on additional authorities on which respondent relies.

I

Respondent, the Detroit Edison Co., distributes electricity and electric light bulbs to about five million people in southeastern Michigan. In this marketing area, respondent is the sole supplier of electricity, and supplies consumers with almost 50% of the [96 S.Ct. 3114] standard-size light bulbs they use most frequently.4 Customers are billed for the electricity they consume, but pay no separate charge for light bulbs. Respondent's rates, including the omission of any separate charge for bulbs, have been approved by the Michigan Public Service Commission, and may not be changed without the Commission's approval. Respondent must, therefore, continue

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its lamp exchange program until it files a new tariff and that new tariff is approved by the Commission.

Respondent, or a predecessor, has been following the practice of providing limited amounts of light bulbs to its customers without additional charge since 1886.5 In 1909, the State of Michigan began regulation of electric utilities.6 In 1916, the Michigan Public Service Commission first approved a tariff filed by respondent setting forth the lamp supply program. Thereafter, the Commission's approval of respondent's tariffs has included implicit approval of the lamp exchange program. In 1964, the Commission also approved respondent's decision to eliminate the program for large commercial customers.7 The elimination of the service for such customers became effective as part of a general rate reduction for those customers.

In 1972, respondent provided its residential customers with 18,564,381 bulbs at a cost of $2,835,000.8 In its accounting to the Michigan Public Service Commission, respondent included this amount as a portion of its cost of providing service to its customers. Respondent's accounting records reflect no direct profit as a result of the

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distribution of bulbs. The purpose of the program, according to respondent's executives, is to increase the consumption of electricity. The effect of the program, according to petitioner, is to foreclose competition in a substantial segment of the light bulb market.9

The distribution of electricity in Michigan is pervasively regulated by the Michigan Public Service Commission. A Michigan statute10 vests the Commission with "complete power and jurisdiction to regulate all public utilities in the state. . . ." The statute confers express power on the Commission

to regulate all rates, fares, fees, charges, services, rules, conditions of service, and all other matters pertaining to the formation, operation, or direction of such public utilities.

Respondent advises us that the heart of the Commission's function is to regulate the "`furnishing . . . [of] electricity for the production of light, heat or power. . . .'"11

The distribution of electric light bulbs in Michigan is unregulated. The statute creating the Commission contains no direct reference to light bulbs. Nor, as far as we have been advised, does any other Michigan [96 S.Ct. 3115] statute authorize the regulation of that business. Neither the Michigan Legislature nor the Commission has ever made any specific investigation of the desirability of a lamp exchange program or of its possible effect on competition in the light bulb market. Other utilities regulated by the Michigan Public Service Commission do not follow the practice of providing bulbs to their customers at no

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additional charge. The Commission's approval of respondent's decision to maintain such a program does not, therefore, implement any state-wide policy relating to light bulbs. We infer that the State's policy is neutral on the question whether a utility should, or should not, have such a program.

Although there is no statute, Commission rule, or policy which would prevent respondent from abandoning the program merely by filing a new tariff providing for a proper adjustment in its rates, it is nevertheless apparent that, while the existing tariff remains in effect, respondent may not abandon the program without violating a Commission order, and therefore without violating state law. It has, therefore, been permitted by the Commission to carry out the program, and also is required to continue to do so until an appropriate filing has been made and has received the approval of the Commission.

Petitioner has not named any...

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