National Society of Professional Engineers v. U.S.

U.S. Supreme Court National Soc'y of Prof. Engineers v.
United States, 435
U.S. 679 (1978) National Society of Professional
Engineers v. United States No. 76-1767 Argued January 18,
1978 Decided April 25,
1978 435
U.S. 679 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA
CIRCUIT Syllabus The United States brought this civil antitrust suit against
petitioner, the National Society of Professional Engineers,
alleging that petitioner's canon of ethics prohibiting its members
from submitting competitive bids for engineering services
suppressed competition in violation of § 1 of the Sherman Act.
Petitioner defended on the ground, inter alia, that, under
the Rule of Reason, the canon was justified because it was adopted
by members of a learned profession for the purpose of minimizing
the risk that competition would produce inferior engineering work
endangering the public safety. The District Court, granting an
injunction against the canon, rejected this justification, holding
that the canon on its face violated § 1 of the Sherman Act, thus
making it unnecessary to make findings on the likelihood that
competition would produce the dire consequences envisaged by
petitioner. The Court. of Appeals affirmed, although modifying the
District Court's injunction in certain respects so that, as
modified, it prohibits petitioner from adopting any official
opinion, policy statement, or guideline stating or implying that
competitive bidding is unethical. Held: 1. On its face, the canon in question restrains trade within the
meaning of § 1 of the Sherman Act, and the Rule of Reason, under
which the proper inquiry is whether the challenged agreement is one
that promotes, or one that suppresses, competition, does not
support a defense based on the assumption that competition itself
is unreasonable. Pp. 435 U. S.
686 -696.

															(a) The canon amounts to an agreement among competitors to
refuse to discuss prices with potential customers until after
negotiations have resulted in the initial selection of an engineer,
and, while it is not price-fixing as such, it operates as an
absolute ban on competitive bidding, applying with equal force to
both complicated and simple projects and to both inexperienced and
sophisticated customers. Pp. 435 U. S.
692 -693.

															(b) Petitioner's affirmative defense confirms rather than
refutes the anticompetitive purpose and effect of its canon, and
its attempt to justify, under the Rule of Reason, the restraint on
competition imposed by the canon on the basis of the potential
threat that competition poses Page 435 U. S. 680 to the public safety and the ethics of the engineering
profession is nothing less than a frontal assault on the basic
policy of the Sherman Act. Pp. 435 U. S.
693 -695.

															(c) That engineers are often involved in large-scale projects
significantly affecting the public safety does not justify any
exception to the Sherman Act. Pp. 435 U. S.
695 -696.

															(d) While ethical norms may serve to regulate and promote
competition in professional services, and thus fall within the Rule
of Reason, petitioner's argument here is a far cry from such a
position; and, although competition may not be entirely conducive
to ethical behavior, that is not a reason, cognizable under the
Sherman Act, for doing away with competition. P. 435 U. S.
696 .

															2. The District Court's injunction, as modified by the Court of
Appeals, does not abridge First Amendment rights. Pp. 435 U. S.
696 -699.

															(a) The First Amendment does not "make it . . . impossible ever
to enforce laws against agreements in restraint of trade," Giboney v. Empire Storage & Ice Co., 336 U.
S. 490 , 336 U. S. 502 ,
and, although the District Court may consider the fact that its
injunction may impinge upon rights that would otherwise be
constitutionally protected, those protections do not prevent it
from remedying the antitrust violations. Pp. 435 U. S.
697 -698.

															(b) The standard against which the injunction must be judged is
whether the relief represents a reasonable method of eliminating
the consequences of the illegal conduct, and the injunction meets
this standard. P. 435 U. S.
698 .

															(c) If petitioner wishes to adopt some other ethical guideline
more closely confined to the legitimate objective of preventing
deceptively low bids, it may move the District Court to modify its
injunction. Pp. 435 U. S.
698 -699.

															181 U.S.App.D.C. 41, 555 F.2d 978, affirmed.

															STEVENS, J., delivered the opinion of the Court, in which
STEWART, WHITE, MARSHALL, and POWELL, JJ., joined, and in Parts I
and III of which BLACKMUN and REHNQUIST, JJ., joined. BLACKMUN, J.,
filed an opinion concurring in part and concurring in the judgment,
in which REHNQUIST, J., joined, post, p. 435 U. S. 699 .
BURGER, C.J., filed an opinion concurring in part and dissenting in
part, post, p. 435 U.S.
701 . BRENNAN, J., took no part in the consideration or
decision of the case. Page 435 U. S. 681 MR. JUSTICE STEVENS delivered the opinion of the Court.

															This is a civil antitrust case brought by the United States to
nullify an association's canon of ethics prohibiting competitive
bidding by its members. The question is whether the canon may be
justified under the Sherman Act, 26 Stat. 209, as amended, 15
U.S.C. § 1 et seq. (1976 ed.), because it was adopted by
members of a learned profession for the purpose of minimizing the
risk that competition would produce inferior engineering work
endangering the public safety. The District Court rejected this
justification without making any findings on the likelihood that
competition would produce the dire consequences foreseen by the
association. [ Footnote 1 ] The
Court of Appeals affirmed. [ Footnote 2 ] We granted certiorari to decide whether the
District Court should have considered the factual basis for the
proffered justification before rejecting it. 434 U.S. 815. Because
we are satisfied that the asserted defense rests on a fundamental
misunderstanding of the Rule of Reason frequently applied in
antitrust litigation, we affirm. I Engineering is an important and learned profession. There are
over 750,000 graduate engineers in the United States, of whom about
325,000 are registered as professional engineers. Registration
requirements vary from State to State, but usually require the
applicant to be a graduate engineer with at least Page 435 U. S. 682 four years of practical experience and to pass a written
examination. About half of those who are registered engage in
consulting engineering on a fee basis. They perform services in
connection with the study, design, and construction of all types of
improvements to real property -- bridges, office buildings,
airports, and factories are examples. Engineering fees, amounting
to well over $2 billion each year, constitute about 5% of total
construction costs. In any given facility, approximately 50% to 80%
of the cost of construction is the direct result of work performed
by an engineer concerning the systems and equipment to be
incorporated in the structure.

															The National Society of Professional Engineers (Society) was
organized in 1935 to deal with the nontechnical aspects of
engineering practice, including the promotion of the professional,
social, and economic interests of its members. Its present
membership of 69,000 resides throughout the United States and in
some foreign countries. Approximately 12,000 members are consulting
engineers who offer their services to governmental, industrial, and
private clients. Some Society members are principals or chief
executive officers of some of the largest engineering firms in the
country.

															The charges of a consulting engineer may be computed in
different ways. He may charge the client a percentage of the cost
of the project, may set his fee at his actual cost plus overhead
plus a reasonable profit, may charge fixed rates per hour for
different types of work, may perform an assignment for a specific
sum, or he may combine one or more of these approaches. Suggested
fee schedules for particular types of services in certain areas
have been promulgated from time to time by various local societies.
This case does not, however, involve any claim that the National
Society has tried to fix specific fees, or even a specific method
of calculating fees. It involves a charge that the members of the
Society have unlawfully agreed to refuse to negotiate or even to
discuss the question of fees until after a prospective client has
selected the Page 435 U. S. 683 engineer for a particular project. Evidence of this agreement is
found in § 11(c) of the Society's Code of Ethics, adopted in July
1964. [ Footnote 3 ]

															The District Court found that the Society's Board of Ethical
Review has uniformly interpreted the

															"ethical rules against competitive bidding for engineering
services as prohibiting the submission of any form of price
information to a prospective customer which would enable that
customer to make a price comparison on engineering services.
[ Footnote 4 ]"

															If the client requires that such information be provided, then §
11(c) imposes an Page 435 U. S. 684 obligation upon the engineering firm to withdraw from
consideration for that job. The Society's Code of Ethics thus
"prohibits engineers from both soliciting and submitting such price
information," 389
F. Supp. 1193 , 1206 (DC 1974), [ Footnote 5 ] and seeks to preserve the profession's
"traditional" method of selecting professional engineers. Under the
traditional method, the client initially selects an engineer on the
basis of background and reputation, not price. [ Footnote 6 ]

															In 1972, the Government filed its complaint against the Society
alleging that members had agreed to abide by canons of ethics
prohibiting the submission of competitive bids for engineering
services and that, in consequence, price competition among the
members had been suppressed and customers had been deprived of the
benefits of free and open competition. The complaint prayed for an
injunction terminating the unlawful agreement.

															In its answer, the Society admitted the essential facts alleged
by the Government and pleaded a series of affirmative defenses,
only one of which remains in issue. In that defense, the Society
averred that the standard set out in the Code of Ethics was
reasonable because competition among professional engineers was
contrary to the public interest. It was averred that it would be
cheaper and easier for an engineer "to design and specify
inefficient and unnecessarily expensive structures and Page 435 U. S. 685 methods of construction." [ Footnote 7 ] Accordingly, competitive pressure to offer
engineering services at the lowest possible price would adversely
affect the quality of engineering. Moreover, the practice of
awarding engineering contracts to the lowest bidder, regardless of
quality, would be dangerous to the public health, safety, and
welfare. For these reasons, the Society claimed that its Code of
Ethics was not an "unreasonable restraint of interstate trade or
commerce."

