State v. Ray Bell Oil Co.

OPINION

WOOD, Judge.

NMSA 1978, § 57-1-1 (Cum.Supp.1982), part of our Antitrust Act, pertains to restraint of trade. Prohibited restraints of trade may be dealt with in civil or criminal proceedings. NMSA 1978, §§ 57-1-3 and 57-1-6 (Cum.Supp.1982). Defendant was charged with criminal restraint of trade. The charge was in the alternative, that defendant violated either Paragraph A or Paragraph B of § 57-1-1. The trial court granted defendant’s motion to dismiss the Paragraph A charge; the State appealed. The appeal is concerned with the meaning of Paragraphs A and B.

The motion to dismiss was granted after the State “agreed that either alternative charge was based on an alleged conspiracy among competitors to fix the retail price of gasoline.” The trial court concluded: “Where an allegation of fixing prices is the complained of activity * * * the charge must be brought under Section 57-l-l(B) because that subsection specifically refers to conspiracies that control prices whereas Section 57-l-l(A) refers only to conspiracies in restraint of trade.” The trial court misread the statute; we reverse.

A comparison of federal action with New Mexico action aids in understanding the meaning of the New Mexico statute. The Sherman Antitrust Act was enacted in 1890. Section 1 of that Act, see 15 U.S. C.A. § 1 (Supp.1982), reads:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

New Mexico enacted a restraint of trade statute by Laws 1891, ch. 10, § 1. It is compiled as NMSA 1978, § 57-1-1 (orig. pamp.), and reads:

Every contract or combination between individuals, associations or corporations, having for its object or which shall operate to restrict trade or commerce or control the quantity, price or exchange of any article of manufacture or product of the soil or mine, is hereby declared to be illegal.

This 1891 statute did not track the federal statute.

United States v. United States Gypsum Co., 438 U.S. 422, 98 S.Ct. 2864, 57 L.Ed.2d 854 was decided in 1978. Gypsum held:

(a) 15 U.S.C.A. § 1 is not a strict liability statute.

(b) “[I]ntent is a necessary element” of a federal criminal antitrust violation; “criminal offenses defined by the Sherman Act should be construed as including intent as an element.” (Id. 438 U.S. at 443, 98 S.Ct. at 2876.)

By Laws 1979, ch. 374, § 1, § 57-1-1 was amended to its present wording, which is:

A. Every contract, agreement, combination or conspiracy in restraint of trade or commerce, any part of which trade or commerce is within this state, is hereby declared to be unlawful.

B. Every contract, agreement, combination or conspiracy which controls the quantity, price or exchange of any article of manufacture, product of the soil or mine or any goods or services in restraint of trade is hereby declared to be unlawful.

NMSA 1978, § 57-1-15 (Cum.Supp.1982), also enacted in 1979, reads:

Unless otherwise provided in the Antitrust Act [57-1-1 to 57-1-15 NMSA 1978], the Antitrust Act shall be construed in harmony with judicial interpretations of the federal antitrust laws. This construction shall be made to achieve uniform application of the state and federal laws prohibiting restraints of trade and monopolistic practices.

The similarity between 15 U.S.C.A. § 1 and § 57-l-l(A) is obvious. Here the State claims a conspiracy. Both statutes require a conspiracy in restraint of trade.

We look to federal decisions to determine the meaning of “restraint of trade”. Section 57-1-15. A conspiracy to fix prices is a per se restraint of trade. ■This means that the reasonableness of the prices is not an issue. The “rule of reason” does not apply to per se restraints of trade. Compare Elephant Butte Alfalfa Ass’n. v. Rouault, 33 N.M. 136, 262 P. 185 (1926).

United States v. Trenton Potteries, 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700 (1927), explains:

The aim and result of every price-fixing agreement, if effective, is the elimination of one form of competition. The power to fix prices, whether reasonably exercised or not, involves power to control the market and to fix arbitrary and unreasonable prices. The reasonable price fixed today may through economic and business changes become the unreasonable price of tomorrow. Once established, it may be maintained unchanged because of the absence of competition secured by the agreement for a price reasonable when fixed. Agreements which create such potential power may well be held to be in themselves unreasonable or unlawful restraints, without the necessity of minute inquiry whether a particular price is reasonable or unreasonable as fixed and without placing on the government in enforcing the Sherman Law the burden of ascertaining from day to day whether it has become unreasonable through the mere variation of economic conditions. [Id. 273 U.S. at 397, 47 S.Ct. at 379.]

5jt * * * * *

The charge of the trial court * * * fairly submitted to the jury the question whether a price-fixing agreement * * * was entered into by the respondents. Whether the prices actually agreed upon were reasonable or unreasonable was immaterial in the circumstances. * * * [Id. 273 U.S. at 401, 47 S.Ct. at 381.]

