Citizen Publishing Co. v. United States

394 U.S. 131 (1969)


Tucson has only two daily newspapers of general circulation, the Star and D. Prior to 1940 the two papers vigorously competed with each other. The Star sold 50% more advertising space than D and operated at a profit, while D sustained losses. New owners controlled D, but they did not appear to contemplate selling the paper. The owners negotiated a joint operating agreement between the two papers which was to run for 25 years from March 1940, a term that was extended in 1953 until 1990. By its terms, the agreement may be canceled only by mutual consent of the parties. They kept the identity and staff separate but merged the production, advertising department, and distribution aspects of the business. They fixed prices, pooled profits, and prohibited competition. Combined profits before taxes rose from $27,531 in 1940 to $1,727,217 in 1964. P charged an unreasonable restraint of trade or commerce in violation of § 1 of the Sherman Act, and a monopoly in violation of § 2. D claimed the failing company doctrine as a defense. The court found that D was not on the verge of going out of business. the District Court, after finding that the joint operating agreement contained provisions which were unlawful per se under § 1, granted P’s motion for summary judgment. D appealed.