															The parties compiled a voluminous discovery and trial record.
The District Court made detailed findings about the Page 435 U. S. 686 engineering profession, the Society, its members' participation
in interstate commerce, the history of the ban on competitive
bidding, and certain incidents in which the ban appears to have
been violated or enforced. The District Court did not, however,
make any finding on the question whether, or to what extent,
competition had led to inferior engineering work which, in turn,
had adversely affected the public health, safety, or welfare. That
inquiry was considered unnecessary, because the court was convinced
that the ethical prohibition against competitive bidding was, "on
its face, a tampering with the price structure of engineering fees
in violation of § 1 of the Sherman Act." 389 F. Supp. at 1200.

															Although it modified the injunction entered by the District
Court, [ Footnote 8 ] the Court
of Appeals affirmed its conclusion that the agreement was unlawful
on its face, and therefore "illegal without regard to claimed or
possible benefits." 181 U.S.App.D.C. 41, 47, 555 F.2d 978, 984. II In Goldfarb v. Virginia State Bar, 421 U.
S. 773 , the Court held that a bar association's rule
prescribing minimum fees for legal services violated § 1 of the
Sherman Act. In that opinion, the Court noted that certain
practices by members of a learned profession might survive scrutiny
under the Rule of Reason even though they would be viewed as a
violation of the Sherman Act in another context. The Court
said:

															"The fact that a restraint operates upon a profession as
distinguished from a business is, of course, relevant in
determining whether that particular restraint violates the Page 435 U. S. 687 Sherman Act. It would be unrealistic to view the practice of
professions as interchangeable with other business activities, and
automatically to apply to the professions antitrust concepts which
originated in other areas. The public service aspect, and other
features of the professions may require that a particular practice,
which could properly be viewed as a violation of the Sherman Act in
another context, be treated differently. We intimate no view on any
other situation than the one with which we are confronted
today."

															421 U.S. at 421 U. S.
788 -789, n. 17.

															Relying heavily on this footnote, and on some of the major cases
applying a Rule of Reason -- principally Mitchel v.
Reynolds, 1 P. Wms. 181, 24 Eng.Rep. 347 (1711); Standard
Oil Co. v. United States, 221 U. S. 1 ; Chicago Board of Trade v. United States, 246 U.
S. 231 ; and Continental T.V., Inc. v. GTE Sylvania
Inc., 433 U. S. 36 --
petitioner argues that its attempt to preserve the profession's
traditional method of setting fees for engineering services is a
reasonable method of forestalling the public harm which might be
produced by unrestrained competitive bidding. To evaluate this
argument it is necessary to identify the contours of the Rule of
Reason and to discuss its application to the kind of justification
asserted by petitioner. A. The Rule of Reason. One problem presented by the language of § 1 of the Sherman Act
is that it cannot mean what it says. The statute says that "every"
contract that restrains trade is unlawful. [ Footnote 9 ] But, as Mr. Justice Brandeis perceptively
noted, restraint is the very Page 435 U. S. 688 essence of every contract; [ Footnote 10 ] read literally, § 1 would outlaw the entire
body of private contract law. Yet it is that body of law that
establishes the enforceability of commercial agreements and enables
competitive markets -- indeed, a competitive economy -- to function
effectively.

															Congress, however, did not intend the text of the Sherman Act to
delineate the full meaning of the statute or its application in
concrete situations. The legislative history makes it perfectly
clear that it expected the courts to give shape to the statute's
broad mandate by drawing on common law tradition. [ Footnote 11 ] The Rule of Reason, with its
origins in common law precedents long antedating the Sherman Act,
has served that purpose. It has been used to give the Act both
flexibility and definition, and its central principle of antitrust
analysis has remained constant. Contrary to its name, the Rule does
not open the field of antitrust inquiry to any argument in favor of
a challenged restraint that may fall within the realm of reason.
Instead, it focuses directly on the challenged restraint's impact
on competitive conditions.

															This principle is apparent in even the earliest of cases
applying the Rule of Reason, Mitchel v. Reynolds, supra. Mitchel involved the enforceability of a promise by the
seller of a bakery that he would not compete with the purchaser of
his business. The covenant was for a limited time, and applied only
to the area in which the bakery had operated. It was therefore
upheld as reasonable, even though it deprived the Page 435 U. S. 689 public of the benefit of potential competition. The long-run
benefit of enhancing the marketability of the business itself --
and thereby providing incentives to develop such an enterprise --
outweighed the temporary and limited loss of competition. [ Footnote 12 ]

															The Rule of Reason suggested by Mitchel v. Reynolds has
been regarded as a standard for testing the enforceability of
covenants in restraint of trade which are ancillary to a legitimate
transaction, such as an employment contract or the sale of a going
business. Judge (later Mr. Chief Justice) Taft so interpreted the
Rule in his classic rejection of the argument that competitors may
lawfully agree to sell their goods at the same price as long as the
agreed-upon price is reasonable. United States v. Addyston Pipe
& Steel Co., 85 F. 271, 282-283 (CA6 1898), aff'd, 175 U. S. 175 U.S.
211. That case, and subsequent decisions by this Court,
unequivocally foreclose an interpretation of the Rule as permitting
an inquiry into the reasonableness of the prices set by private
agreement. [ Footnote 13 ]

															The early cases also foreclose the argument that, because of the
special characteristics of a particular industry, monopolistic
arrangements will better promote trade and commerce than
competition. United States v. Trans-Missouri Freight
Assn., 166 U. S. 290 ; United States v. Joint Traffic Assn., 171 U.
S. 505 , 171 U. S.
573 -577. That kind of argument is properly addressed to
Congress, and may justify an exemption from the statute for Page 435 U. S. 690 specific industries, [ Footnote 14 ] but it is not permitted by the Rule of
Reason. As the Court observed in Standard Oil Co. v. United
States, 221 U.S. at 221 U. S. 65 ,

															"restraints of trade within the purview of the statute . . .
[can]not be taken out of that category by indulging in general
reasoning as to the expediency or nonexpediency of having made the
contracts or the wisdom or want of wisdom of the statute which
prohibited their being made."

															The test prescribed in Standard Oil is whether the
challenged contracts or acts "were unreasonably restrictive of
competitive conditions." Unreasonableness under that test could be
based either (1) on the nature or character of the contracts, or
(2) on surrounding circumstances giving rise to the inference or
presumption that they were intended to restrain trade and enhance
prices. [ Footnote 15 ] Under
either branch of the test, the inquiry is confined to a
consideration of impact on competitive conditions. [ Footnote 16 ] Page 435 U. S. 691 In this respect, the Rule of Reason has remained faithful to its
origins. From Mr. Justice Brandeis' opinion for the Court in Chicago Board of Trade to the Court opinion written by MR.
JUSTICE POWELL in Continental T.V., Inc., the Court has
adhered to the position that the inquiry mandated by the Rule of
Reason is whether the challenged agreement is one that promotes
competition or one that suppresses competition.

															"The true test of legality is whether the restraint imposed is
such as merely regulates and perhaps thereby promotes competition
or whether it is such as may suppress or even destroy
competition."

															246 U.S. at 246 U. S. 238 ,
quoted in 433 U.S. at 433 U. S. 49 n.
15. [ Footnote 17 ] Page 435 U. S. 692 There are, thus, two complementary categories of antitrust
analysis. In the first category are agreements whose nature and
necessary effect are so plainly anticompetitive that no elaborate
study of the industry is needed to establish their illegality --
they are "illegal per se. " In the second category are
agreements whose competitive effect can only be evaluated by
analyzing the facts peculiar to the business, the history of the
restraint, and the reasons why it was imposed. In either event, the
purpose of the analysis is to form a judgment about the competitive
significance of the restraint; it is not to decide whether a policy
favoring competition is in the public interest, or in the interest
of the members of an industry. Subject to exceptions defined by
statute, that policy decision has been made by the Congress.
[ Footnote 18 ] B. The Ban on Competitive Bidding. Price is the "central nervous system of the economy," United
States v. Socony-Vacuum Oil Co., 310 U.
S. 150 , 310 U. S. 226 n. 59, and an agreement that "interfere[s] with the setting of
price by free market forces" is illegal on its face. United
States v. Container Corp., 393 U. S. 333 , 393 U. S. 337 .
In this case, we are presented with an agreement among competitors
to refuse to discuss prices with potential customers until after
negotiations have resulted in the initial selection of an engineer.
While this is not price-fixing as such, no elaborate industry
analysis is required to demonstrate the anticompetitive character
of such an agreement. It operates as an absolute ban on competitive
bidding, applying with equal force to both complicated and simple
projects and to both inexperienced and sophisticated customers. As
the District Court found, the ban "impedes the ordinary give and
take of the market place," and substantially deprives the customer
of "the ability to utilize Page 435 U. S. 693 and compare prices in selecting engineering services." 404 F.
Supp. 457 , 460. On its face, this agreement restrains trade
within the meaning of § 1 of the Sherman Act.

