## Facts

- Competing hotels, restaurants, and related businesses in Portland, Oregon, formed an association to attract conventions and funded it through member contributions.
- Suppliers selling to hotel members were asked to pay an assessment equal to 1% of their sales to hotel members.
- Hotel members agreed to favor suppliers who paid the assessment and to reduce or stop purchases from suppliers who did not.
- A hotel purchasing agent, despite being instructed not to participate, told at least one supplier it would lose the hotel’s business unless it contributed.
- A federal grand jury indicted Hilton Hotels Corporation, Western International Hotels Company, and others for conspiring in restraint of trade in violation of Sherman Act § 1, 15 U.S.C. § 1.
- After conviction in the District of Oregon, Western International appealed, challenging the per se treatment of the conduct and the corporate-liability jury instruction.

## Issues

1. Whether an agreement among competing hotels to pressure suppliers to pay assessments by granting preferences to contributors and curtailing purchases from noncontributors is a per se unlawful group boycott under Sherman Act § 1.
2. Whether a corporation may be held criminally liable under Sherman Act § 1 for an employee’s boycott-related acts undertaken within the scope of employment, even if contrary to corporate policy and express instructions.

## Decision

- The Ninth Circuit affirmed the convictions.
- The court held the arrangement was a concerted refusal to deal of a type long treated as per se unreasonable under Sherman Act § 1.
- The court rejected the argument that the asserted goal of increasing convention business removed the conduct from per se condemnation, emphasizing the scheme’s direct effect of depriving noncontributing suppliers of a fair chance to compete.
- The court approved jury instructions imputing an agent’s conduct to the corporation when done within the scope of employment, even if the agent violated corporate policy or orders.
- The court held the evidence supported a finding of an agreement among the hotels, based on the association’s structure, uniform assessments, and coordinated purchasing pressure on suppliers.

## Legal Principles

- Concerted refusals to deal and group boycotts by competitors designed to coerce targets or exclude them from business opportunities are per se violations of Sherman Act § 1.
- Claimed benign motives do not prevent per se treatment when the restraint’s necessary and direct consequence is anticompetitive exclusion or coercion.
- A corporation may be held criminally liable for Sherman Act violations committed by its agents acting within the scope of their employment and for the corporation’s benefit, even when the conduct contravenes stated corporate policy or express instructions.
- A jury may infer an unlawful agreement from coordinated conduct and organizational arrangements that implement and enforce a common purchasing policy against nonparticipants.

## Conclusion

The Ninth Circuit affirmed Sherman Act § 1 convictions arising from a coordinated supplier-assessment boycott, holding the conduct per se unlawful and imputing liability to the corporations for a purchasing agent’s actions taken within the scope of his job despite contrary corporate directives.


United States v. Hilton Hotels Corp., 467 F.2d 1000 (9th Cir. 1972)