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Tampa Elec. Co. v. Nashville Coal Co. - 365 U.S. 320, 81 S. Ct. 623 (1961)

Rule:

Even though a contract is found to be an exclusive-dealing arrangement, it does not violate Clayton Act, § 3, 15 U.S.C.S. § 14, unless the court believes it probable that performance of the contract will foreclose competition in a substantial share of the line of commerce affected.

Facts:

Petitioner Tampa Electric Company (Tampa) produces electric energy and sells it to a 60-mile by 30-mile service area in the vicinity of Tampa, Fla. In 1954, it had two generating plants that consumed only oil in their burners, as did all electric generating plants in peninsular Florida. It decided to construct a new generating plant and to try burning coal in at least two, and possibly all, units of that plant; and it contracted to purchase from Nashville Coal Co. (Nashville) all coal it would require as boiler fuel at the new plant over a 20-year period. Tampa’s estimated maximum requirements exceeded the total consumption of coal in peninsular Florida; but it did not amount to more than 1% of the total amount of coal of the same type produced and marketed by the 700 coal suppliers in Nashville’s producing area. Nashville repudiated the contract on the ground that it was illegal under the antitrust laws, and Tampa sued for a declaratory judgment that it was valid and for its enforcement. The District Court declared the contract violative of § 3 of the Clayton Act and denied enforcement. The Court of Appeals for the Sixth Circuit affirmed. The United States Supreme Court granted Tampa's petition for certiorari review.

Issue:

Did Tampa’s contract violate the Clayton Act when its estimated maximum requirements exceeded the total consumption of coal in peninsular Florida?

Answer:

No

Conclusion:

The United States Supreme Court held that Tampa’s contract did not violate the Clayton Act because its contract requirements were for less than one percent of the total marketed production of the 700 coal producers who could serve Tampa’s contract needs. Also, coal producers in the relevant competitive market were eager to sell more coal within that market area. Therefore, in the relevant marketing area involved, the contract sued upon did not tend to foreclose a substantial volume of competition.

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