															The Society's affirmative defense confirms, rather' than
refutes, the anticompetitive purpose and effect of its agreement.
The Society argues that the restraint is justified because bidding
on engineering services is inherently imprecise, would lead to
deceptively low bids, and would thereby tempt individual engineers
to do inferior work, with consequent risk to public safety and
health. [ Footnote 19 ] The
logic of this argument rests on the assumption that the agreement
will tend to maintain the price level; if it had no such effect, it
would not serve its intended purpose. The Society nonetheless
invokes the Rule of Reason, arguing that its restraint on price
competition ultimately inures to the public benefit by preventing
the Page 435 U. S. 694 production of inferior work and by insuring ethical behavior. As
the preceding discussion of the Rule of Reason reveals, this Court
has never accepted such an argument.

															It may be, as petitioner argues, that competition tends to force
prices down, and that an inexpensive item may be inferior to one
that is more costly. There is some risk, therefore, that
competition will cause some suppliers to market a defective
product. Similarly, competitive bidding for engineering projects
may be inherently imprecise and incapable of taking into account
all the variables which will be involved in the actual performance
of the project. [ Footnote
20 ] Based on these considerations, a purchaser might conclude
that his interest in quality -- which may embrace the safety of the
end product outweighs the advantages of achieving cost savings by
pitting one competitor against another. Or an individual vendor
might independently refrain from price negotiation until he has
satisfied himself that he fully understands the scope of his
customers' needs. These decisions might be reasonable; indeed,
petitioner has provided ample documentation for that thesis. But
these are not reasons that satisfy the Rule; nor are such
individual decisions subject to antitrust attack.

															The Sherman Act does not require competitive bidding; [ Footnote 21 ] Page 435 U. S. 695 it prohibits unreasonable restraints on competition.
Petitioner's ban on competitive bidding prevents all customers from
making price comparisons in the initial selection of an engineer,
and imposes the Society's views of the costs and benefits of
competition on the entire marketplace. It is this restraint that
must be justified under the Rule of Reason, and petitioner's
attempt to do so on the basis of the potential threat that
competition poses to the public safety and the ethics of its
profession is nothing less than a frontal assault on the basic
policy of the Sherman Act.

															The Sherman Act reflects a legislative judgment that,
ultimately, competition will produce not only lower prices but also
better goods and services. "The heart of our national economic
policy long has been faith in the value of competition." Standard Oil Co. v. FTC, 340 U. S. 231 , 340 U. S. 248 .
The assumption that competition is the best method of allocating
resources in a free market recognizes that all elements of a
bargain -- quality, service, safety, and durability -- and not just
the immediate cost, are favorably affected by the free opportunity
to select among alternative offers. Even assuming occasional
exceptions to the presumed consequences of competition, the
statutory policy precludes inquiry into the question whether
competition is good or bad.

															The fact that engineers are often involved in large-scale
projects significantly affecting the public safety does not alter
our analysis. Exceptions to the Sherman Act for potentially
dangerous goods and services would be tantamount to a repeal of the
statute. In our complex economy, the number of items that may cause
serious harm is almost endless -- automobiles, drugs, foods,
aircraft components, heavy equipment, and countless others, cause
serious harm to individuals or to the public at large if
defectively made. The judiciary cannot Page 435 U. S. 696 indirectly protect the public against this harm by conferring
monopoly privileges on the manufacturers.

															By the same token, the cautionary footnote in Goldfarb, 421 U.S. at 421 U. S.
788 -789, n. 17, quoted supra, cannot be read as
fashioning a broad exemption under the Rule of Reason for learned
professions. We adhere to the view expressed in Goldfarb that, by their nature, professional services may differ
significantly from other business services, and, accordingly, the
nature of the competition in such services may vary. Ethical norms
may serve to regulate and promote this competition, and thus fall
within the Rule of Reason. [ Footnote 22 ] But the Society's argument in this case is a
far cry from such a position. We are faced with a contention that a
total ban on competitive bidding is necessary because otherwise
engineers will be tempted to submit deceptively low bids.
Certainly, the problem of professional exception is a proper
subject of an ethical canon. But, once again, the equation of
competition with deception, like the similar equation with safety
hazards, is simply too broad; we may assume that competition is not
entirely conducive to ethical behavior, but that is not a reason,
cognizable under the Sherman Act, for doing away with
competition.

															In sum, the Rule of Reason does not support a defense based on
the assumption that competition itself is unreasonable. Such a view
of the Rule would create the "sea of doubt" on which Judge Taft
refused to embark in Addyston, 85 F. at 284, and which
this Court has firmly avoided ever since. III The judgment entered by the District Court, as modified by Page 435 U. S. 697 the Court of Appeals, [ Footnote 23 ] prohibits the Society from adopting any
official opinion, policy statement, or guideline stating or
implying that competitive bidding is unethical. [ Footnote 24 ] Petitioner argues that this
judgment abridges its First Amendment rights. [ Footnote 25 ] We find no merit in this
contention.

															Having found the Society guilty of a violation of the Sherman
Act, the District Court was empowered to fashion appropriate
restraints on the Society's future activities both to avoid a
recurrence of the violation and to eliminate its consequences. See, e.g., International Salt Co. v. United States, 332 U. S. 392 , 332 U. S.
400 -401; United States v. Glaxo Group, Ltd., 410 U. S. 62 , 410 U. S. 64 .
While the resulting order may curtail the exercise of liberties
that the Society might otherwise enjoy, that is a necessary and, in
cases such as this, unavoidable consequence of the violation. Just
as an injunction against price-fixing abridges the freedom of
businessmen to talk to one another about prices, so too the
injunction in this case must restrict the Society's range of
expression on the ethics of competitive bidding. [ Footnote 26 ] The First Amendment does not
"make it . . . impossible ever to enforce laws against agreements
in restraint of trade. . . ." Giboney v. Empire Storage &
Ice Co., 336 U. S. 490 , 336 U. S. 502 .
In fashioning a remedy, the District Court may, of course, consider
the fact that its injunction may impinge upon rights that would
otherwise be constitutionally Page 435 U. S. 698 protected, but those protections do not prevent it from
remedying the antitrust violations.

															The standard against which the order must be judged is whether
the relief represents a reasonable method of eliminating the
consequences of the illegal conduct. We agree with the Court of
Appeals that the injunction, as modified, meets this standard.
While it goes beyond a simple proscription against the precise
conduct previously pursued, that is entirely appropriate.

															"The District Court is not obliged to assume, contrary to common
experience, that a violator of the antitrust laws will relinquish
the fruits of his violation more completely than the court requires
him to do. And advantages already in hand may be held by methods
more subtle and informed, and more difficult to prove, than those
which, in the first place, win a market. When the purpose to
restrain trade appears from a clear violation of law, it is not
necessary that all of the untraveled roads to that end be left
open, and that only the worn one be closed." International Salt Co., supra at 332 U. S.
400 .

															The Society apparently fears that the District Court's
injunction, if broadly read, will block legitimate paths of
expression on all ethical matters relating to bidding. [ Footnote 27 ] But the answer to these
fears is, as the Court held in International Salt, that
the burden is upon the proved transgressor "to bring any proper
claims for relief to the court's attention." Ibid. In Page 435 U. S. 699 this case, the Court of Appeals specifically stated that,

															"[i]f the Society wishes to adopt some other ethical guideline
more closely confined to the legitimate objective of preventing
deceptively low bids, it may move the district court for
modification of the decree."

															181 U.S.App.D.C. at 46, 555 F.2d at 983. This is, we believe, a
proper approach, adequately protecting the Society's interests. We
therefore reject petitioner's attack on the District Court's
order.

															The judgment of the Court of Appeals is Affirmed. MR. JUSTICE BRENNAN took no part in the consideration or
decision of this case.

															[ Footnote 1 ] 389 F.
Supp. 1193 (DC 1974).

															[ Footnote 2 ]

															181 U.S.App.D.C. 41, 555 F.2d 978 (1977). When the District
Court's original judgment was entered, petitioner as entitled to
appeal directly to this Court. We vacated the District Court's
judgment for reconsideration in the light of our then recent
decision in Goldfarb v. Virginia State Bar, 421 U.
S. 773 . 422 U.S. 1031. After reconsideration, the
District Court reentered its original judgment, 404 F.
Supp. 457 (DC 1975), and petitioner then appealed to the Court
of Appeals.

															[ Footnote 3 ]

															That section, which remained in effect at the time of trial,
provided:

															"Section 11 -- The Engineer will not compete unfairly with
another engineer by attempting to obtain employment or advancement
or professional engagements by competitive bidding. . . . "

															"c. He shall not solicit or submit engineering proposals on the
basis of competitive bidding. Competitive bidding for professional
engineering services is defined as the formal or informal
submission, or receipt, of verbal or written estimates of cost or
proposals in terms of dollars, man days of work required,
percentage of construction cost, or any other measure of
compensation whereby the prospective client may compare engineering
services on a price basis prior to the time that one engineer, or
one engineering organization, has been selected for negotiations.
The disclosure of recommended fee schedules prepared by various
engineering societies is not considered to constitute competitive
bidding. An Engineer requested to submit a fee proposal or bid
prior to the selection of an engineer or firm subject to the
negotiation of a satisfactory contract, shall attempt to have the
procedure changed to conform to ethical practices, but if not
successful he shall withdraw from consideration for the proposed
work. These principles shall be applied by the Engineer in
obtaining the services of other professions."

