Credit Bureau Reports, Inc. v. Retail Credit Company

• Citation: 476 F.2d 989
• Decision Date: 07 June 1973
• Docket Number: No. 72-1572.,72-1572.
• Parties: CREDIT BUREAU REPORTS, INC., Plaintiff-Appellee-Cross Appellant, v. RETAIL CREDIT COMPANY et al., Defendants-Appellants-Cross Appellees. CREDIT MARKETING SERVICES, INC., Plaintiff-Appellant, v. CREDIT BUREAU REPORTS, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

476 F.2d 989 (1973)

CREDIT BUREAU REPORTS, INC., Plaintiff-Appellee-Cross Appellant, v. RETAIL CREDIT COMPANY et al., Defendants-Appellants-Cross Appellees.

CREDIT MARKETING SERVICES, INC., Plaintiff-Appellant, v. CREDIT BUREAU REPORTS, INC., Defendant-Appellee.

No. 72-1572.

United States Court of Appeals, Fifth Circuit.

Rehearing and Rehearing Denied June 7, 1973.

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Leroy Jeffers, Charles T. Newton, Jr., Harry Reasoner, Houston, Tex., for Retail Credit and others.

John H. Boman, Jr., Kent E. Mast, Atlanta, Ga., for Credit Marketing and others.

William C. Harvin, Houston, Tex., King & Spalding, Atlanta, Ga., E. William Barnett, John L. Jeffers, Jr., William R. Burke, Jr., Houston, Tex., for appellee.

Before JONES, GODBOLD and INGRAHAM, Circuit Judges.

Rehearing and Rehearing En Banc Denied June 7, 1973.

GODBOLD, Circuit Judge:

Credit Bureau Reports, Inc. (CBR) brought this anti-trust suit in the U. S. District Court for the Southern District of Texas, against Retail Credit Company (RCC) and its subsidiaries, seeking an injunction and a decree of divestiture under § 16 of the Clayton Act (15 U.S.C. § 26). CBR charged RCC with price fixing in the nonlocal credit reporting market¹ in violation of § 1 of the Sherman Act (15 U.S.C. § 1), with monopolization of the insurance reporting market² and attempted monopolization of the nonlocal credit reporting market in violation of § 2 of the Sherman Act (15 U.S.C. § 2), and with having violated § 7 of the Clayton Act (15 U.S.C. § 18) by acquisition of more than 100 local credit bureaus, which tended to lessen competition in the reporting markets.³ CBR alleges that these asserted violations significantly threatened its operations in the nonlocal credit reporting market and its potential entry into the insurance reporting market where it would be a competitor of RCC.

After CBR's complaint was filed, Credit Marketing Services, Inc. (CMS), a subsidiary of RCC, brought suit in the U. S. District Court for the Northern District of Georgia, charging CBR with price fixing and monopolization in nonlocal credit reporting in violation of §§ 1 and 2 of the Sherman Act and seeking injunctive relief under § 16 of the Clayton Act. The Georgia federal court transferred CMS's suit to the Southern District of Texas where it was consolidated with the action filed by CBR.

The District Court, sitting without a jury, found that RCC had not fixed prices in the nonlocal credit reporting market but had violated § 2 of the Sherman Act by monopolizing the insurance reporting market and by attempting to monopolize nonlocal credit reporting, and had violated § 7 of the Clayton Act by acquiring the local credit bureaus. The court enjoined RCC from (1) withdrawing its local bureaus from membership in CBR for three years; (2) from going forward in any manner to compete with CBR for the marketing of nonlocal credit reports for three years; and (3) from acquiring additional local bureaus for five years. The court refused to require divestiture of the local bureaus RCC had acquired. As to CMS's complaint, the court found that, while owned by the local bureaus which provided the information it sold, CBR was a sole entity merely selling its own product, credit reports. The court held that CBR, therefore, had not violated the Sherman Act by conspiring with any other entity to fix prices, allocate territory, or refuse to deal.

RCC appeals from the order enjoining its activities and CBR cross-appeals from the refusal to order divestiture. We affirm on the basis of the District Court's opinion, Credit Bureau Reports, Inc., v. Retail Credit Co. et al., 358 F.Supp. 780 (S.D.Tex.1971), and of the following discussion.

On appeal the parties have focused upon three issues: the "prematurity" of the interest of CBR which the District Court found to be threatened and for which CBR was granted injunctive protection, the requisites of the showing of a causal nexus between that interest and the antitrust law violations found by the District Court, and the claim that CBR has engaged in illegal territorial allocation.

