Big business, big government, win big in Supreme Court
The United States Supreme Court handed down several rulings Tuesday that favor big business and insulate the federal government from certain types of civil liability.
In what many see as an important antitrust pronouncement, the court decided 5 to 3 that a parent company is incapable of illegally conspiring with its wholly owned subsidiary to keep a competitor out of the market.
The ruling was in line with Reagan administration philosophy. The government had argued that business competition is discouraged if a corporation and its subsidiary are considered separate economic entities.
Big winners financially were the Copperweld Corporation and its subsidiary, Regal Tube Company, which had been fined $7.5 million by a lower court for predatory pricing activities in violation of federal antitrust law. A Chicago appeals court had upheld this award to Independence Tube - which had sued for illegal restraint of trade under the Sherman Antitrust Act.
Chief Justice Warren Burger, writing for the majority and rejecting a theory of intra-enterprise conspiracy, said ''there can be little doubt that the operations of a corporate enterprise organized into divisions must be judged as the conduct of a single actor. The existence of an unincorporated division reflects no more than a firm's decision to adopt an organizational division of labor.''
Dissenting Justices John Paul Stevens, William Brennan, and Thurgood Marshall held that the question which should have been addressed was ''why two corporations that engage in a predatory course of conduct which produces a nationwide restraint on competition . . . should be immunized from liability because they were controlled by the same godfather.''
Since 1947, under the ''intra-enterprise conspiracy doctrine,'' courts have permitted antitrust liability resulting from an agreement or conspriracy between a parent corporation and a subsidiary under its control, or between two subsidiaries controlled by the same parent. But the specific issue in this case had not been previously addressed - namely, whether a corporation's decision to handle its business through subsidiaries should continue to be treated differently from the decision to use internal divisions.
In another case Tuesday, the Supreme Court ruled unanimously that the federal government may not be sued for negligence in commercial air disasters. In deciding a case arising from negligence claims against the Federal Aviation Administration (which certifies airliners), Chief Justice Burger said ''the FAA has a statutory duty to promote safety in air transportation, not to insure it.''