## Facts

- Otter Tail Power Company was an electric utility serving numerous towns in Minnesota, North Dakota, and South Dakota, selling power at retail and also selling at wholesale to some municipal systems.
- After retail franchises expired in certain towns, some municipalities sought to establish their own municipal electric systems.
- The United States sued under § 2 of the Sherman Act, alleging Otter Tail monopolized and attempted to monopolize retail electric distribution in its service area.
- The challenged conduct included: (1) refusing to sell power at wholesale to proposed municipal systems; (2) refusing to “wheel” power (transmit power over Otter Tail’s facilities) from other suppliers to those systems; (3) instituting or supporting litigation intended to prevent or delay municipal systems; and (4) invoking restrictive provisions in transmission-related contracts to deny municipalities access to alternative suppliers using Otter Tail’s transmission system.
- The district court found § 2 violations and entered injunctive relief barring the refusal practices and contract invocations and requiring wheeling in relevant circumstances.
- Otter Tail argued federal regulation under the Federal Power Act and the Federal Power Commission (FPC) displaced antitrust law and limited the court’s remedial authority.

## Issues

1. Whether the Federal Power Act and the FPC’s jurisdiction displaced or immunized Otter Tail from liability under § 2 of the Sherman Act.
2. Whether an injunction requiring wheeling conflicted with the FPC’s regulatory authority.
3. Whether refusals to sell at wholesale or wheel power, and the invocation of restrictive contract provisions to block municipal systems, constituted monopolization or attempted monopolization under § 2.
4. Whether Otter Tail’s litigation opposing municipalization was protected petitioning activity or could be treated as unprotected “sham” litigation.

## Decision

- The Court largely affirmed the judgment against Otter Tail and the core injunctive relief, and remanded for further findings on the litigation component.
- The Court held the Federal Power Act did not insulate Otter Tail from antitrust regulation; there was no congressional purpose to make antitrust laws inapplicable to electric utilities.
- The Court held the district court’s wheeling order did not conflict with FPC authority, emphasizing the FPC lacked power to impose a comparable wheeling requirement and there was no current inconsistency with any FPC ruling.
- The Court upheld findings that Otter Tail, to protect its retail monopoly, refused to wholesale or wheel power to proposed municipal systems and invoked restrictive contract provisions to foreclose alternative supply; the contract restrictions were treated as unlawful on their face for that anticompetitive use.
- The Court remanded for reconsideration whether Otter Tail’s litigation was a “mere sham” under Noerr-Pennington principles as clarified by later precedent.

## Legal Principles

- Federal regulation of a utility under the Federal Power Act does not, without clear congressional intent, displace application of the Sherman Act to exclusionary conduct.
- A monopolist’s refusal to deal—including refusal to transmit (“wheel”) power over a controlled transmission system—may violate Sherman Act § 2 when used to exclude rivals and maintain monopoly power.
- Contractual provisions invoked to deny competitors or new municipal systems access to alternative supply through a monopolist-controlled transmission system can constitute unlawful exclusionary conduct under § 2.
- Courts may order injunctive relief to remedy anticompetitive conduct where the remedy does not conflict with the responsible agency’s statutory powers; the absence of agency authority to impose the remedy supports judicial relief.
- Petitioning through litigation is generally protected, but litigation undertaken as a “sham” to interfere with competition may lose constitutional protection and may support antitrust liability.

## Conclusion

The Court held that antitrust law applied to Otter Tail despite federal power regulation and that its refusal to sell or wheel power, together with restrictive contract tactics used to block municipal systems, supported § 2 liability and injunctive relief; it remanded only to determine whether Otter Tail’s litigation efforts were unprotected sham petitioning.


Otter Tail Power Co. v. United States, 410 U.S. 366 (1973)