															App. 9951.

															[ Footnote 4 ]

															389 F. Supp. at 1206. In addition to § 11(c) of the Society's
Code of Ethics, see n 3, supra, the Society's Board of Directors has adopted
various "Professional Policy" statements. Policy statement 10-F was
issued to "make it clear beyond all doubt" that the Society opposed
competitive bidding for all engineering projects. 389 F. Supp. at
1206. This policy statement was replaced in 1972 by Policy 10-G
which permits price quotations for certain types of engineering
work -- in particular, research and development projects.

															[ Footnote 5 ]

															Although the Society argues that it has never "enforced" its ban
on competitive bidding, Reply Brief for Petitioner 15-18, the
District Court specifically found that the record

															"support[s] a finding that NSPE and its members actively pursue
a course of policing adherence to the competitive bid ban through
direct and indirect communication with members and prospective
clients."

															389 F. Supp. at 1200. This finding has not been challenged as
clearly erroneous.

															[ Footnote 6 ]

															Having been selected, the engineer may then, in accordance with
the Society's canons of ethics, negotiate a satisfactory fee
arrangement with the client. If the negotiations are unsuccessful,
then the client may withdraw his selection and approach a new
engineer. Id. at 1215.

															[ Footnote 7 ]

															The entire defense pleaded in the answer reads as follows:

															"18. (a) The principles and standards contained in the NSPE Code
of Ethics, particularly those contained in that part of the NSPE
Code of Ethics set out above, are reasonable, necessary to the
public health, safety and welfare insofar as they are affected by
the work of professional engineers, and serve the public
interest."

															"(b) Experience has demonstrated that competitive bidding for
professional engineering services is inconsistent with securing for
the recipients of such services the most economical projects or
structures. Testing, calculating and designing the most economical
and efficient structures and methods of construction is complex,
difficult and expensive. It is cheaper and easier to design and
specify inefficient and unnecessarily expensive structures and
methods of construction. Consequently, if professional engineers
are required by competitive pressures to submit bids in order to
obtain, employment of their services, the inevitable tendency will
be to offer professional engineering services at the lowest
possible price. Although this may result in some lowering of the
cost of professional engineering services, it will inevitably
result in increasing the overall cost and decreasing the efficiency
of those structures and projects which require professional
engineering design and specification work."

															"(c) Experience has also demonstrated that competitive bidding
in most instances and situations results in an award of the work to
be performed to the lowest bidder, regardless of other factors such
as ability, experience, expertise, skill, capability, learning and
the like, and that such awards in the case of professional
engineers endanger the public health, welfare and safety."

															"(d) For the aforesaid reasons, the provisions of the NSPE Code
of Ethics set out above are not, in any event, in unreasonable
restraint of interstate trade or commerce."

															App. 21-22.

															[ Footnote 8 ]

															The Court of Appeals struck down the portion of the District
Court's decree that ordered the Society to state that it did not
consider competitive bidding to be unethical. 181 U.S.App.D.C. at
47, 555 F.2d at 984. The court reasoned that this provision was
"more intrusive than necessary to achieve fulfillment of the
governmental interest." Ibid. The Government has not
petitioned for review of that decision.

															[ Footnote 9 ]

															Section 1 of the Sherman Act, as set forth in 15 U.S.C. § 1
(1976 ed.), provides:

															"Every contract, combination in the form of trust or otherwise,
or conspiracy, in restraint of trade or commerce among the several
States, or with foreign nations, is declared to be illegal. . .
."

															[ Footnote 10 ]

															"But the legality of an agreement or regulation cannot be
determined by so simple a test as whether it restrains competition.
Every agreement concerning trade, every regulation of trade,
restrains. To bind, to restrain, is of their very essence." Chicago Board of Trade v. United States, 246 U.
S. 231 , 246 U. S. 238 . See also United States v. Topco Associates, 405 U.
S. 596 , 405 U. S. 606 :
"Were § 1 to be read in the narrowest possible way, any commercial
contract could be deemed to violate it."

															[ Footnote 11 ] See 21 Cong.Rec. 2456 (1890) (comments of Sen.
Sherman); see generally H. Thorelli, Federal Antitrust
Policy 228-229 (1955).

															[ Footnote 12 ]

															"4thly, The fourth reason is in favour of these contracts, and
is that there may happen instances wherein they may be useful and
beneficial, as . . . in case of an old man who, finding himself
under such circumstances, either of body or mind, as that he is
likely to be a loser by continuing his trade, in this case, it will
be better for him to part with it for a consideration, that, by
selling his custom, he may procure to himself a livelihood which he
might probably have lost by trading longer."

															1 P. Wms., at 191, 24 Eng.Rep. at 350.

															[ Footnote 13 ]

															85 F. at 293. See also United States v. Trans-Missouri
Freight Assn., 166 U. S. 290 , 166 U. S.
340 -342.

															[ Footnote 14 ]

															Congress has exempted certain industries from the full reach of
the Sherman Act. See, e.g., 7 U.S.C. §§ 291-292 (1976 ed.)
(Capper-Volstead Act, agricultural cooperatives); 15 U.S.C. §§
1011-1013 (1976 ed.) (McCarran-Ferguson Act, insurance); 49 U.S.C.
§ 5b (Reed-Bulwinkle Act, rail and motor carrier rate-fixing
bureaus); 15 U.S.C. § 1801 (1976 ed.) (newspaper joint operating
agreements).

															[ Footnote 15 ]

															"Without going into detail, and but very briefly surveying the
whole field, it may be with accuracy said that the dread of
enhancement of prices and of other wrongs which it was thought
would flow from the undue limitation on competitive conditions
caused by contracts or other acts of individuals or corporations
led, as a matter of public policy, to the prohibition or treating
as illegal all contracts or acts which were unreasonably
restrictive of competitive conditions, either from the nature or
character of the contract or act or where the surrounding
circumstances were such as to justify the conclusion that they had
not been entered into or performed with the legitimate purpose of
reasonably forwarding personal interest and developing trade, but,
on the contrary, were of such a character as to give rise to the
inference or presumption that they had been entered into or done
with the intent to do wrong to the general public and to limit the
right of individuals, thus restraining the free flow of commerce
and tending to bring about the evils, such as enhancement of
prices, which were considered to be against public policy."

															221 U.S. at 221 U. S. 58 .

															[ Footnote 16 ]

															Throughout the Court's opinion, the emphasis is on economic
conceptions. For instance, the Court's description of the common
law treatment of engrossing and forestalling statutes noted that
contracts which had been illegal on their face were later
recognized as reasonable because they tended to promote
competition. Id. at 221 U. S. 55 . As
was pointed out in the Report of the Attorney General's National
Committee To Study the Antitrust Laws 11 (1955):

															"While Standard Oil gave the courts discretion in
interpreting the word 'every' in Section 1, such discretion is
confined to consideration of whether, in each case, the conduct
being reviewed under the Act constitutes an undue restraint of
competitive conditions, or a monopolization, or an attempt to
monopolize. This standard permits the courts to decide whether
conduct is significantly and unreasonably anticompetitive in
character or effect; it makes obsolete once prevalent arguments,
such as whether monopoly arrangements would be socially preferable
to competition in a particular industry because, for example, of
high fixed costs or the risks of 'cutthroat' competition or other
similar unusual conditions."

															[ Footnote 17 ]

															In Continental T.V., Inc., the Court explained the Rule
of Reason standard as follows:

															"Under this rule, the factfinder weighs all of the circumstances
of a case in deciding whether a restrictive practice should be
prohibited as imposing an unreasonable restraint on
competition."

															433 U.S. at 433 U. S.
49 .

															The Court then analyzed the "market impact" of vertical
restraints, noting their complexity because of the potential for a
simultaneous reduction of intrabrand competition and stimulation of
interbrand competition. Id. at 433 U. S. 50 -51.
"Competitive impact" and "economic analysis" were emphasized
throughout the opinion.

															[ Footnote 18 ] See generally Attorney General's Report, supra, n 16, at
111; Bork, The Rule of Reason and the Per Se Concept: Price Fixing
and Market Division, 74 Yale L.J. 775 (1965); L. Sullivan, Law of
Antitrust 165-197 (1977).

															[ Footnote 19 ]

															The Society also points out that competition, in the form of
bargaining between the engineer and customer, is allowed under its
canon of ethics once an engineer has been initially selected. See n 6, supra. It then contends that its prohibition of
competitive bidding regulates only the timing of competition, thus
making this case analogous to Chicago Board of Trade, where the Court upheld an exchange rule which forbade exchange
members from making purchases after the close of the day's session
at any price other than the closing bid price. Indeed, petitioner
has reprinted the Government's brief in that case to demonstrate
that the Solicitor General regarded the exchange's rule as a form
of price-fixing. Reply Brief for Petitioner A1-A28. We find this
reliance on Chicago Board of Trade misplaced for two
reasons. First, petitioner's claim mistakenly treats negotiation
between a single seller and a single buyer as the equivalent of
competition between two or more potential sellers. Second, even if
we were to accept the Society's equation of bargaining with price
competition, our concern with Chicago Board of Trade is in
its formulation of the proper test to be used in judging the
legality of an agreement; that formulation unquestionably stresses
impact on competition. Whatever one's view of the application of
the Rule of Reason in that case, see Sullivan, supra, 435 U. S. 18, at
175-182, the Court considered the exchange's regulation of price
information as having a positive effect on competition. 246 U.S. at 246 U. S.
240 -241. The District Court's findings preclude a
similar conclusion concerning the effect of the Society's
"regulation."

