## Facts

- Northwest Power Products, Inc. distributed and serviced powder actuated tools (PAT) and supplies in the Dallas–Fort Worth area and held roughly an 18–20% market share.
- Omark Industries, Inc. manufactured PAT tools and supplies and supplied Northwest and other distributors.
- Omark became dissatisfied with Northwest’s management and communicated that it would end the distributorship unless Northwest turned management over to its sales manager, Bob Wooten.
- Northwest’s president refused and discharged Wooten; Wooten then joined Bosco Fastening Service Center, Inc., which became Omark’s new PAT distributor in the area.
- Bosco hired several Northwest employees; Northwest alleged that an employee took a valuable customer list and that defendants made disparaging statements about Northwest’s financial condition and prospects.
- Northwest alleged Omark, Bosco, and Wooten conspired to terminate Northwest’s distributorship and divert its customers through tortious and unfair conduct.
- Northwest remained in the market, selling PAT products from remaining Omark inventory and alternative suppliers, but claimed substantial business harm.

## Issues

1. Whether an alleged conspiracy to terminate a distributorship and divert a rival’s business through unfair or tortious means is a per se violation of Sherman Act § 1.
2. Whether the evidence created a triable issue under the rule of reason that defendants’ conduct unreasonably restrained trade in the relevant Dallas–Fort Worth PAT distribution and service market.

## Decision

- The Fifth Circuit affirmed summary judgment for Omark, Bosco, and Wooten.
- The court declined to treat the alleged conduct as per se unlawful and rejected the “Pick-Barth” approach to characterizing business-tort conspiracies as automatic § 1 violations.
- Under the rule of reason, Northwest failed to raise a genuine dispute that the conduct harmed competition in the market, as opposed to harming Northwest as a competitor.
- The shift from Northwest to Bosco did not remove Omark products from the market; Omark products continued to be sold through a different distributor, and Northwest could still compete using other sources.

## Legal Principles

- Per se treatment under Sherman Act § 1 is limited to clearly defined categories of conduct that almost always restrict competition; unfair or tortious competitive practices are not per se unlawful merely because they harm a rival.
- A § 1 plaintiff must prove injury to competition in the relevant market (e.g., reduced output, higher prices, diminished consumer choice, significant foreclosure), not only injury to itself.
- Termination of a distributorship or reassignment of distribution, even if accompanied by sharp practices, is not an antitrust violation absent evidence of an unreasonable restraint of trade.

## Conclusion

The court held that allegations of distributor termination, employee raiding, and related unfair conduct did not establish a Sherman Act § 1 violation without proof of anticompetitive market effects; because the record showed, at most, harm to a competitor rather than harm to competition, summary judgment for defendants was proper.


Northwest Power Prods., Inc. v. Omark Indus., Inc., 576 F.2d 83 (5th Cir. 1978)