In this suit, Consolidated Metal Products, Inc., a manufacturer of oil well equipment, contends that the American Petroleum Institute ("API"), a trade association representing all sectors of the domestic petroleum industry, delayed trade standard certification to certain equipment manufactured by Consolidated and thereby excluded it from the market in violation of section 1 of the Sherman Act. 15 U.S.C. Sec. 1. After a thorough review of the evidence, the district court granted summary judgment for API. Although Consolidated offered evidence that API had no basis to conclude that its equipment would not perform up to trade standards, the district court found this insufficient to raise a genuine issue of fact material to whether the delay was a conspiracy in restraint of trade. Consolidated appeals.

The principal question in this case is whether unjustified denial of a valuable product certification by a standard-setting body, without more, violates section 1 of the Sherman Act. We hold that it does not and affirm the judgment of the district court.

Sucker rods are part of the equipment used to pump oil from wells having low natural pressure. A pump jack at the surface imparts an up-and-down motion to a sucker rod string that extends through the tubing of the well to a pump submerged in the fluid of the well. Each sucker rod is 25 to 30 feet long, 1/2 to 1 1/8 inches in diameter, and has coupler heads on each end. The heads allow the rods to be strung together inside the tubing until they reach the submerged pump.

Conventional sucker rods are manufactured of a single piece of steel. First, steel is forged into a shaft. Then, the ends of the shaft are hot-forged into coupler heads, making a one-piece sucker rod.

In 1980, when domestic oil production and the demand for sucker rods were at record levels, Consolidated developed an innovative method for manufacturing the rods. Using its patented high-strength steel, Consolidated manufactured the rods in three individual pieces: the steel shaft and two threaded coupler heads. Consolidated then roll-threaded the coupler heads onto the steel shaft. Because this process eliminated the costly hot-forging required by the conventional design, Consolidated's rods were cheaper to produce than conventional rods. Consolidated began marketing its rods in 1981, and that year sold nearly 12 million feet of them--a substantial amount.

In addition to its various other activities, API is the only domestic body that sets standards for oil field equipment. Equipment manufacturers may apply to API for approval of their products and, if API finds that the equipment meets its standards, it will (for an annual fee) grant a license to display the API monogram on the equipment. The monogram is a registered trademark of API. By using it, the licensee warrants to purchasers that the monogrammed product complies with API specifications. The API monogram has commercial value in that its use enhances product sales.

API has been setting standards for, and approving, sucker rods since at least 1927. API approval of products is not, however, required by any law and oil field equipment, including sucker rods, is sold without it.

Consolidated had been selling sucker rods without the API monogram for some time when, after several initial inquiries, it formally applied to API for approval of its innovative rod design on June 1, 1981. Around the same time, other manufacturers who had been marketing unconventional sucker rods also applied for API approval. These other new rods included a threepiece design in which the coupler heads were welded, rather than roll-threaded, onto the steel shaft.

J.M. Spanhel of the API production department staff was authorized to grant or deny sucker rod manufacturers the license to use the API monogram.1 Spanhel was familiar with the three-piece threaded design from Consolidated's earlier inquiries with API. He told Consolidated that he thought its design was not contemplated by API's sucker rod specifications, contained in API Spec. 11B,2 but nonetheless arranged for Consolidated to make presentations to API's sucker rod standards committee.

The sucker rod standards committee referred the applications of Consolidated and the other three-piece rod manufacturers to the manufacturer subcommittee. After hearing presentations by the applicants, the manufacturer subcommittee deferred all action to the user subcommittee. The user subcommittee met on June 24, 1981 to consider the various applications and heard presentations by several sucker rod manufacturers, including Consolidated. Spanhel asked the user subcommittee to determine how the requirements of Spec. 11B should be applied to Consolidated's rod. The minutes of that meeting state:

The User Subcomittee unanimously agreed that there is no current justification for the appointment of a task group to investigate the writing of specifications for sucker rods which do not meet the current [Spec.] 11B specifications. This Subcommittee encourages all potential manufacturers to continue to develop new products. This Subcommittee has concurred that sucker rods can be welded in a manner that meets the current [Spec.] 11B specifications. This Subcommittee believes that Consolidated Metal's sucker rods do not meet 11B specifications because of tensile strength characteristics.