1. Prematurity.

Section 16 of the Clayton Act entitles private litigants to injunctive relief from threatened injury resulting from a violation of the antitrust laws. To obtain such relief the complaining party must prove that the alleged offender either already has violated the antitrust laws or that such violation is impending and that, because of this violation, he is threatened with loss or injury. Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 130, 89 S.Ct. 1562, 23 L.Ed.2d 129, 152 (1969). A mere showing by the private plaintiff of a violation of the antitrust laws has no actionable significance because, while in a government action there need be established only an antitrust violation, a private litigant "`must not only show the violation of the antitrust laws, but show also the impact of the violations upon him,' i. e., some injury (or threatened injury where injunctive relief only is sought) proximately resulting from the antitrust violation." McKeon Construction Co. v. McClatchy Newspapers, 1970 Trade Cas. ¶¶ 73, 212 (N.D.Cal.1969), quoting from Simpson v. Union Oil Company, 311 F.2d 764, 767 (9th Cir. 1963), rev'd on other grounds, 377 U.S. 13, 84 S.Ct. 1051, 12 L.Ed.2d 98 (1964).

The District Court's grant of injunctive relief here was carefully premised upon three related determinations. First, it found that RCC had violated the antitrust laws by monopolizing the insurance reporting market, by attempting to monopolize the nonlocal credit reporting market, and by acquiring local credit bureaus. Second, it determined that CBR was a potential entrant into the insurance reporting market and that its interest as a potential entrant was protected by the antitrust laws. Third, the court determined that "defendants' Clayton Act violations and their attempts to monopolize the nonlocal credit reporting market significantly threaten CBR by closing tightly the door to the insurance reporting market and entitle it to injunctive relief on that basis," and that "CBR is threatened with injury because of the existence of RCC's monopoly power in the field of insurance reporting."

RCC's "prematurity" argument is essentially an attack upon the court's second determination, directed not at the correctness of the fact findings underlying it but at the sufficiency of those facts to establish that CBR was a potential entrant into the insurance reporting market. The evidence relied upon by the court related to the decisions of CBR executives to begin preparation for entry into the market, and to a survey conducted by CBR to determine local bureau interest in participation through CBR in insurance reporting. RCC contends that this evidence failed to establish that CBR was presently ready, willing, and able to enter the market. Also, RCC points to countervailing evidence relating to the existence of barriers, not caused by RCC, to CBR's actual entry into the market, and to acknowledgment by CBR that when suit was filed, it did not have a product acceptable to the insurance companies.⁴ Additionally, RCC notes evidence showing that until recently CBR executives thought that the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) would impose upon local bureaus performing telephone investigations of potential insureds, legal duties and potential liability too onerous to accept.

RCC made the same arguments at trial, and the District Court correctly rejected them. The evidence relied upon was sufficient to establish that CBR had done enough to make its presence on the edge of the insurance reporting market have "competitive significance," notwithstanding whether it ever would or could be able to actually enter that market because of the existence of other barriers not caused by RCC. In United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1965), the government has sued for an order requiring El Paso to divest itself of Pacific Northwest, contending that the acquisition of Northwest had violated § 7 of the Clayton Act by removing El Paso's potential competitor in the California gas market. The trial court found that Northwest could not have obtained a contract from California distributors, could not have received gas supplies or financing for a pipeline project to California and could not have put together a project acceptable to the regulatory agencies. 376 U.S. at 657-658, 84 S.Ct. 1044, 12 L.Ed.2d at 17-18. The Supreme Court, however, held that those findings were irrelevant, 376 U.S. at 658, 84 S.Ct. 1044, 12 L.Ed.2d at 18, and that a § 7 violation had been established because the mere existence of Northwest as a potential competitor on the edge of the California market—without regard to whether it would ever be able to actually enter that market—had "competitive significance" in the California market.

Similarly in Zenith Radio, supra, the Court reinstated injunctive relief the trial court had granted Zenith against continued participation by Hazeltine Research in English and Australian patent pooling arrangements which created barriers to Zenith's potential entry into those markets. 395 U.S. at 132-133 and n. 26, at p. 132, 89 S.Ct. 1562, 23 L.Ed. 2d 153 and n. 26, at 153. The relief was reinstated notwithstanding the Court's earlier holding that treble damages were properly denied because Zenith had not shown that its failures to enter those markets were proximately caused by the defendants' antitrust violations. The Court had noted that other restraints— Zenith's failure to develop a television set which could operate on the different signals transmitted in England, government trade barriers, and high shipping costs—existed to block Zenith's actual entry. 395 U.S. at 125-126, 129, 89 S. Ct. 1562, 23 L.Ed. 149-151. See also United States v. Falstaff Brewing Corp., 410 U.S. 526, 93 S.Ct. 1096, 35 L.Ed.2d 475 (1973).

2. Causation.

In...