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High court overturns award in lumber case

February 21, 2007|From Bloomberg News

The Supreme Court on Tuesday overturned a $79-million antitrust award against lumber producer Weyerhaeuser Co. in a ruling that will help shield companies from claims that they illegally tried to drive a competitor out of business.

The justices unanimously said a jury used the wrong standard in concluding that Weyerhaeuser monopolized the Pacific Northwest market for finished alder, a hardwood used in furniture. A now-defunct rival accused Federal Way, Wash-based Weyerhaeuser, the world's biggest forest products company, of overbidding for scarce logs.

The ruling is a victory for large U.S. companies, giving them more room to bid aggressively for raw materials and other supplies without the risk of violating federal antitrust laws.

"There are myriad legitimate reasons -- ranging from benign to affirmatively pro-competitive -- why a buyer might bid up input prices," Justice Clarence Thomas wrote for the court.

The case centered on a judge's instruction to jurors that they could award damages if Weyerhaeuser bought "more logs than it needed" and prevented Ross-Simmons Hardwood Lumber Co. from acquiring logs at a "fair price."

The U.S. 9th Circuit Court of Appeals in San Francisco upheld the instruction, but the Supreme Court said the circuit court should have applied a standard similar to the one the Supreme Court used in a 1993 predatory-pricing case. That case required proof that a defendant sold its product below cost and was likely to recoup those losses after competition was driven out.

Ross-Simmons said the 1993 ruling wasn't applicable because the Weyerhaeuser case didn't involve predatory price cuts.

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