															[ Footnote 20 ]

															We, of course, express no view on the truth of this assertion,
although it might be noted that the Society has allowed competitive
bidding for some types of engineering projects in this country, see n 4, supra, and, at one time, allowed competitive bidding for
all engineering work in foreign countries "as required by the laws,
regulations or practices of the foreign country." App. 6487. This
rule, called the "When-in-Rome" clause, was abolished in 1968. Id. at 6344.

															[ Footnote 21 ]

															Indeed, Congress has decided not to require competitive bidding
for Government purchases of engineering services. The Brooks Act,
40 U.S.C. §§ 541-544 (1970 ed., Supp. V), requires the Government
to use a method af selecting engineers similar to the Society's
"traditional method." See n 6, supra. The Society relies heavily on the
Brooks Act as evidence that its ban on competitive bidding is
reasonable. The argument is without merit. The Brooks Act does not
even purport to exempt engineering services from the antitrust
laws, and the reasonableness of an individual purchaser's decision
not to seek lower prices through competition does not authorize the
vendors to conspire to impose that same decision on all other
purchasers.

															[ Footnote 22 ]

															Courts have, for instance, upheld marketing restraints related
to the safety of a product, provided that they have no
anticompetitive effect and that they are reasonably ancillary to
the seller's main purpose of protecting the public from harm or
itself from product liability. See, e.g., Tripoli Co. v. Wella
Corp., 425 F.2d 932 (CA3 1970) (en banc); cf. Continental
T.V., 433 U.S. at 433 U. S. 55 n.
23.

															[ Footnote 23 ] See n 8, supra. [ Footnote 24 ] See App. 9974-9980.

															[ Footnote 25 ]

															Petitioner contends the judgment is both an unconstitutional
prior restraint on speech and an unconstitutional prohibition
against free association.

															[ Footnote 26 ]

															Thus, in Goldfarb, although the bar association
believed that its fee schedule accurately reflected ethical price
levels, it was nonetheless enjoined "from adopting, publishing, or
distributing any future schedules of minimum or suggested fees." Goldfarb v. Virginia State Bar, 355 F.
Supp. 491 , 495-496 (ED Va.1973). See also United States v.
National Assn. of Real Estate Boards, 339 U.
S. 485 .

															[ Footnote 27 ]

															For instance, the Society argues that the injunction can be read
as prohibiting it from opposing repeal of statutes such as the
Brooks Act, see n 21, supra, and that such a prohibition would violate the
principles of the Noerr-Pennington doctrine. See
Eastern Railroad Presidents Conf. v. Noerr Motor Freight,
Inc., 365 U. S. 127 ; Mine Workers v. Pennington, 381 U.
S. 657 . By its terms, the injunction contains no such
prohibition, and indeed the Government contends that "[n]othing in
the judgment prevents NSPE and its members from attempting to
influence governmental action. . . ." Brief for United States
60.

															MR. JUSTICE BLACKMUN, with whom MR. JUSTICE REHNQUIST joins,
concurring in part and concurring in the judgment.

															I join Parts I and III of the Court's opinion and concur in the
judgment. I do not join 435 U. S. because I would not, at least for the moment, reach as far as the
Court appears to me to do in intimating, ante at 435 U. S. 696 ,
and n. 22, that any ethical rule with an overall anticompetitive
effect promulgated by a professional society is forbidden under the
Sherman Act. In my view, the decision in Goldfarb v. Virginia
State Bar, 421 U. S. 773 , 421 U. S.
788 -789, n. 17 (1975), properly left to the Court some
flexibility in considering how to apply traditional Sherman Act
concepts to professions long consigned to self-regulation.
Certainly, this case does not require us to decide whether the
"Rule of Reason," as applied to the professions, ever could take
account of benefits other than increased competition. For even
accepting petitioner's assertion that product quality is one such
benefit, and that maintenance of the quality of engineering
services requires that an engineer not bid before he has made full
acquaintance with the scope of a client's desired project, Brief
for Petitioner 49-50, 54, petitioner Society's rule is still
grossly overbroad. As petitioner concedes, Tr. of Oral Page 435 U. S. 700 Arg. 47 48, § 11(c) forbids any simultaneous consultation
between a client and several engineers, even where the client
provides complete information to each about the scope and nature of
the desired project before requesting price information. To secure
a price estimate on a project, the client must purport to engage a
single engineer, and so long as that engagement continues, no other
member of the Society is permitted to discuss the project with the
client in order to provide comparative price information. Though §
11(c) does not fix prices directly, and though the customer retains
the option of rejecting a particular engineer's offer and beginning
negotiations all over again with another engineer, the forced
process of sequential search inevitably increases the cost of
gathering price information, and hence will dampen price
competition, without any calibrated role to play in preventing
uninformed bids. Then, too, the Society's rule is overbroad in the
aspect noted by Judge Leventhal, when it prevents any dissemination
of competitive price information in regard to real property
improvements prior to the engagement of a single engineer,
regardless of "the sophistication of the purchaser, the complexity
of the project, or the procedures for evaluating price
information." 181 U.S.App.D.C. 41, 45, 55 F.2d 978, 982 (1977).

															My skepticism about going further in this case by shaping the
Rule of Reason to such a narrow last as does the majority, * arises from the
fact that there may be ethical rules which have a more than de
minimis anticompetitive effect, and yet are important in a
profession's proper ordering. A medical association's prescription
of standards of minimum competence for licensing or certification
may lessen the number of Page 435 U. S. 701 entrants. A bar association's regulation of the permissible
forms of price advertising for nonroutine legal services or
limitation of in-person solicitation, see Bates v. State Bar of
Arizona, 433 U. S. 350 (1977), may also have the effect of reducing price competition. In
acknowledging that "professional services may differ significantly
from other business services," and that the "nature of the
competition in such services may vary," ante at 435 U. S. 696 ,
but then holding that ethical norms can pass muster under the Rule
of Reason only if they promote competition, I am not at all certain
that the Court leaves enough elbow room for realistic application
of the Sherman Act to professional services.

															* This Court has not always applied the Rule of Reason with such
rigor even to commercial businesses. See Appalachian Coals,
Inc. v. United States, 288 U. S. 344 (1933); Chicago Board of Trade v. United States, 246 U. S. 231 (1918); L. Sullivan, Law of Antitrust 175-182 (1977); R. Bork, The
Antitrust Paradox 41-47, 56 (1978). I intimate no view as to the
correctness of those decisions.

															MR. CHIEF JUSTICE BURGER, concurring in part and dissenting in
part.

															I concur in the Court's judgment to the extent it sustains the
finding of a violation of the Sherman Act, but dissent from that
portion of the judgment prohibiting petitioner from stating in its
published standards of ethics the view that competitive bidding is
unethical. The First Amendment guarantees the right to express such
a position, and that right cannot be impaired under the cloak of
remedial judicial action.


U.S. Supreme Court Brunswick Corp. v. Pueblo Bowl-O-Mat,
Inc., 429
U.S. 477 (1977) Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc. No. 75-904 Argued November 3,
1976 Decided January 25,
1977 429
U.S. 477 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE THIRD
CIRCUIT Syllabus Respondents, bowling centers in three distinct markets, brought
this antitrust action against petitioner, one of the two largest
bowling equipment manufacturers and the largest operator of bowling
centers, claiming that petitioner's acquisitions of competing
bowling centers that had defaulted in payments for bowling
equipment that they had purchased from petitioner might
substantially lessen competition or tend to create a monopoly in
violation of § 7 of the Clayton Act. Respondents sought treble
damages pursuant to § 4 of the Act, as well as injunctive and other
relief. At trial, they sought to prove that petitioner, because of
its size, had the capacity to lessen competition in the markets it
had entered by driving smaller competitors out of business. To
establish damages, respondents attempted to show that, had
petitioner allowed the defaulting centers to close, respondents'
profits would have increased. The jury returned a verdict for
damages in favor of respondents, which the District Court trebled
in accordance with § 4. The Court of Appeals, while endorsing the
legal theories upon which respondents' claim was based, reversed
the case and remanded for further proceedings because of errors in
the trial court's instructions to the jury. The court concluded
that a properly instructed jury could have found that a "giant"
like petitioner entering a market of "pygmies" might lessen
horizontal retail competition. The court also concluded that there
was sufficient evidence to permit a jury to find that, but for
petitioner's actions, the acquired centers would have gone out of
business. The court held that, if a jury were to make such
findings, respondents would be entitled to damages for threefold
the income they would have earned. Petitioner's petition for
certiorari challenged the theory that the Court of Appeals had
approved for awarding damages. Held: 1. For plaintiffs in an antitrust action to recover treble
damages on account of § 7 violations, they must prove more than
that they suffered injury which was causally linked to an illegal
presence in the market; they must prove injury of the type that the
antitrust laws were intended to prevent and that flows from that
which makes the defendants' acts unlawful. The injury must reflect
the anticompetitive effect Page 429 U. S. 478 of either the violation or of anticompetitive acts made possible
by the violation. Pp. 429 U. S.
484 -489.

