United States Steel Corp. v. Fortner Enterprises

United States Steel Corporation (U.S. Steel) (defendant) operated a Home Division, which manufactured parts for prefabricated homes, and the Credit Corporation, which offered financing to customers of the Home Division. U.S. Steel used its credit to borrow money from banks at a low rate, allowing the Credit Corporation to offer financing arrangements to Home Division customers that would not be offered by other companies. For example, financing from the Credit Corporation had a lower interest rate than other loans. With its loan terms, U.S. Steel accepted more risk than traditional lenders. However, the prices of prefabricated homes offered by the Home Division were higher than those offered by competitors. Fortner Enterprises (Fortner) (plaintiff) was a corporation operated by a real estate developer to buy and develop residential property. Fortner borrowed over $2 million from the Credit Corporation to purchase the components for 210 prefabricated homes. After experiencing problems while developing the residential property, Fortner accused U.S. Steel of violating § 1 of the Sherman Act. Fortner argued that U.S. Steel had created an illegal tying arrangement by abusing its economic power over credit, the tying product, to restrain competition and charge noncompetitive prices for prefabricated homes, the tied product. After initial litigation, the district court determined that U.S. Steel had adequate economic power in the credit market to make the tying arrangement illegal. In its holding, the district court focused on the unique nature of the loans offered by U.S. Steel through the Credit Corporation. The court of appeals affirmed the district court, and U.S. Steel appealed.