[BETA] Fortnightly

The 9th U.S. Circuit Court of Appeals has ruled that Portland General Electric Co., could not invoke "state action immunity" as protection against antitrust charges in a case involving the division of the Portland, Ore., market into exclusive service territories.

Columbia Steel Casting Co., a large industrial consumer of electric power in the city, had sued Portland General and another local utility, Pacific Power & Light Co., charging both companies with dividing the city's electric users among them in violation of federal antitrust laws. Columbia was prevented from obtaining service from PP&L when Portland refused to wheel power over to its facilities. It dropped its suit against PP&L, however, after Portland belatedly began transmitting PP&L power to its casting plant.

Historically, Portland General had competed for customers in the Portland market with PP&L. For many years both utilities had unsuccessfully attempted to gain regulatory approval for an allocation of exclusive service territories within the city. In 1972, however, city officials rejected a plan to displace competition but passed an ordinance designed to eliminate duplicative facilities for aesthetic, safety, and economic reasons. Both utilities then gained the approval of the Oregon Public Utilities Commission for the transfer of the duplicative facilities and associated customer accounts to each other pursuant to the new city ordinance.

Affirming a finding by a lower court that Portland General had violated section 1 of the Sherman Act, the appeals court ruled that the 1972 order by the commission approving the transfer of facilities and accounts between the two utilities was insufficient evidence of a state approved policy displacing competition in the marketplace, as required under the state action immunity doctrine. The court pointed out that the commission had reminded the utilities in its ruling that they "operate under non-exclusive franchises and that the obligation to supply properties within the City must remain binding upon both companies." The appeals court sent the case back to the lower court, however, finding that it may have incorrectly limited the damage award in the case. Columbia Steel Casting Co., Inc. v Portland General Electric Co., Nos. 93-35902, 93-35958, Dec. 27, 1996 (9th Cir.).

Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.