Town Sound & Custom Tops v. Chrysler Motors Corp.
In Town Sound & Custom Tops, Inc. v. Chrysler Motors Corp., 959 F.2d 468 (3d Cir. 1992), an en banc sitting of the Third Circuit rejected an antitrust claim based on a tying arrangement.
Judge Becker, renowned for his antitrust decisions and writing this opinion for the court also, recounted the facts as follows:
| “ | Until the mid-1970s, Chrysler Motors Corporation ("Chrysler") and other leading American automobile manufacturers sold car radios as options that were priced separately from the rest of the cars' standard features. By the mid-1980s, however, Chrysler began to include factory-installed sound systems as a standard feature of its models. Today the price of a sound system is included in the base price of virtually all Chryslers, Plymouths, and Dodges ("Chrysler cars"). Whereas car buyers could formerly purchase Chrysler cars without sound systems and buy their own systems from independent autosound dealers, now they cannot even receive credit on a car's price for deleting the sound system. The independent autosound dealers have accordingly seen consumer demand for their products and services decline.
As a result, the plaintiffs, a group of independent autosound dealers, sued Chrysler in the district court for the Eastern District of Pennsylvania, claiming that Chrysler has illegally restrained commerce by conditioning the sale of Chrysler cars on the purchase of Chrysler-supplied autosound systems. Their complaint avers that Chrysler's actions force purchasers of Chrysler cars to accept inferior and overpriced Chrysler-supplied sound systems, resulting in harm to consumers as well as to the independent dealers themselves. Specifically, the plaintiffs claim that Chrysler has tied the sales of Chrysler cars and automobile sound systems for Chrysler cars in violation of section 1 of the Sherman Act, 15 USC § 1 (1988), and section 3 of the Clayton Act, 15 USC § 14 (1988). |
” |
Town Sound & Custom Tops, Inc. v. Chrysler Motors Corp., 959 F.2d 468, 471 (3d Cir. 1992)}} In restating the law, Judge Becker first observed reluctantly that:
| “ | a majority of the Supreme Court has been steadfast thus far in its refusal to jettison either the traditional "per se" nomenclature or the traditional formulation of the test. See Jefferson Parish, 466 U.S. at 9-11 (majority opinion); id at 32 (Brennan, joined by Marshall, concurring). Thus, we must apply the traditional "per se" rule (with its recent glosses) unless and until the Supreme Court decides to do away with it. | ” |
959 F.2d at 478.
After further analysis, Judge Becker concluded that:
| “ | Because Chrysler lacks market power in the tying product market (the market for automobiles sold in the United States), the plaintiffs cannot succeed on their "per se" claim, or on a rule of reason claim based on leveraging of market power. Because the plaintiffs do not offer any other plausible and cognizable theory of causation of antitrust injury, the plaintiffs raise no other triable rule of reason claim. Because the plaintiffs offer no better evidence of incipient antitrust injury than of current antitrust injury, their Clayton Act claim must fail as well. Accordingly, the summary judgment of the district court will be affirmed. | ” |
959 F.2d at 496.
Two judges dissented from this en banc ruling. A subsequent petition for a writ of certiorari was denied.
This Third Circuit decision has been cited favorably roughly 100 times, mostly within the Third Circuit but also in a passing reference by a dissent written by Justice Antonin Scalia in the U.S. Supreme Court.