Tampa Electric Co. v. Nashville Coal Co.

365 U.S. 320 (1961)


P is a public utility located in Tampa, Florida. In 1955 P decided to expand its facilities and decided to try coal as boiler fuel in the first two units constructed. P contracted with D to furnish the expected coal requirements for the units under an exclusive dealing requirements contract. In April 1957, soon before the first coal was actually to be delivered and after P, in order to equip its first two Gannon units for the use of coal, had expended some $3,000,000 more than the cost of constructing oil-burning units, and after D had expended approximately $7,500,000 readying themselves to perform the contract, D advised P that the contract was illegal under the antitrust laws, would therefore not be performed, and no coal would be delivered. P found replacement suppliers but at a much higher price. The total consumption of coal in peninsular Florida, as of 1958, aside from Gannon Station, was approximately 700,000 tons annually. there were some 700 coal suppliers in the producing area where Ds operated, and that P's anticipated maximum requirements at 2,250,000 tons annually, would approximate 1% of the total coal of the same type produced and marketed from D's producing area. P sued D for a declaration that its contract with D was valid, and for enforcement according to its terms. Ds claimed the contract was invalid under §3 the Clayton Act and also violated both §§ 1 and 2 of the Sherman Act which, it claimed, likewise precluded its enforcement. The court granted D’s motion for summary judgment in that the contract was a violation of § 3 of the Clayton Act. The Court of Appeals agreed. Both courts reasoned the 'total requirements' provision had the same practical effect, for it prevented P for a period of 20 years from buying coal from any other source for use at that station. The Supreme Court granted certiorari.