Antitrust Law Daily Wrap Up, TOP STORY: High Court will not take up challenge to geographic non-compete agreement, (Jun 8, 2015)

By Jeffrey May, J.D.

The nation's two largest grocery wholesalers were unable to convince the U.S. Supreme Court to consider the applicability of the per se rule to acquisition agreements that contain geographic non-compete pacts and to agreements whose competitive nature and effects remain unclear at summary judgment. Left standing is a decision of the U.S. Court of Appeals in St. Louis reversing summary judgment in favor of the wholesalers in an action brought by grocers, alleging a conspiracy to divide markets. Today, the High Court denied the wholesalers’ petition for certiorari, which was filed with the Court on January 16 (SuperValu Inc. v. D&G, Inc., Dkt. 14-891).

A 2003 asset exchange agreement entered into by wholesalers SuperValu Inc. and C&S Wholesale Grocers, Inc. is behind the case. The agreement included a non-compete provision with respect to former customers. A grocer filed suit, alleging that the agreement violated the antitrust laws. The district court granted summary judgment in favor of the wholesalers. On appeal, the Eighth Circuit ruled that neither side was entitled to summary judgment and that the case should be tried to a jury. The appellate court decided that there was a factual dispute about the real terms of the wholesalers’ agreement.

The wholesalers contended that the rule of reason should apply in this case. They called on the Supreme Court to reverse the Eighth Circuit panel's decision. Specifically, they asked: (1) whether, in an antitrust case, fact issues about the competitive nature and effects of an agreement preclude applying the rule of reason at summary judgment and require deferring the decision of whether the per se rule applies until after a jury trial; (2) whether, in a business acquisition, the seller's agreement not to compete in the geographic area where that business operated is per se unlawful under the Sherman Act; and (3) whether, in a challenge to a business acquisition, the antitrust statute of limitations begins anew each time the defendant uses its increased market power to sell goods at an inflated price.

The petitioners questioned the Eighth Circuit's decision to reject the rule of reason at the summary judgment stage and to delay resolution of the mode of analysis until after the jury verdict. “The case offers the Court a prime opportunity to clarify the circumstances in which departure from the rule of reason is warranted,” the petitioners contended.

Statute of limitations. Lastly, the petitioners also asked the Court to address “discord on when a cause of action accrues for antitrust claims relating to an acquisition.” They argued that the statute of limitations should run from the date of the acquisition, and should not be restarted with every sale at an allegedly supra-competitive price, as the Sixth Circuit, held “on virtually identical facts,” in Z Technologies Corp. v. Lubrizol Corp., 753 F.3d 594, 2014-1 Trade Cases ¶78,776.

Attorneys: Aaron M. Street (Baker Botts LLP) and Martin R. Lueck (Robins, Kaplan, Miller & Ciresi, LLP) for SuperValu Inc. W. Joseph Bruckner (Lockridge Grindal Nauen PLLP) and Richard Bruce Drubel Jr. (Boies Schiller & Flexner LLP) for D&G, Inc.

Companies: D&G, Inc.; SuperValu Inc.; C&S Wholesale Grocers, Inc.

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