Tv Signal Company of Aberdeen, a Corporation v. American Telephone & Telegraph, a Corporation, and Northwestern Bell Telephone Company, a Corporation

HENLEY, Circuit Judge,

concurring.

I agree that the district court’s judgment in this case must be reversed and the cause must be remanded for further proceedings, but my reasoning in reaching this result differs somewhat from that of the majority. The district court rested its judgment for defendants on two alternative grounds: that plaintiff lacked standing and that plaintiff failed to demonstrate the existence of a relevant product market. Logically the question of standing must be considered first.

Standing

The district court gave three reasons for holding that plaintiff lacked standing: (1) since “Plaintiff’s business was in no way in competition with or in impending competition with the business of Defendants, Plaintiff’s alleged injury [was not] the type of injury against which the antitrust laws *1311were designed to protect”;1 (2) the higher initial cost of construction of plaintiff’s underground system would be offset within two years by the advantages of that system over an all-aerial one; and (3) plaintiff’s inability to enter the broadband market and the “forced” sale of plaintiff’s business were not causally related to the one per pole policy.

Judge Lay’s majority opinion fully discusses the errors in the district court’s second and third reasons for denying standing, see pp. 1305-1307 supra, and I readily concur in that part of the opinion. The first reason given by the district court (the absence of competition between the parties) seems to have been rejected by the majority, after lengthy consideration, on the ground that plaintiff was both an actual and potential competitor of defendants. See pp. 1307-1312 supra. For reasons to be stated, I prefer to approach the issue of standing somewhat differently.

The private treble damages action for antitrust violations was created by section 4 of the Clayton Act, and the starting point for analysis of whether a given plaintiff can maintain such an action should be the statutory language. It provides in relevant part:

Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . and shall recover threefold the damages by him sustained

15 U.S.C. § 15 (1976). In the present case, it is clear that the higher initial cost of construction, incurred by plaintiff as a result of Bell’s denial of access to its poles, constituted injury to TV Signal’s “business or property.” See Reiter v. Sonotone Corp., 442 U.S. 330, 99 S.Ct. 2326, 2331-32, 60 L.Ed.2d 931 (1979); Chattanooga Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390, 396, 27 S.Ct. 65, 66, 51 L.Ed. 241 (1906). In its rejection of the district court’s second reason for denying standing, the majority holds — and I agree — that for purposes of standing this increased cost is not subject to reduction by the amount of any eventual offsetting benefits of an underground system. See p. 1306 supra. Thus, whether plaintiff has standing depends only on whether its injury occurred “by reason of” the alleged antitrust violation.

The lower federal courts have attempted to construe this phrase, “by reason of,” so as to limit the right to bring a treble damages action to those persons whom Congress intended the antitrust laws to protect. For this purpose the courts have developed two tests: the “direct injury” test and the “target area” test. In re Multi-district Vehicle Air Pollution M.D.L. No. 31, 481 F.2d 122, 125-30 (9th Cir.), cert. denied, 414 U.S. 1045, 94 S.Ct. 551, 38 L.Ed.2d 336 (1973); Ragar v. T. J. Raney & Sons, 388 F.Supp. 1184, 1186-87 (E.D.Ark.), aff’d per curiam, 521 F.2d 795 (8th Cir. 1975). In general, the direct injury test denies standing in those cases where a third-party victim of the violation comes between plaintiff and defendant, see, e. g., Nationwide Auto Appraiser Serv., Inc. v. Association of Cas. & Sur. Cos., 382 F.2d 925 (10th Cir. 1967); Volasco Prods. Co. v. Lloyd A. Fry Roofing Co., 308 F.2d 383, 395 (6th Cir. 1962), cert. denied, 372 U.S. 907, 83 S.Ct. 721, 9 L.Ed.2d 717 (1963); Melrose Realty Co. v. Loew’s, Inc., 234 F.2d 518 (3d Cir.), cert. denied, 352 U.S. 890, 77 S.Ct. 128, 1 L.Ed.2d 85 (1956), whereas the target area test asks whether plaintiff is “within that area of the economy which is endangered by a breakdown of competitive conditions,” Conference of Studio Unions v. Loew’s Inc., 193 F.2d 51, 55 (9th Cir. 1951), cert. denied, 342 U.S. 919, 72 S.Ct. 367, 96 L.Ed. 687 (1952); see, e. g., Sanitary Milk Producers v. Bergjans Farm Dairy, Inc., 368 F.2d 679, 688-89 (8th Cir. 1966); South Carolina Council of Milk Producers, Inc. v. Newton, 360 F.2d 414 (4th Cir.), cert. denied, 385 U.S. 934, 87 S.Ct. 295, 17 L.Ed.2d 215 (1966).