At this point API and Consolidated began their long and heated dispute over whether Spec. 11B did or did not "cover" Consolidated's three-piece threaded design and whether the user subcommittee made any determination on the matter. API contends that the user subcommittee's interest in tensile strength in part reflects a concern with the strength of the threaded joint between the shaft and heads in Consolidated's design, a concern Spanhel also held. In any event, API contends, Spanhel understood the user subcommittee's ruling, reasonably, as either rejecting or tabling Consolidated's application for product approval. Accordingly, API contends, Spanhel's own judgment in the matter was confirmed and he justifiably refused to grant Consolidated's application for the monogram.

Consolidated, on the other hand, contends that Spec. 11B "covered" its design because it did not specifically exclude threaded-on coupler heads. Consolidated also insists that the user subcommittee's concern with tensile strength could be addressed merely by changing the type of steel in the rod and had nothing to do with the threaded joints. Spanhel, Consolidated contends, should have known this and could not reasonably have understood the user committee's statements as accepting any delay in API approval of Consolidated's rod.

On several occasions during the three months after the June 1981 standards meeting, Consolidated and API discussed the possible approval of Consolidated's rods. Consolidated continued to press for approval, insisting that Spec. 11B "did not exclude" its design, and Spanhel, for API, continued to insist upon more time to study the performance of the three-piece threaded rod. In September 1981, after Consolidated threatened to sue, API set up a standards subcommittee to consider revising Spec. 11B to incorporate the three-piece threaded design. The discussions between Consolidated continued unchanged in both acrimony and substance. API completed and approved specifications for three-piece threaded rods on January 14, 1983 and formally licensed use of its monogram on Consolidated's rod on April 15, 1983.

Seven days later, on April 22, 1983, Consolidated filed the complaint in this case, alleging a conspiracy between Continental Emsco, Inc., Dover Corporation (both established manufacturers of conventional sucker rods), API, and several unnamed co-conspirators. All were listed as defendants. Consolidated's complaint, the defendants' responses, and two years of discovery have focussed on whether it was "reasonable" for API to delay Consolidated a monogram license from June 1981 to April 1983. The district court granted summary judgment in favor of all the defendants. Consolidated appeals only the judgment for API.

Rule 56(c) of the Federal Rules of Civil Procedure permits summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that the moving party is entitled to a judgment as a matter of law". Rule 56(e) provides:

When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but ... must set forth specific facts showing that there is a genuine issue for trial.

Only disputes over material facts, facts that might affect the outcome of the lawsuit under the governing substantive law, will preclude summary judgment.3

It is true that summary judgment is less common in antitrust cases than in other cases, but this is not because different rules apply to those cases.4 Rather, it is because the relevant factual disputes in antitrust cases are typically more complicated that those in other cases.5 Accordingly, it is typically more difficult for the trial court to resolve all doubt about the merits of an antitrust claim on the basis of the written, pre-trial record alone.6 But this is certainly not always so.

In Matsushita Electric Industrial Co. v. Zenith Radio Corp., the Supreme Court upheld a summary judgment against the plaintiffs on their claim under section 1 of the Sherman Act, stating:

To survive [the defendants'] motion for summary judgment, [the plaintiffs] must establish that there is a genuine issue of material fact as to whether [the defendants] entered into an illegal conspiracy that caused [the plaintiffs] to suffer a cognizable injury.... This showing has two components. First, [the plaintiffs] must show more than a conspiracy in violation of the antitrust laws; they must show an injury to them resulting from illegal conduct.

* * *

Second, the issue of fact must be "genuine." Fed.R.Civ.Pro. 56(c), (e).... When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.7

Thus, when defending its antitrust claim against summary judgment, Consolidated faces the same hurdle as the plaintiff in any other cause of action: it "must come forward with 'specific facts showing that there is a genuine issue for trial ' ".8

As required when reviewing a grant of summary judgment, we view the written record in the light most favorable to Consolidated, the party opposing the motion, when deciding if a genuine issue of material fact exists.9 We conclude that, viewed in any light, the record in this antitrust case presents no basis for a trial.

