467 U.S. 752, 104 S. Ct. 2731 (1984)
In 1955 the predecessor to Regal Tube Co. was established in Chicago to manufacture structural steel tubing used in heavy equipment, cargo vehicles, and construction.1 It remained a wholly owned subsidiary of C. E. Robinson Co. until 1968, when Lear Siegler, Inc., purchased Regal and operated it as an unincorporated division with David Grohne serving as president and general manager.2
In 1972 Copperweld Corp. purchased the Regal division from Lear Siegler under a sale agreement that bound Lear Siegler and its subsidiaries not to compete with Regal in the United States for five years.3 Copperweld transferred Regal's assets to a newly formed, wholly owned Pennsylvania corporation that continued manufacturing operations in Chicago while sharing Copperweld's Pittsburgh headquarters.4
Shortly before the acquisition, Grohne accepted a job as a corporate officer of Lear Siegler.5 In May 1972 he formed Independence Tube Corp., which soon secured an offer from the Yoder Co. to supply a tubing mill.6 In December 1972 Independence gave Yoder a purchase order to have a mill ready by the end of December 1973.7
When Copperweld and Regal executives learned of Grohne's plans they sent letters warning Yoder and others that Copperweld would take all necessary steps to protect its rights under the purchase agreement and its know-how and trade secrets. When Yoder accepted Independence's order for a tubing mill on February 19, 1973, Copperweld sent Yoder one of these letters; two days later Yoder voided its acceptance. After respondent's efforts to resurrect the deal failed, respondent arranged to have a mill supplied by another company, which performed its agreement even though it too received a warning letter from Copperweld. Respondent began operations on September 13, 1974, nine months later than it could have if Yoder had supplied the mill when originally agreed.8 Although the letter to Yoder was petitioners' most successful effort to discourage those contemplating doing business with respondent, it was not their only one. Copperweld repeatedly contacted banks that were considering financing respondent's operations. One or both petitioners also approached real estate firms that were considering providing plant space to respondent and contacted prospective suppliers and customers of the new company.910
In 1976 Independence Tube filed this action in federal district court against Copperweld, Regal, and Yoder.11 The jury found that Copperweld and Regal had conspired to violate § 1 of the Sherman Act but that Yoder was not part of the conspiracy.12 It awarded $2,499,009 on the antitrust claim that was trebled to $7,497,027.13 The district court denied petitioners' post-trial motions.14 The Seventh Circuit affirmed in 1982, and the Supreme Court granted certiorari in 1983.15
Whether a parent corporation and its wholly owned subsidiary are legally capable of conspiring with each other under § 1 of the Sherman Act?16
Section 1 of the Sherman Act reaches unreasonable restraints of trade effected by a contract, combination, or conspiracy between separate entities and does not reach conduct that is wholly unilateral.17 Officers or employees of the same firm do not provide the plurality of actors imperative for a § 1 conspiracy.18 The coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of § 1 of the Sherman Act.19 A parent and its wholly owned subsidiary have a complete unity of interest.20 Their objectives are common, not disparate. Their general corporate actions are guided or determined not by two separate corporate consciousnesses but one.
No. The coordinated acts of Copperweld and its wholly owned subsidiary Regal cannot constitute a combination or conspiracy under § 1 of the Sherman Act.21 In 1972 Copperweld purchased the Regal division from Lear Siegler and transferred its assets to a newly formed wholly owned Pennsylvania corporation that continued manufacturing operations in Chicago while sharing Copperweld's Pittsburgh headquarters.22 Shortly before the acquisition David Grohne accepted a job as a corporate officer of Lear Siegler. In May 1972 he formed Independence Tube Corp., which soon secured an offer from the Yoder Co. to supply a tubing mill. In December 1972 Independence gave Yoder a purchase order to have a mill ready by the end of December 1973.
When executives at Regal and Copperweld learned of Grohne's plans, they initially hoped that Lear Siegler's noncompetition agreement would thwart the new competitor. Although their lawyer advised them that Grohne was not bound by the agreement, he did suggest that petitioners might obtain an injunction against Grohne's activities if he made use of any technical information or trade secrets belonging to Regal. The legal opinion was given to Regal and Copperweld along with a letter to be sent to anyone with whom Grohne attempted to deal. The letter warned that Copperweld would be "greatly concerned if [Grohne] contemplates entering the structural tube market . . . in competition with Regal Tube" and promised to take "any and all steps which are necessary to protect our rights under the terms of our purchase agreement and to protect the know-how, trade secrets, etc., which we purchased from Lear Siegler."23 When Yoder accepted respondent's order for a tubing mill on February 19, 1973, Copperweld sent Yoder one of these letters; two days later Yoder voided its acceptance.24 After respondent's efforts to resurrect the deal failed, respondent arranged to have a mill supplied by another company, which performed its agreement even though it too received a warning letter from Copperweld. Respondent began operations on September 13, 1974, nine months later than it could have if Yoder had supplied the mill when originally agreed. Although the letter to Yoder was petitioners' most successful effort to discourage those contemplating doing business with respondent, it was not their only one. Copperweld repeatedly contacted banks that were considering financing respondent's operations. One or both petitioners also approached real estate firms that were considering providing plant space to respondent and contacted prospective suppliers and customers of the new company. Regal was operated as an unincorporated division of Lear Siegler for four years before it became a wholly owned subsidiary of Copperweld. Nothing in this record indicates any meaningful difference between Regal's operations as a division and its later operations as a separate corporation.25 If a parent and a wholly owned subsidiary do "agree" to a course of action, there is no sudden joining of economic resources that had previously served different interests, and there is no justification for § 1 scrutiny.26
Copperweld and its wholly owned subsidiary Regal are incapable of conspiring with each other for purposes of § 1 of the Sherman Act.27
Related opinions on this issue
Joined by Justices Brennan And Marshall
Justice Stevens dissented.28 He argued that the majority announced a new per se rule of immunity that leaves a significant gap in the enforcement of § 1 with respect to anticompetitive conduct unrelated to efficiencies of integration.29 He maintained that the purpose of the challenged conduct was to exclude a potential competitor from the market by applying economic coercion to suppliers of financing and capital equipment as well as to potential customers.30
This type of exclusionary conduct is plainly distinguishable from vertical integration designed to achieve competitive efficiencies.31 Stevens contended that the rule of Yellow Cab and its progeny addresses a gap in antitrust enforcement.32 It reaches anticompetitive agreements between affiliated corporations which have sufficient market power to restrain marketwide competition, but not sufficient power to be considered monopolists within the ambit of § 2 of the Act.33
There was evidence suggesting that Regal and Copperweld were not integrated, and that the challenged agreement had little to do with achieving procompetitive efficiencies and much to do with protecting Regal's market position.34