brought suit alleging that VW’s acquisition of Subsidiary violated § 7 of the Clayton Act, 15 U.S.C. § 18.
The allegation of a § 7 violation was premised mainly on a theory of vertical restraint[1]—that VW would be able to coerce both its wholly owned and indirectly controlled distributors and dealers to satisfy their demand for automobile air conditioning equipment from Subsidiary’s supply, thus foreclosing sales opportunities of Calnetics and other independent air conditioning manufacturers (hereinafter referred to generically as “Delta”). Calnetics also alleged that VW, Distributor, and Subsidiary[2] had conspired and combined to restrain competition in the manufacture, distribution, and sale of air conditioning systems for Volkswagen, Karmann Ghia, and Porsche automobiles in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and had actually monopolized and attempted to monopolize the distribution, manufacture, and sale of air conditioning systems in violation of § 2 of the Sherman Act, 15 U.S.C. § 2.
Calnetics sought both damages and equitable relief, including divestiture of Subsidiary. Its claims for damages under the Sherman and Clayton Acts were premised entirely on its exclusion from competition for the sale of automobile air conditioning equipment to Distributor.
VW and Subsidiary counterclaimed, alleging that a secret agreement between Calnetics and the head of Distributor’s service department, R. W. Christiansen, which provided Christiansen and his wholly owned corporation, RWC Sales Corp. with a 3% commission on all sales to Distributor, violated §§ 1 and 2 of the Sherman Act, § 2(c) of the Robinson-Patman Act,[3] and California state law. VW and Subsidiary sought both damages and equitable relief. Distributor filed a counterclaim based on state law, but was not allowed to amend its answer to include a counterclaim under the Robinson-Patman Act.
On February 28, 1972, the trial court granted Distributor’s motion for summary judgment on all claims against it,[4] but rejected motions for summary judgment by VW and Subsidiary. The court also granted Calnetics’ motion for summary judgment on the counterclaims brought by VW and Subsidiary.
After the February 28 summary judgments, the only claims remaining to be tried were those by Calnetics against VW and Subsidiary under §§ 1 and 2 of the Sherman Act and § 7 of the Clayton Act. The district court had earlier ordered that the § 7 claim be tried separately from, and prior to, the Sherman Act claims. Accordingly, a jury trial commenced April 4, 1972 on the § 7 claim.
Upon the conclusion of Calnetics’ case in chief, the district court directed a verdict in favor of VW and Subsidiary on the issue of damages, dismissed the jury, and proceeded to hear further evidence on Calnetics’ claim for equitable relief.
On June 30, 1972, the district court held that VW’s acquisition of Subsidiary violated § 7 of the Clayton Act. Calnetics Corp. v. Volkswagen of America, Inc., 348 F.Supp. 606 (C.D.Cal.1972). It granted judgment for Calnetics but deferred the execution of the relief until the parties had presented “plans for accomplishing the [equitable] relief granted * * *.” 348 F.Supp. at 623.
- ↑ In addition to a traditional theory of vertical restraint, Calnetics also urges that the acquisition diminished competition because: (1) as a subsidiary, Subsidiary enjoyed access to more money and engineering talent than it had as an independent company; (2) as a subsidiary, Subsidiary enjoyed the benefits of engineering coordination with the parent automobile manufacturer; and (3) the acquisition eliminated the acquired firm as a potential competitor.
- ↑ Calnetics urges that VW and Distributor combined and conspired with Subsidiary’s predecessor corporation prior to Sept. 26, 1969, the date of the acquisition, and with Subsidiary thereafter. Throughout the rest of this opinion, “Subsidiary” will refer both to Subsidiary and to the predecessor corporation.
- ↑ 15 U.S.C. § 13(c).
- ↑ Having thus eliminated all federal claims between Distributor and Calnetics, the district court dismissed the pendent state law claims between Distributor and Calnetics.
