Otter Tail Power Co. v. United States

Otter Tail Power Company (Otter Tail) (defendant) was an electric utility company that sold electricity wholesale to other retailers and directly to consumers in Minnesota, North Dakota, and South Dakota. Otter Tail received 10- to 20-year franchises from towns in which it sold retail electricity. Given the nature of electricity distribution, most towns could only accommodate one electricity-distribution system. Therefore, Otter Tail had natural and legal monopolies for electricity distribution in the towns to which it sold retail electricity. Several towns in which Otter Tail previously had held a franchise attempted to establish municipal systems for distributing electricity. The municipal systems would have had to purchase electricity wholesale and run the electricity through transmission lines owned by Otter Tail. Otter Tail refused to sell electricity wholesale to the proposed municipal systems and refused to allow the municipal systems access to its transmission lines. Otter Tail also made agreements with other electricity suppliers to further prevent the municipal systems from purchasing wholesale electricity, and Otter Tail engaged in litigation to prevent or delay the establishment of the municipal systems. The United States government (plaintiff) accused Otter Tail of using its monopoly power to prevent towns from establishing their own municipal systems in violation of § 2 of the Sherman Act. The district court found that Otter Tail had violated § 2 and enjoined Otter Tail from engaging in its anticompetitive tactics. Otter Tail appealed.