															(a) Section 4 is essentially a remedial provision, and, to
recover damages, respondents must prove more than that petitioner
violated § 7. Pp. 429 U. S.
485 -487.

															(b) Congress has condemned mergers only when they may produce
anticompetitive effects; yet, under the Court of Appeals' holding,
once a merger is found to violate § 7, all dislocations that the
merger caused are actionable regardless of whether the dislocations
have anything to do with the reason the merger was condemned. Here,
if the acquisitions were unlawful it, is because they brought a
"deep pocket" parent into a market of "pygmies," but respondents'
injury is unrelated to the size of either the acquiring company or
its competitors; it would have suffered the identical loss, but
without any recourse had the acquired centers secured refinancing
or had they been bought by a "shallow pocket" parent. Pp. 429 U. S.
487 -488.

															2. Petitioner is entitled under Fed.Rule Civ.Proc. 50(b) to
judgment on the damages claim notwithstanding the verdict, since
respondents' case was based solely on their novel theory, rejected
herein, of damages ascribable to profits they would have received
had the acquired centers been closed, and since respondents have
not shown any reason to require a new trial. Pp. 429 U. S.
489 -490.

															3. Respondents remain free on remand to seek equitable relief.
P. 429 U. S.
491 .

															523 F.2d 262, vacated and remanded.

															MARSHALL, J., delivered the opinion for a unanimous Court.

															MR JUSTICE MARSHALL delivered the opinion of the Court.

															This case raises important questions concerning the
interrelationship of the anti-merger and private damages action
provisions of the Clayton Antitrust Act. Page 429 U. S. 479 Petitioner is one of the two largest manufacturers of bowling
equipment in the United States. Respondents are three of the 10
bowling centers owned by Treadway Companies, Inc. Since 1965,
petitioner has acquired and operated a large number of bowling
centers, including six in the markets in which respondents operate.
Respondents instituted this action contending that these
acquisitions violated various provisions of the antitrust laws.

															In the late 1950's, the bowling industry expanded rapidly, and
petitioner's sales of lanes, automatic pinsetters, and ancillary
equipment rose accordingly. [ Footnote 1 ] Since this equipment requires a major capital
expenditure -- $12,600 for each lane and pinsetter, App. A1576 --
most of petitioner's sales were for secured credit.

															In the early 1960's, the bowling industry went into a sharp
decline. Petitioner's sales quickly dropped to pre-boom levels.
Moreover, petitioner experienced great difficulty in collecting
money owed it; by the end of 1964, over $100,000,000, or more than
25%, of petitioner's accounts were more than 90 days delinquent. Id. at A1884. Repossessions rose dramatically, but
attempts to sell or lease the repossessed equipment met with only
limited success. [ Footnote 2 ]
Because petitioner had borrowed close to $250,000,000 to finance
its credit sales, id. at A1900, it was, as the Court of
Appeals concluded, "in serious financial difficulty." NBO
Industries Treadway Cos., Inc. v. Brunswick Corp., 523 F.2d
262, 267 (CA3 1975).

															To meet this difficulty, petitioner began acquiring and Page 429 U. S. 480 operating defaulting bowling centers when their equipment could
not be resold and a positive cash flow could be expected from
operating the centers. During the seven years preceding the trial
in this case, petitioner acquired 222 centers, 54 of which it
either disposed of or closed. Ibid. These acquisitions
made petitioner by far the largest operator of bowling centers,
with over five times as many centers as its next largest
competitor. Ibid. Petitioner's net worth in 1965 was more
than eight times greater, and its gross revenue more than seven
times greater, than the total for the 11 next largest bowling
chains. App. A1675. Nevertheless, petitioner controlled only 2% of
the bowling centers in the United States. Id. at
A1096.

															At issue here are acquisitions by petitioner in the three
markets in which respondents are located: Pueblo, Colo.
Poughkeepsie, N.Y. and Paramus, N.J. In 1965, petitioner acquired
one defaulting center in Pueblo, one in Poughkeepsie, and two in
the Paramus area. In 1969, petitioner acquired a third defaulting
center in the Paramus market, and, in 1970, petitioner acquired a
fourth. Petitioner closed its Poughkeepsie center in 1969 after
three years of unsuccessful operation; the Paramus center acquired
in 1970 also proved unsuccessful, and in March, 1973, petitioner
gave notice that it would cease operating the center when its lease
expired. The other four centers were operational at the time of
trial.

															Respondents initiated this action in June, 1966, alleging, inter alia, that these acquisitions might substantially
lessen competition or tend to create a monopoly in violation of § 7
of the Clayton Act, 15 U.S.C. § 18. [ Footnote 3 ] Respondents sought Page 429 U. S. 481 damages, pursuant to § 4 of the Act, 15 U.S.C. § 15, for three
times "the reasonably expectable profits to be made [by
respondents] from the operation of their bowling centers." App.
A24. Respondents also sought a divestiture order, an injunction
against future acquisitions, and such "other further and different
relief" as might be appropriate under § 16 of the Act, 15 U.S.C. §
26. App. A27.

															Trial was held in the spring of 1973, following an initial
mistrial due to a hung jury. To establish a § 7 violation,
respondents sought to prove that, because of its size, petitioner
had the capacity to lessen competition in the markets it had
entered by driving smaller competitors out of business. To
establish damages, respondents attempted to show that, had
petitioner allowed the defaulting centers to close, respondents'
profits would have increased. At respondents' request, the jury was
instructed in accord with respondents' theory as to the nature of
the violation and the basis for damages. The jury returned a
verdict in favor of respondents in the amount of $2,358,030, which
represented the minimum estimate by respondents of the additional
income they would have realized had the acquired centers been
closed. Id. at A1737. As required by law, the District
Court trebled the damages. [ Footnote 4 ] It also awarded respondents costs and
attorneys' Page 429 U. S. 482 fees totaling $446,97.32, and, sitting as a court of equity, it
ordered petitioner to divest itself of the centers involved here, Treadway Cos. v. Brunswick Corp., 389 F.
Supp. 996 (NJ 1974). Petitioner appealed. [ Footnote 5 ]

															The Court of Appeals, while endorsing the legal theories upon
which respondents' claim was based, reversed the judgment and
remanded the case for further proceedings. NBO Industries
Treadway Cos. v. Brunswick Corp., supra. The court found that
a properly instructed jury could have concluded that petitioner was
a "giant" whose entry into a "market of pygmies" might lessen
horizontal retail competition, because such a "giant"

															"has greater ease of entry into the market, can accomplish cost
savings by investing in new equipment, can resort to low or below
cost sales to sustain itself against competition for a longer
period, and can obtain more favorable credit terms."

															523 F.2d at 268. The court also found that there was sufficient
evidence to permit a jury to conclude that, but for petitioner's
actions, the acquired centers would have gone out of business. Id. Page 429 U. S. 483 at 273, 275-277, and the court held that, if jury were to make
such findings, respondents would be entitled to damages for
threefold the income they would have earned. After reviewing the
instructions on these issues, however, the court decided that the
jury had not been properly charged, and that therefore a new trial
was required. Id. at 275-277. [ Footnote 6 ] It also decided that, since "an essential
predicate" for the District Court's grant of equitable relief as
the jury verdict on the § 7 claim, the equitable decree should be
vacated a well. Id. at 277-278. And it concluded that, in
any event, equitable relief

															"should be restricted to preventing those practice by which a
deep pocket market entrant harms Page 429 U. S. 484 competition. . . . [D]ivestiture was simply inappropriate." Id. at 279.

															Both sides petitioned this Court for writs of certiorari.
Brunswick's petition challenged the theory the Court of Appeals had
approved for awarding damages; the plaintiffs' petition challenged
the Court of Appeals' conclusions with respect to the jury
instructions and the appropriateness of a divestiture order.
[ Footnote 7 ] We granted
Brunswick's petition. [ Footnote
8 ] 424 U. S. 90 (1976). II The issue for decision is a narrow one. Petitioner does not
presently contest the Court of Appeals' conclusion that a properly
instructed jury could have found the acquisitions unlawful. Nor
does petitioner challenge the Court of Appeals' determination that
the evidence would support a finding that had petitioner not
acquired these centers, they would have gone out of business and
respondents' income would have increased. Petitioner questions only
whether antitrust damages are available where the sole injury
alleged is that competitors were continued in business, thereby
denying respondents an anticipated increase in market shares.
[ Footnote 9 ] Page 429 U. S. 485 To answer that question, it is necessary to examine the
anti-merger and treble damages provisions of the Clayton Act.
Section 7 of the Act proscribes mergers whose effect " may
be substantially to lessen competition, or to tend to create a monopoly." (Emphasis added.) It is, as we have observed
many times, a prophylactic measure, intended "primarily to arrest
apprehended consequences of intercorporate relationships before
those relationships could work their evil. . . ." United States
v. E. I. du Pont de Nemours & Co., 353 U.
S. 586 , 353 U. S. 597 (1957). See also Brown Shoe Co. v. United States, 370 U. S. 294 , 370 U. S.
317 -318 (1962); United States v. Philadelphia Nat.
Bank, 374 U. S. 321 , 374 U. S.
362 -363 (1963); United States v. Penn-Olin Chemical
Co., 378 U. S. 158 , 378 U. S.
170 -171 (1964); United States v. Von's Grocery
Co., 384 U. S. 270 , 384 U. S. 277 (1966); FTC v. Procter & Gamble Co., 386 U.
S. 568 , 386 U. S.
577 -578 (1967); Gulf Oil Corp. v. Copp Paving
Co., 419 U. S. 186 , 419 U. S. 201 (1974).

