754 F.2d 404 (1st Cir. 1985), 84-1194, Cia. Petrolera Caribe, Inc. v. Arco Caribbean, Inc.

Docket Nº:84-1194.
Citation:754 F.2d 404
Party Name:Trade Cases 66,400, 1 Fed.R.Serv.3d 70 CIA. PETROLERA CARIBE, INC., Plaintiff, Appellant, v. ARCO CARIBBEAN, INC., et al., Defendants, Appellees.
Case Date:February 06, 1985
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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754 F.2d 404 (1st Cir. 1985)

Trade Cases 66,400,

1 Fed.R.Serv.3d 70

CIA. PETROLERA CARIBE, INC., Plaintiff, Appellant,


ARCO CARIBBEAN, INC., et al., Defendants, Appellees.

No. 84-1194.

United States Court of Appeals, First Circuit

February 6, 1985

Argued Sept. 6, 1984.

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Celso E. Lopez, San Sebastian, P.R., with whom Carlos F. Lopez, San Juan, P.R., was on brief, for plaintiff, appellant.

Max K. Jamison, Santa Monica, Cal., with whom Alvaro R. Calderon, Jr., and Calderon, Rosa-Silva & Vargas, Hato Rey, P.R., were on brief, for defendants, appellees.

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Before COFFIN and BOWNES, Circuit Judges, and SELYA, [*] District judge.

BOWNES, Circuit Judge.

In this antitrust action, plaintiff-appellant Cia. Petrolera Caribe, Inc. (Caribe) appeals entry of summary judgment in favor of defendants Arco Carribean, Inc. (Arco), U.S.A. Petroleum Corp. (USAP), Isla Petroleum Corporation (Isla), and Gasolinas de Puerto Rico (GPR). The complaint alleges that USAP's acquisition of Arco's Puerto Rican assets violated Secs. 7 and 8 of the Clayton Act, 15 U.S.C. Secs. 18, 19, and Secs. 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1, 2. Although the complaint originally requested both damages and injunctive relief, Caribe abandoned the request for damages in the district court and asked only for an injunctive remedy, particularly divestiture, pursuant to Sec. 16 of the Clayton Act, 15 U.S.C. Sec. 26.

Caribe challenges three rulings of law by the district court. It first claims that the district court erred in ruling that it lacked standing to bring the action because it had not been and would not be injured as a proximate result of the alleged antitrust violations. Second, Caribe contends that the court erred in holding that the specific injunctive remedy it sought--divestiture--is not available to a private litigant such as Caribe. Finally, plaintiff contends that disputed relevant and material facts rendered summary judgment inappropriate.

Caribe also forwards as error two procedural rulings: the district court's acceptance and reliance upon affidavits and a reply brief submitted by the defendants on their motion for summary judgment despite the court's refusal to accept plaintiff's affidavit or to allow it an opportunity to reply; and, the district court's refusal to allow oral argument on summary judgment.

We first discuss whether plaintiff has "standing" for maintaining this suit. Because we conclude that it does, we then review plaintiff's procedural claims. We next examine the propriety of awarding summary judgment on liability in favor of defendants, and conclude with a discussion of why we believe plaintiff's remedies include divestiture.


We recount the facts in the light most favorable to the plaintiff, against whom summary judgment was entered. Caribe is in the wholesale and retail gasoline business. It wholesales refined gasoline to a small chain of service stations in Puerto Rico it owns and operates. Defendant USAP is an oil company headquartered in the continental United States that bought the Puerto Rican assets of Arco Carribean, Inc., a subsidiary of the multinational oil company Atlantic Richfield, Inc. This acquisition constitutes the merger contested here. Prior to this acquisition, USAP's only participation in the Puerto Rican gasoline market was through its wholly owned subsidiary, GPR. GPR owns and operates a number of service stations in Puerto Rico. As part of the merger plan formulated by USAP, another wholly owned subsidiary, Isla, was created. Isla's purpose was to take title to the Puerto Rican assets of Arco Carribean and to continue the management and operation of the former Arco stations. After consummation of the merger in July 1981, Isla became the wholesaler of gasoline not only to the former Arco (now Isla) service stations but also to those operated by GPR. Neither GPR nor Isla markets gasoline outside Puerto Rico.

