Supreme Court Decides Predatory Bidding Case

On February 20, the Supreme Court issued its decision in Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., No. 05-381, addressing the antitrust analysis of predatory bidding (i.e., paying an above-market price to gain control of a necessary input to the detriment of other buyers) under Sherman Act Section 2. In an opinion by Justice Thomas, the Court unanimously concluded that the predatory pricing test of Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), also applies in the predatory bidding context. As a result, the Court reversed a treble damage judgment of $79 million for the plaintiffs. The practical effect of the decision is to make it very difficult for plaintiffs to prevail in predatory bidding cases. The decision also reflects the continuing strong influence of economic analysis in the Court’s antitrust jurisprudence.