															Section 4, in contrast, is in essence a remedial provision. It
provides treble damages to "[a]ny person who shall be injured in
his business or property by reason of anything forbidden in the
antitrust laws. . . ." Of course, treble damages also play an
important role in penalizing wrongdoers and deterring wrongdoing,
as we also have frequently observed. Perma Life Mufflers v.
International Parts Corp., 392 U. S. 134 , 392 U. S. 139 (1968); Fortner Enterprises v. United States Steel Corp., 394 U. S. 495 , 394 U. S. 502 (1969); Zenith Radio Corp. v. Hazeltine Research, 395 U. S. 100 , 395 U. S. 130 (1969); Hawaii v. Standard Oil Co., 405 U.
S. 251 , 405 U. S. 262 (1972). It nevertheless is true that the treble damages provision,
which makes awards available only to injured parties, and measures
the awards by a Page 429 U. S. 486 multiple of the injury actually proved, is designed primarily a
a remedy. [ Footnote 10 ]

															Intermeshing a statutory prohibition against acts that have a
potential to cause certain harms with a damages action intended to
remedy those harms is not without difficulty. Plainly, to recover
damages, respondents must prove more than that petitioner violated
§ 7, since such proof establishes only that injury may result.
Respondents contend that the only additional element they need
demonstrate is that they are in a worse position than they would
have been had petitioner not committed those acts. The Court of
Appeals agreed, Page 429 U. S. 487 holding compensable any loss "causally linked" to "the mere
presence of the violator in the market." 523 F.2d at 272-273.
Because this holding divorces antitrust recovery from the purposes
of the antitrust laws without a clear statutory command to do so,
we cannot agree with it.

															Every merger of two existing entities into one, whether lawful
or unlawful, has the potential for producing economic readjustments
that adversely affect some persons. But Congress has not condemned
mergers on that account; it has condemned them only when they may
produce anticompetitive effects. Yet, under the Court of Appeals'
holding, once a merger is found to violate § 7, all dislocations
caused by the merger are actionable, regardless of whether those
dislocations have anything to do with the reason the merger was
condemned. This holding would make § 4 recovery entirely
fortuitous, and would authorize damages for losses which are of no
concern to the antitrust laws. [ Footnote 11 ]

															Both of these consequences are well illustrated by the facts of
this case. If the acquisitions here were unlawful, it is because
they brought a "deep pocket" parent into a market of "pygmies." Yet
respondents' injury -- the loss of income that would have accrued
had the acquired centers gone bankrupt -- bears no relationship to
the size of either the acquiring company or its competitors.
Respondents would have suffered the identical "loss" -- but no
compensable injury -- had the acquired centers instead obtained
refinancing or been purchased by "shallow pocket" parents, as the
Court of Appeals itself acknowledged, 523 F.2d at 279. [ Footnote 12 ] Thus, respondents'
injury was not of "the type that the statute was Page 429 U. S. 488 intended to forestall," Wyandotte Co. v. United States, 389 U. S. 191 , 389 U. S. 202 (1967). [ Footnote 13 ]

															But the antitrust laws are not merely indifferent to the injury
claimed here. At base, respondents complain that, by acquiring the
failing centers petitioner preserved competition, thereby depriving
respondents of the benefits of increased concentration. The damages
respondents obtained are designed to provide them with the profits
they would have realized had competition been reduced. The
antitrust laws, however, were enacted for "the protection of
competition, not competitors," Brown Shoe Co. v. United
States, 370 U.S. at 370 U. S. 320 .
It is inimical to the purposes of these laws to award damages for
the type of injury claimed here.

															Of course, Congress is free, if it desires, to mandate damages
awards for all dislocations caused by unlawful mergers despite the
peculiar consequences of so doing. But because of these
consequences, "we should insist upon a clear expression of a
congressional purpose," Hawaii v. Standard Oil Co., 405
U.S. at 405 U. S. 264 ,
before attributing such an intent to Congress. We can find no such
expression in either the language or the legislative history of §
4. To the contrary, it is far from clear that the loss of windfall
profits that would have accrued had the acquired centers failed
even constitutes "injury" within the meaning of § 4. And it is
quite clear that, if respondents were injured, it was not "by
reason of anything forbidden in the antitrust laws": while
respondents' loss occurred "by reason of" the unlawful
acquisitions, it did not occur "by reason of" that which made the
acquisitions unlawful Page 429 U. S. 489 We therefore hold that, for plaintiffs to recover treble damages
on account of § 7 violations, they must prove more than injury
causally linked to an illegal presence in the market. Plaintiffs
must prove antitrust injury, which is to say injury of the
type the antitrust laws were intended to prevent and that flows
from that which makes defendants' acts unlawful. The injury should
reflect the anticompetitive effect either of the violation or of
anticompetitive acts made possible by the violation. It should, in
short, be "the type of loss that the claimed violations . . . would
be likely to cause." Zenith Radio Corp. v. Hazeltine
Research, 395 U.S. at 395 U. S. 125 . [ Footnote 14 ] III We come, then, to the question of appropriate disposition of
this case. At the very least, petitioner is entitled to a new
trial, not only because of the instructional errors noted by the
Court of Appeals that are at at issue here, see n 6, supra, but also because
the District Court's instruction Page 429 U. S. 490 as to the basis for damages was inconsistent with our holding as
outlined above. Our review of the record, however, persuades us
that a new trial on the damages claim is unwarranted. Respondents
based their case solely' on their novel damages theory which we
have rejected. While they produced some conclusory testimony
suggesting that, in operating the acquired centers, petitioner had
abused its deep pocket by engaging in anticompetitive conduct,
[ Footnote 15 ] they made no
attempt to prove that they had lost any income as a result of such
predation. [ Footnote 16 ]
Rather, their entire proof of damages was based on their claim to
profits that would have been earned had the acquired centers
closed. Since respondents did not prove any cognizable damages, and
have not offered any justification for allowing respondents, after
two trials and over 10 years of litigation, yet a third opportunity
to do so, it follows that, petitioner is entitled, in accord with
its motion made pursuant to Rule 50(b), to judgment on the damages
claim notwithstanding the verdict. Neely v. Eby Constr.
Co., 386 U. S. 317 , 386 U. S. 326 -
330 (1967); United States v. Generes, 405 U. S.
93 , 106-107(1972). Page 429 U. S. 491 Respondents' complaint also prayed for equitable relief, and the
Court of Appeals held that, if respondents established a § 7
violation, they might be entitled to an injunction against "those
practices by which a deep pocket market entrant harms competition."
523 F.2d at 279. Because petitioner has not contested this holding,
respondents remain free, on remand, to seek such a decree.

															The judgment of the Court of Appeals is vacated, and the case is
remanded for further proceedings consistent with this opinion. It is so ordered. [ Footnote 1 ]

															Sales of automatic pinsetters, for example, went from 1,890 in
1956 to 16,288 in 1961. App. A1866.

															[ Footnote 2 ]

															Repossessions of pinsetters increased from 300 in 1961 to 5,996
in 1965. Ibid. In 1963, petitioner resold over two-thirds
of the pinsetters repossessed; more typically, only one-third were
resold, and in 1965, less than one-quarter were resold. Id. at A1879.

															[ Footnote 3 ]

															The complaint contained two additional counts. Count one alleged
that petitioner had violated § 1 of the Sherman Act, 15 U.S.C. § 1,
by fixing resale prices for bowling supplies sold by petitioner to
respondents. This count was abandoned prior to trial. Count two
alleged that, by virtue of the acquisitions and other acts,
petitioner was guilty of monopolization or an attempt to monopolize
in violation of § 2 of the Sherman Act, 15 U.S.C. § 2. The jury
found for petitioner on this count, and respondents did not
appeal.

															The complaint also named as plaintiffs National Bowl-O-Mat, the
predecessor to Treadway Companies, and the seven other bowling
center subsidiaries of Treadway. These plaintiffs were unsuccessful
on all counts, however, and they did not appeal the judgments
entered against them.

