Antitrust Law Daily Wrap Up, ANTITRUST—ConnSupCt: Connecticut Supreme Court Rejects Appeal Questioning Market Definition for Purposes of Antitrust Defense in Contract Dispute, (May 29, 2013)

By Jeffrey May, J.D.

The Connecticut Supreme Court has dismissed as moot an appeal questioning the relevant markets used to analyze an antitrust defense in a contract dispute between Wyatt Energy, Inc. and Motiva Enterprises, LLC. Because Wyatt did not challenge findings that Motiva lacked market power to sustain anticompetitive prices in light of substantial excess capacity, there was an independent basis for upholding the rejection of Wyatt's antitrust defense (Wyatt Energy, Inc. v. Motiva Enterprises, LLC., June 4, 2013, Zarella, P.)

Wyatt owned a gasoline distribution terminal in New Haven, Connecticut. Wyatt unilaterally terminated an agreement with Motiva that had granted Motiva exclusive use of logistical and storage services provided by that terminal after Motiva purchased a competing terminal. Wyatt then sold its terminal to Williams Energy, a distributor of petroleum products, without requiring Williams Energy to assume Wyatt’s obligations under the agreement with Motiva. A contract dispute arose, and Wyatt asserted a special defense of illegality premised on purported antitrust violations arising out of Motiva’s purchase of the competing terminal.

Wyatt contended that Motiva’s actions in purchasing the nearby terminal and moving its customers to that terminal while retaining exclusive control over the Wyatt terminal’s loading racks had created a combination in restraint of trade and had achieved, or created the probability of achieving, a monopoly. Wyatt argued that, if it had not terminated the agreement, then it might have faced liability for being a party to such a combination.

The trial court ruled that Wyatt had breached its agreement with Motiva and that Wyatt had failed to prove that it was justified in doing so on the ground that continued performance could have subjected it to antitrust liability. The appellate court affirmed (128 ConnApp 666; 19 A3d 181; 2011-1 Trade Cases ¶77,458).

Before the state supreme court, Wyatt argued that the appellate court's decision was based on legally incorrect definitions of the product and geographic markets. The state supreme court agreed with Motiva that, even using Wyatt’s proposed market limited to terminalling services in Connecticut, the appeal was moot because Wyatt did not appeal from the trial court’s finding that excess capacity and other competitive factors would have prevented Motiva from imposing higher, noncompetitive prices.

Even if the trial court had determined that the relevant market was terminalling services in Connecticut or in New Haven, as Wyatt proposed, the trial court’s unchallenged findings that there was substantial excess capacity in both coastal Connecticut and Connecticut as a whole would have supported the trial court’s conclusion that Motiva’s acquisition of the terminal did not give Motiva the opportunity to exercise market power or to engage in actual or attempted monopolization in violation of Connecticut antitrust law, the court explained.

The case is SC 18811.

Attorneys: Robert A. Izard (Izard Nobel LLP) for Wyatt Energy, Inc. Sheila A. Huddleston (Shipman & Goodwin LLP) for Motiva Enterprises, LLC

Companies: Motiva Enterprises, LLC; Wyatt Energy, Inc.

Cases: Antitrust ConnecticutNews