United States v. Grinnell Corporation

Grinnell Corporation (defendant) was a plumbing and fire-sprinkler manufacturer. Grinnell owned controlling stock in three companies that provided fire and burglary alarm services (defendants). The three companies offered accredited central-station services, which used nearby stations staffed by guards 24 hours a day. The three companies Grinnell controlled had over 87 percent of the market for accredited central-station services. Homeowners with accredited central-station services were charged lower insurance premiums than homeowners using other forms of home protection. Alternative forms included watchmen, watchdogs, audible alarms, automatic proprietary systems, unaccredited central-station services, and services connected to local governments. The United States (plaintiff) sued Grinnell and the three fire and burglary alarm companies, alleging violations of § 1 and § 2 of the Sherman Act. Grinnell disputed the definition of the relevant market. Grinnell said that accredited central-service stations compete with other forms of home protection, and these alternative services should have been included as part of a wider market definition. Grinnell also argued the geographic market should have been defined locally rather than nationally. Because the services protected property at a fixed location, Grinnell argued competition occurred only between companies in the property’s area. However, prices and policies were set nationally. The district court found the defendants had committed per se violations of § 1 and § 2 of the Sherman Act. The defendants appealed to the United States Supreme Court.