Caribe entered the gasoline market in Puerto Rico in 1979 and slowly but steadily expanded its operations. By mid-1981, it was operating twenty-four stations and was planning an additional eight. It appears that most of these stations served rural and less populous regions of Puerto Rico. At its highest point, Caribe's market share was 1.1%. Caribe claims that because of the merger, a trend toward greater concentration in the market has occurred, lessening competition and threatening the survival of the smaller companies

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including itself. It alleges that it will be "squeezed" out of the market by the oligopolist firms. It further claims that the increase in market share of the top five has increased their market power, and consequently their ability to dictate the conditions for doing business to the smaller companies. Caribe believes the inevitable result will be harm to consumers in the form of price hikes. Caribe asserts that the harm to itself resulting from this concentration of market power is affirmatively shown by its inability to expand beyond the hinterlands of Puerto Rico into the more populous metropolitan areas. It also claims that increased market concentration, in conjunction with other barriers to entry, effectively prevents the entrance of other competitors into the market.

Immediately preceding the merger, the Puerto Rican gasoline market also included seven multinational, vertically integrated companies: Texaco, Esso, Shell, Gulf, Mobil, Chevron and Arco. 1 The first four of these firms plus GPR controlled 77% of the market at the time of the merger but, after the merger, their proportion rose to a high of 83%. GPR's own market share rose from 5.29% to 9.33% after its merger with the former Arco subsidiary. Caribe's market share at that time was 0.4%.


Caribe's claims for injunctive relief are based on Sec. 16 of the Clayton Act, 15 U.S.C. Sec. 26, which reads in pertinent part:

Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws ... when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings....

The district court held, without more, that Caribe lacked standing "on all causes of action because it has not been, and will not be, damaged as a result of any conduct alleged in its complaint."

Although the complaint would never serve as a model for antitrust pleadings, it does specifically invoke Sec. 16 of the Clayton Act in paragraph one. In Count I, paragraph 12b, it is alleged that the merger will "materially impair the competitive effectiveness of Plaintiff and others that were and are now competing with ARCO and the buyer." In Count II, paragraph 15, it is alleged that the objective of the merger was to "restrain[ ] and prevent[ ] plaintiff and others from exercising an essential and necessary part of their lawful trade or business in interstate trade or commerce." Paragraph 17 in Count II also alleges "plaintiff has lost customers, patronage and trade and has been prevented and detered [sic] from continuing and expanding and increasing its business as otherwise [sic] would have done." These bare bones allegations have been supplemented with additional facts through affidavits and depositions of record.

It appears that the district court erroneously applied the requirements of Sec. 4 of the Clayton Act, 15 U.S.C. Sec. 15, which authorizes treble damages for antitrust violations, to plaintiff's request for Sec. 16 injunctive relief. In Hawaii v. Standard Oil Co., 405 U.S. 251, 260, 92 S.Ct. 885, 890, 31 L.Ed.2d 184 (1972), the Supreme Court noted an important difference between the requirements of Sec. 16 and those of Sec. 4. The Court pointed out that a Sec. 4 claim requires an injury to "business or property" that Sec. 16 omits. The Court noted that, by contrast, Sec. 16 provides that "any individual threatened with injury by an antitrust violation may ... sue for injunctive relief against violations of the antitrust laws...." Hawaii v. Standard Oil Co., 405 U.S. at 261, 92 S.Ct. at 890-91 (emphasis added). Plainly, Congress empowered

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a broader range of plaintiffs to bring Sec. 16 actions because the standards to be met are less exacting than those under Sec. 4; under Sec. 16, a plaintiff need show only a threat of injury rather than an accrued injury.

The Court's remarks in Hawaii reaffirm its conclusions in Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969), a case more nearly on point. The Court took to task the court of appeals for vacating a portion of an injunction because it believed that

Zenith's failure to prove the fact of injury barred injunctive relief as well as treble damages. This was unsound, for Sec. 16 of the Clayton Act, 15 U.S.C. Sec. 26, which was enacted by the Congress to make available equitable remedies previously denied private parties, invokes traditional principles of equity and authorizes injunctive relief upon the demonstration of "threatened" injury ...; he need only demonstrate a significant threat of injury from an impending violation of the antitrust laws or from a contemporary violation likely to continue or recur.

Id. at 130, 89 S.Ct. at 1580 (citations omitted; emphasis added). Although this was an enunciation of the standard a plaintiff must satisfy for an injunction to issue after trial, it applies here because to withstand a motion for summary judgment, a plaintiff is not required to plead additional matters and submit supporting proof more exacting than that ultimately required for judgment in its favor.

As we have recently observed, "[t]he principles of standing determine...

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