United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218, 60 S.Ct. 811, 842, 84 L.Ed. 1129 (1940), states:

[T]his Court has consistently and without deviation adhered to the principle that price-fixing agreements are unlawful per se under the Sherman Act and that no showing of so-called competitive abuses or evils which those agreements were designed to eliminate or alleviate may be interposed as a defense.

Price-fixing agreements, without more, are unreasonable restraints of trade. A crime occurs under 15 U.S.C.A. § 1, and § 57-l-l(A), if there is a conspiracy to fix prices with the requisite intent. The anti-competitive effect—the price fixing—does not have to occur. Gypsum explains:

Our question instead is whether a criminal violation of the antitrust laws requires, in addition to proof of anticompetitive effects, a demonstration that the disputed conduct was undertaken with the “conscious object” of producing such effects, or whether it is sufficient that the conduct is shown to have been undertaken with knowledge that the proscribed effects would most likely follow. While the difference between these formulations is a narrow one, see ALI, Model Penal Code, Comment on § 2.02, p. 125 (Tent. Draft No. 4, 1955), we conclude that action undertaken with knowledge of its probable consequences and having the requisite anticompetitive effects can be a sufficient predicate for a finding of criminal liability under the antitrust laws.²¹ [Id. 438 U.S. at 444, 98 S.Ct. at 2877.]

As to the treatment of intent where anti-competitive effects have been demonstrated, Note, Criminal Intent and the Sherman Act: The Label Per Se Can’t Take Gypsum Away, 32 Hastings L.J. 499 (1980).

It being stipulated that the criminal charge was based on an alleged conspiracy among competitors to fix the retail price of gasoline, the charge was properly under § 57-l-l(A) unless § 57-l-l(B) makes § 57-l-l(A) inapplicable.

Section 57-l-l(B) has no counterpart in the federal statute. It is similar to § 57-1-1(A) in that it applies to a conspiracy in restraint of trade. However, Paragraph B has an additional requirement, a consequence is required—a “conspiracy which controls the quantity, price or exchange of any article of manufacture, product of the soil or mine or any goods or services[.]” This language comes from the New Mexico statute of 1891.

Inasmuch as “control” is not required to violate § 57-l-l(A), see United States v. Socony-Vacuum Oil Co., why was the “control” language carried forward into the amendment enacted in 1979? State v. Gurley, 25 N.M. 233, 180 P. 288 (1919), provides the answer. Gurley, discussing our 1891 Act, states:

In order for the contract to be violative of the statute it must have been one having for its object, or which would operate to restrict trade or commerce, or control the quantity, price, or exchange of the broom corn in question. In 19 R.C:L. p. 115, it is said:

“It is generally agreed that if the necessary effect of the contract or combination is to stifle or directly or necessarily to restrict free competition or lessen it to an unreasonable extent, such contract or combination is under the ban of the law, whatever may have been the intention of the parties.”

This we believe to be generally accepted as a correct statement of the law. [Id. 25 N.M. at 237, 180 P. 288.]

Having followed Gypsum, and its requirement of intent, in enacting § 57-1-1(A), the Legislature enacted § 57-l-l(B) as a no intent crime. Compare State v. Barber, 91 N.M. 764, 581 P.2d 27 (Ct.App. 1978). Where the conspiracy to fix the price of gasoline results in actual control of the price of gasoline, § 57-l-l(B) is violated “whatever may have been the intention of the parties.”

Summarizing:

(a) Section 57-l-l(A) is violated by a conspiracy to fix prices with the requisite intent.

(b) Section 57-l-l(B) is violated by a conspiracy to fix prices if the result is control of the price. No intent is required.

The trial court erred in dismissing the charge under § 57-l-l(A), and in ruling that a conspiracy to control must be prosecuted under § 57-l-l(B). The charges, being in the alternative, were proper in that one crime was charged as having been committed in two ways. See State v. Ortiz, 90 N.M. 319, 563 P.2d 113 (Ct.App.1977); State v. Gurule, 90 N.M. 87, 559 P.2d 1214 (Ct.App.1977). Trial should proceed under the alternative charges. If the State’s proof is insufficient to show that the alleged conspiracy resulted in control of gasoline prices,' the charge under § 57-l-l(B) should not be submitted to the jury.

The order dismissing the charge under § 57-l-l(A) is reversed.

IT IS SO ORDERED.

DONNELLY, J., concurs. LOPEZ, J., dissents.

21 Footnote 21 to Gypsum states:

In so holding, we do not mean to suggest that conduct undertaken with the purpose of producing anticompetitive effects would not also support criminal liability, even if such effects did not come to pass. Cf. United States v. Griffith, 334 U.S. 100, 105 [68 S.Ct. 941, 944, 92 L.Ed. 1236] (1948). We hold only that this elevated standard of intent need not be established in eases where anticompetitive effects have been demonstrated; instead, proof that the defendant’s conduct was undertaken with knowledge of its probable consequences will satisfy the Government’s burden. [Id. 438 U.S. at 444, 98 S.Ct. at 2877.]