Section 1 of the Sherman Act states: "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". But as the Supreme Court observed in Northwest Wholesale Stationers, Inc. v. Pacific Stationary and Printing Co.,

[E]very commercial agreement restrains trade. Whether this action violates Sec. 1 of the Sherman Act depends on whether it is adjudged an unreasonable restraint.10

To prove an "unreasonable" restraint, Consolidated may proceed along two avenues of proof. "The rule of reason" requires Consolidated to show that API's product approval program is a conspiracy to produce an anticompetitive effect on the relevant market. "The per se rule" requires Consolidated to show that API's product approval program is conduct presumed to have such an anticompetitive effect.

We address first the per se rule and its scope. In Northwest Wholesale Stationers, the Supreme Court stated that section 1 claims should be subject to rule of reason analysis

unless the challenged action falls into the category of "agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use." Northern Pacific R. Co. v. United States, 356 U.S. 1, 5, 78 S. Ct. 514, 518, 2 L. Ed. 2d 545 (1958).

... The decision to apply the per se rule turns on "whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output ... or instead one designed to 'increase economic efficiency and render markets more, rather than less, competitive.' " Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 19-20, 99 S. Ct. 1551, 1562, 60 L. Ed. 2d 1 (1979).11

The Court termed this, mildly, "an area of antitrust law that has not been free of confusion".12

There must be principled limits on the per se rule. The Supreme Court has long recognized that "concerted refusals to deal or group boycotts" should be condemned as per se violations.13 Nonetheless, because a per se ruling declares illegal an entire class of business practices on the basis of only attenuated inquiry into the economic consequences, the Court has also long cautioned against its overzealous use.14 As the Eighth Circuit observed,

The term "group boycott" ... is in reality a very broad label for divergent types of concerted activity. To outlaw certain types of business conduct merely by attaching the "group boycott" and "per se " labels obviously invites the chance that certain types of reasonable concerted activity will be proscribed.15

Recently, in FTC v. Indiana Federation of Dentists, the Court again cautioned against resolving section 1 cases "by forcing the [defendant's] policy into the 'boycott' pigeonhole", especially when it would "extend per se analysis to restraints imposed in the context of business relationships where the economic impact ... is not immediately obvious".16

As Northwest Wholesale Stationers explained, to state a per se violation, "[t]he mere allegation of a concerted refusal to deal does not suffice because not all concerted refusals to deal are predominantly anticompetitive".17 The Court emphasized that the denial of necessary business relations is crucial to per se illegality:

Cases to which this Court has applied the per se approach have generally involved joint efforts by a firm or firms to disadvantage competitors by "either directly denying or persuading or coercing suppliers or customers to deny relationships the competitors need in the competitive struggle." Sullivan, [Law of Antitrust] at 261-62. See, e.g. Silver [v. New York Stock Exchange, 373 U.S. 341, 83 S. Ct. 1246, 10 L. Ed. 2d 389 (1963) ] (denial of necessary access to exchange members); Radiant Burners Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 [81 S. Ct. 365, 5 L. Ed. 2d 358] (1961) (denial of necessary certification of product); Associated Press v. United States, 326 U.S. 1 [65 S. Ct. 1416, 89 L. Ed. 2013] (1945) (denial of important sources of news); Klor's Inc. [v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S. Ct. 705, 3 L. Ed. 2d 741 (1959) ] (denial of wholesale supplies). In these cases, the boycott often cut off access to a supply, facility, or market necessary to enable the boycotted firm to compete, Silver, supra; Radiant Burners, Inc., supra, and frequently the boycotting firms possessed a dominant position in the relevant market. E.g., Silver, supra; Associated Press, supra; Fashion Originators' Guild of America, Inc. v. FTC, 312 U.S. 457 [61 S. Ct. 703, 85 L. Ed. 949] (1941). See generally Brodley, Joint Ventures and Antitrust Policy, 95 Harv.L.Rev. 1523, 1533, 1563-65 (1977).18