Although the courts usually apply one of these tests to the exclusion of the other, *1312and although Sanitary Milk seems to indicate that the test to be applied in the Eighth Circuit is the target area test, it is unnecessary in the present case to decide which of the two tests to apply because TV Signal has standing whichever is applied. As noted in the majority opinion, see p. 1306, note 6 supra, the district court found that plaintiff’s increased construction cost was “a direct consequence of Bell’s refusal to enter into” a pole attachment agreement, 465 F.Supp. at 1092, and the refusal was entirely due to the alleged violation, the one per pole policy. It is also clear that the injury to TV Signal occurred “within that area of the economy endangered by a breakdown of competitive conditions,” i. e., the construction and control of CATV distribution systems. Since TV Signal was “injured in its business or property” and since the requirements of both the direct injury test and the target area test are met in the present case, plaintiff has standing.

Contrary to the district court’s opinion, neither section 4 nor the direct injury test nor the target area test requires that plaintiff and defendant be competitors in order for plaintiff to have standing. Plaintiffs who were not in competition with defendants have been held to have standing in many treble damages actions.2 And in the circumstances of this appeal, competition assumes significance primarily, if not entirely, in only two ways: in determining the target area in which there may be a breakdown of competitive conditions, and in defining the relevant market on which to measure the restrictive effects of the one per pole policy and the possession of monopoly power by defendants. For both these purposes, it is fortuitous that defendants happen to be competitors of plaintiff. For the above reasons, I (1) expressly reject the district court’s premise that plaintiff must be a competitor of defendants in order to have standing, (2) find that TV Signal does have standing, on the grounds stated in the three preceding paragraphs, and (3) preter-mit extended discussion of actual or potential competition in resolving the issue of standing.

Relevant Market

As an alternative ground for dismissing the complaint, the district court held that plaintiff was required to define the relevant market in order to recover under either section 1 or section 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and that plaintiff failed to show the existence of a relevant product market, one of the two components of the relevant market. I believe the first part of this holding was correct, except as regards plaintiff’s claim that the one per pole policy was a per se violation of section 1. It is clear that proof of relevant market is not a prerequisite to recovery for a per se violation.3 Insofar as footnote 8 of the majority opinion states this proposition, I concur therein.

The second part of the district court’s holding was that plaintiff did not establish a relevant product market, because plaintiff and defendants were not in competition. It is, however, undisputed that plaintiff built *1313a CATV distribution network in Aberdeen, that defendants were prepared to build their own system for lease to plaintiff, and that the two systems would have been “reasonably interchangeable” for purposes of delivering CATV signals to the homes of customers. I agree with the majority that “[t]he evidence demonstrates that CATV operators and Bell were both competitors in the market for construction of CATV distribution facilities . . ..” Since this finding requires reversal of the district court and disposes of the issues now before this court, I find it unnecessary to discuss the internal AT&T memoranda, the reasons for defendants’ maintenance or revision of their one per pole policy, or the reasonableness of the policy. These matters, if discussed by us at all, should be considered only after further developments in the trial court.

I concur in the remand of the case for decision of plaintiff’s claims on the merits.

. TV Signal Co. v. American Tel. & Tel. Co., 465 F.Supp. 1084, 1091 (D.S.D.1979).

. See, e. g., Reiter v. Sonotone Corp., 442 U.S. 330, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979); Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968); Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 68 S.Ct. 996, 92 L.Ed. 1328 (1948); Chattanooga Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390, 27 S.Ct. 65, 51 L.Ed. 241 (1906); Greene v. General Foods Corp., 517 F.2d 635 (5th Cir. 1975), cert. denied, 424 U.S. 942, 96 S.Ct. 1409, 47 L.Ed.2d 348 (1976); Mulvey v. Samuel Goldwyn Productions, 433 F.2d 1073, 1076 (9th Cir. 1970), cert. denied, 402 U.S. 923, 91 S.Ct. 1377, 28 L.Ed.2d 662 (1971); South Carolina Council of Milk Producers, Inc. v. Newton, 360 F.2d 414 (4th Cir.) cert. denied, 385 U.S. 934, 87 S.Ct. 295, 17 L.Ed.2d 215 (1966); Bales v. Kansas City Star Co., 336 F.2d 439, 444 (8th Cir. 1964).

. 54 Am.Jur.2d Monopolies § 32 (1971) (footnotes omitted):

[A] per se violation is conclusively presumed to be unreasonable, and hence illegality does not depend on a showing of the unreasonableness of the practice and it is unnecessary to have a trial to show the nature, extent, and degree of its market effect.