															[ Footnote 4 ]

															Judgment ultimately was entered for $6,575,040, which is
$499,050 less than three times the jury's damages award, after
respondent Pueblo Bowl-O-Mat consented to a remittitur which the
District Court proposed as an alternative to a retrial on damages. Treadway Cos. v. Brunswick Corp., 364 F.
Supp. 316 , 324-326 (NJ 1973). The remittitur was deemed
necessary because the jury apparently awarded damages to that
respondent in accord with its minimum claim dating back to 1983,
when the alleged § 2 violation began, rather than back to 1965,
when the alleged § 7 violation began. The District Court thought
that the jury might have been confused by the instruction to use
the same methods for calculating damages under the two sections. Ibid. [ Footnote 5 ]

															Petitioner's appeal and respondents' cross-appeal with respect
to the amount of the attorneys' fee award initially were dismissed
by the Court of Appeals for want of jurisdiction because the
District Court had neither disposed of respondents' equitable claim
nor certified the judgment entered on the legal claims pursuant to
Fed.Rule Civ.Proc. 54(b). Treadway Cos. v. Brunswick
Corp., 500 F.2d 1400 (CA3 1974) (order reported); App.
A1563-A1566 (per curiam opinion reprinted). The District Court then
certified the previously entered judgment, and the parties
reappealed. While the appeals were pending, the District Court
granted equitable relief, and the appeal from that judgment was
consolidated with the pending appeals.

															[ Footnote 6 ]

															With respect to the instruction on the issue of liability, the
court concluded that, since petitioner's acquisitions "did not
increase concentration," the District Court had erred by focusing
on the size of the market shares acquired by petitioner, rather
than on "indicators of qualitative substantiality" such as the
"relative financial strength of Brunswick, Treadway, and other
competitors," or "any retail market advantage" enjoyed by
petitioner because of its status as financier and manufacturer. NBO Industries Treadway Cos. v. Brunswick Corp., 523 F.2d
at 27275 (CA3 1975). With respect to the instruction on damages,
the Court of Appeals concluded that the District Court had failed
to direct the jury to decide whether petitioner's actions were
responsible for keeping the acquired centers in business before
considering how much additional income respondents would have
earned if the acquired centers had been closed. Id. at
276-277.

															The Court of Appeals also held, id. at 275, that, in
instructing the jury on the statutory requirement that the acquired
company be "engaged . . . in commerce," the District Court had not
anticipated this Court's decision in United States v. American
Bldg. Maint. Industries, 422 U. S. 271 (1975), which read the "in commerce" requirement more restrictively
than had the leading decision of the Third Circuit, Transamerica Corp. v. Board of Governors, 206 F.2d 163, cert. denied, 346 U.S. 901 (1953). Indeed, the court
indicated that there might not be sufficient evidence in the record
to satisfy the "in commerce" test. 523 F.2d at 271. The court
concluded, however, that, given the change in the law, it would be
"unjust" to find the evidence insufficient, and thereby deny
plaintiffs an opportunity to meet the new test on retrial.

															[ Footnote 7 ]

															Both petitions also questioned the Court of Appeals' decision to
require relitigation of the "in commerce" issue, see n 6, supra. Brunswick
maintained it was entitled to a directed verdict on this issue;
plaintiffs argued that they had satisfied the new test, and that
therefore no new trial was required.

															[ Footnote 8 ]

															The grant of certiorari excluded the question Brunswick sought
to present concerning the sufficiency of the evidence that the
acquired companies were engaged "in commerce," see nn. 6 7 supra. No action has been taken with respect to respondents'
petition.

															[ Footnote 9 ]

															Petitioner raises this issue directly through the first question
presented, and indirectly through the second, which asks:

															"Does not the 'failing company' principle require dismissal of a
treble damage action based on alleged violations of Section 7 of
the Clayton Act where the plaintiffs' entire damage theory is based
on the premise that the 'acquired' businesses would have failed and
disappeared from the market had the defendant not kept them alive
by making the challenged 'acquisitions?'"

															Pet. for Cert. 3. In light of our holding, we have no occasion
to consider the applicability of the failing company defense to the
conglomerate-like acquisitions involved here.

															[ Footnote 10 ]

															Treble damages antitrust actions were first authorized by § 7 of
the Sherman Act, 26 Stat. 210 (1890). The discussions of this
section on the floor of the Senate indicate that it was conceived
of primarily as a remedy for "[t]he people of the United States as
individuals," especially consumers. 21 Cong.Rec. 1767-1768 (1890)
(remarks of Sen. George); see id. at 2612 (Sens. Teller
and Reagan), 2615 (Sen. Coke), 3146-3149. Treble damages were
provided in part for punitive purposes, id. at 3147 (Sen.
George), but also to make the remedy meaningful by counterbalancing
"the difficulty of maintaining a private suit against a combination
such as is described" in the Act. Id. at 2456 (Sen.
Sherman).

															When Congress enacted the Clayton Act in 1914, it "extend[ed]
the remedy under section 7 of the Sherman Act" to persons injured
by virtue of any antitrust violation. H.R.Rep. No. 627, 63d Cong.,
2d Sess., 14 (1914). The initial House debates concerning
provisions related to private damages actions reveal that these
actions were conceived primarily as

															"open[ing] the door of justice to every man, whenever he may be
injured by those who violate the antitrust laws, and giv[ing] the
injured party ample damages for the wrong suffered."

															51 Cong.Rec. 9073 (1914) (remarks of Rep. Webb); see, e.g.,
id. at 9079 (Rep. Volstead), 9270 (Rep. Carlin), 9414-9417,
9466-9467, 9487-9495. The House debates following the conference
committee report, however, indicate that the sponsors of the bill
also saw treble damages suits as an important means of enforcing
the law. Id. at 16274-16275 (Rep. Webb), 16317-16319 (Rep.
Floyd). In the Senate, there was virtually no discussion of the
enforcement value of private actions, even though the bill was
attacked as lacking meaningful sanctions, e.g., id. at
15818-15821 (Sen. Reed), 16042-16046 (Sen. Norris).

															[ Footnote 11 ] See Areeda, Antitrust Violations Without Damage
Recoveries, 89 Harv.L.Rev. 1127, 1130-1136 (1976); Symposium,
Private Enforcement of the Antimerger Laws, 31 Record of N.Y.C.B.A.
239, 260-261 (1976).

															[ Footnote 12 ]

															Conversely, had petitioner acquired thriving centers --
acquisitions at least as violative of § 7 as the instant
acquisitions -- respondents would not have lost any income that
they otherwise would have received.

															[ Footnote 13 ]

															For instances in which plaintiffs unsuccessfully sought damages
for injuries unrelated to the reason the merger was prohibited, see Reibert v. Atlantic Richfield Co., 471 F.2d 727
(CA10), cert. denied, 411 U.S. 938 (1973); Peterson v.
Borden Co., 50 F.2d 644 (CA7 1931); Kirihara v. Bendix
Corp., 306 F. Supp.
72 (Haw.1969); Goldsmith v. St. Louis-San Francisco R.
Co., 201 F.
Supp. 867 (WDNC 1962).

															[ Footnote 14 ] See generally GAF Corp. v. Circle Floor Co., 463 F.2d
752 (CA2 1972), cert. dismissed, 413 U.S. 901 (1973);
Comment, Section 7 of the Clayton Act: The Private Plaintiff's
Remedies, 7 B.C.Ind. & Comm.L.Rev. 333 (1966); Comment, Treble
Damage Actions for Violations of Section 7 of the Clayton Act, 38
U.Chi.L.Rev. 404 (1971).

															This does not necessarily mean, as the Court of Appeals feared,
523 F.2d at 272, that § 4 plaintiffs must prove an actual lessening
of competition in order to recover. The short-term effect of
certain anticompetitive behavior -- predatory below-cost pricing,
for example -- may be to stimulate price competition. But
competitors may be able to prove antitrust injury before they
actually are driven from the market and competition is thereby
lessened. Of course, the case for relief will be strongest where
competition has been diminished. See, e.g., Calnetics Corp. v.
Volkswagen of America, Inc., 532 F.2d 674 (CA9 1976); Metric Hosiery Co. v. Spartans Industries, Inc., 50 F.R.D.
50 (SDNY 1970); Klingsberg, Bull's Eyes and Carom Shots:
Complications and Conflicts on Standing to Sue and Causation Under
Section 4 of the Clayton Act, 16 Antitrust Bull. 351, 364
(1971).

															[ Footnote 15 ]

															Respondents' testimony concerned price reduction at three
centers, App. A170, A420, A431; unjustified capital expenses at
three centers, id. at A503-A506, A829-A830; and
extravagant "give-aways," id. at A169-A170, A222-A223,
A413-A414, A569. This testimony is rather unimpressive when viewed
against both petitioner's contemporaneous business records which
reveal that it did not lower prices when it took over the centers,
Defendant's Exhibits D-32, D-33, D-36, D-38, and respondents' own
exhibits, which demonstrate that petitioner made a profit at two
centers, App. A1700, generated a positive cash flow at three
others, id. at A1717, A1720, and closed the two centers
that were unsuccessful, id. at A1725, A1733.

															[ Footnote 16 ]

															One of respondents' witnesses did testify that he knew of one
bowling league in Pueblo that had shifted from a respondent to
petitioner after petitioner installed faster automatic pinsetters. Id. at 508. Assuming, arguendo, that such
installations were not cost-justified and constituted a form of
predation, respondents still made no attempt to quantify the
loss.