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TAMPA ELEC. CO. V. NASHVILLE COAL CO., 365 U. S. 320 (1961)

U.S. Supreme Court

Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320 (1961)

Tampa Electric Co. v. Nashville Coal Co.

No. 87

Argued December 15, 1960

Decided February 27, 1961

365 U.S. 320


Petitioner 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 which 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 respondents all coal it would require as boiler fuel at the new plant over a 20-year period. Petitioner'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 respondents' producing area. Respondents repudiated the contract on the ground that it was illegal under the antitrust laws, and petitioner 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 affirmed.

Held: the judgment is reversed. Pp. 365 U. S. 321-335.

1. The contract here involved did not violate § 3 of the Clayton Act. Pp. 365 U. S. 325-335.

(a) Even though a contract is an exclusive dealing arrangement, it does not violate § 3 unless its performance probably would foreclose competition in a substantial share of the line of commerce affected. Pp. 365 U. S. 325-328.

(b) In order for a contract to violate § 3, the competition foreclosed by it must constitute a substantial share of the relevant market. Pp. 365 U. S. 328-329.

(c) On the record in this case, the relevant market is not peninsular Florida, the entire State of Florida, or Florida and Georgia combined; it is the area in which respondents and the other 700 producers of the kind of coal here involved effectively compete. Pp. 365 U. S. 330-333.

Page 365 U. S. 321

(d) In the competitive bituminous coal marketing area here involved, the contract sued upon does not tend to foreclose a substantial volume of competition. Pp. 365 U. S. 333-335.

2. Since the contract does not fall within the broader proscription of § 3 of the Clayton Act, it is not forbidden by § 1 or § 2 of the Sherman Act. P. 365 U. S. 335.

276 F.2d 766, reversed.

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