## Facts

- Barry Wright Corp. sought to enter the market for mechanical snubbers used in nuclear power plant piping systems.
- Pacific Scientific Co. was the only domestic mechanical snubber manufacturer meeting applicable regulatory standards; hydraulic snubbers were viewed as a less reliable substitute.
- ITT Grinnell Corp. was a major purchaser and installer of nuclear piping systems and a large buyer of mechanical snubbers.
- To reduce dependence on Pacific, Grinnell entered a development and supply agreement with Barry under which Grinnell would assist Barry’s development efforts and contribute to development costs, anticipating Barry could become a substantial future supplier.
- Barry experienced persistent difficulties meeting production schedules and performance goals.
- After learning of the Grinnell–Barry effort, Pacific offered Grinnell significant discounts in exchange for long-term, high-volume commitments expected to cover most of Grinnell’s mechanical snubber requirements for specified periods.
- Grinnell ultimately canceled its arrangement with Barry, returned to Pacific as its primary source, and Barry abandoned the snubber venture.
- Barry sued, alleging Pacific’s discounting and Grinnell’s contracts unlawfully foreclosed entry and interfered with Barry’s relationship with Grinnell.

## Issues

1. Whether Pacific’s above-cost discount pricing and long-term, high-volume supply arrangements with Grinnell constituted exclusionary conduct supporting monopolization or attempted monopolization under Sherman Act § 2.
2. Whether the requirements-type and fixed-quantity contracts, including non-cancellation or liquidated-damages-style provisions, amounted to unlawful exclusive dealing or anticompetitive foreclosure under the Sherman or Clayton Acts.
3. Whether Pacific’s and Grinnell’s conduct supported state-law liability for tortious interference with Barry’s contractual relations.

## Decision

- The First Circuit affirmed judgment for defendants after reviewing the district court’s findings under the clearly erroneous standard.
- The court held Pacific’s aggressive pricing was not predatory because the prices remained above cost, and above-cost price reductions are ordinarily lawful competition.
- The court held the requirements-type and fixed-quantity contracts did not unreasonably foreclose competition, given the market facts and the absence of proof of substantial foreclosure preventing entry or expansion.
- The court treated non-cancellation or damages provisions as contractual risk-allocation devices that did not materially increase anticompetitive harm beyond the lawful supply commitments.
- The court rejected Barry’s tortious interference and related state-law claims because the challenged conduct was commercially justified and not improper.

## Legal Principles

- Sherman Act § 2 condemns exclusionary conduct, not aggressive competition; courts should avoid rules that deter ordinary price competition and efficient contracting.
- Above-cost discounting, even by a firm with substantial market share, is generally not exclusionary absent a recognized predatory-pricing showing.
- Exclusive dealing or requirements-type arrangements are unlawful only when they foreclose a sufficiently large portion of outlets or sources of supply to make market entry or expansion materially difficult.
- Contract terms that impose economic consequences for breach (rather than legal impossibility) are not, without more, antitrust violations.
- Tortious interference requires improper or unjustified conduct; lawful competitive behavior and legitimate business decisions do not satisfy that element.

## Conclusion

The court concluded that Pacific’s above-cost discounts and long-term, high-volume supply contracts with Grinnell were lawful competitive responses to Barry’s inability to supply reliably, did not substantially foreclose the market, and therefore did not support federal antitrust liability or state-law tort recovery.


Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227 (1st Cir. 1983)