Similarly, in E.A. McQuade Tours, Inc. v. Consolidated Air Tour Manual Committee, this court engaged in a lengthy analysis of the same cases and concluded that the per se rule applied only "[w]here exclusionary or coercive conduct has been present."19

Consolidated offers no evidence, when viewed in the light of these cases, that merits treating API's product approval program as a "group boycott", per se illegal under section 1.20 In the various cases discussed in Northwest Wholesale Stationers and E.A. McQuade Tours, the touchstone of per se illegality is that the customers or suppliers of the plaintiff had, as a group, agreed or been forced to cease doing business with the plaintiff.21 In this case, Consolidated complains of lost sales but fails to allege that sucker rod users are in some way constrained from buying its products. Indeed, Consolidated admits that, before the demand for domestically-produced oil fell, it was able to sell a substantial amount of its rods.

We hold that a trade association that evaluates products and issues opinions, without constraining others to follow its recommendations, does not per se violate section 1 when, for whatever reason, it fails to evaluate a product favorably to the manufacturer.22 Here, denial of API certification in no real sense "excludes" Consolidated from the market: without certification, Consolidated admits that it is still free to sell its products and consumers are free to buy them.23 In no real sense is the monogram "necessary" to the sale of sucker rods: Consolidated does not allege that consumers are somehow unable to use its rods as they would API-monogrammed rods.24 Thus, Consolidated offers no evidence of a per se violation of section 1.

Neither does Consolidated present a factual dispute material to proving a section 1 violation under the rule of reason. As this court said in Northwest Power Products v. Omark Industries, "[t]o prove an antitrust violation under the rule of reason ... [a plaintiff] must show the defendant's conduct adversely affected competition".25 That is, the rule of reason requires plaintiffs to show that the defendants' actions amounted to a conspiracy against the market--a concerted attempt to reduce output and drive up prices or otherwise reduce consumer welfare.26 Under the rule of reason, the antitrust laws protect competition, not particular competitors.27 In addition, the absence of procedural safeguards in the process of making business decisions "can in no sense determine the antitrust analysis".28

Accordingly, a showing that the defendants harmed the plaintiffs is not enough to prove a violation of section 1 under the rule of reason. It is a natural part of a competitive market that products, firms, and--sometimes--entire sectors of the economy fail. A plaintiff does not have a claim under the rule of reason simply because others refuse to promote, approve, or buy its products.

The plaintiff's contentions in this case, however, amount to little more than this. It is undisputed that API approval has commercial value and that API took two years to approve Consolidated's product. What is more important in this case is what Consolidated fails to assert. It does not allege that API somehow coerces users to buy only monogrammed rods, it provides little concrete information about "the sucker rod market", and it no longer contends that there was an anticompetitive conspiracy between its competitors and API. Consolidated asserts only that because API is a trade association, it is a "walking conspiracy" and then contends, at bottom, that because the monogram has great value, Consolidated is entitled to a trial on the question whether API was justified in taking two years to approve its product.

We disagree. Under the rule of reason, the plaintiff must establish two elements basic to an anticompetitive conspiracy: (1) that the defendant engaged in some form of joint action and (2) that this joint action amounted to an unreasonable restraint of trade.29 Although Consolidated may be able to show that the delay in API approval of its product was unjustified, this does not, by itself, present a genuine dispute over either of these elements necessary to its section 1 claim.

1. Proof of a conspiracy. Consolidated offers no evidence tending to show a conspiracy. API, the sole defendant on appeal, concedes that it is a trade association and is the only domestic standard-setting body for oil well equipment. A trade association by its nature involves collective action by competitors. Nonetheless, a trade association is not by its nature a "WALKING CONSPIRACY", ITS EVERY DENIAL OF some benefit amounting to an unreasonable restraint of trade.30 In particular, it has long been recognized that the establishment and monitoring of trade standards is a legitimate and beneficial function of trade associations.31

To survive summary judgment on the issue of conspiracy, the plaintiff must present evidence that tends to exclude both the possibility of conduct consistent with permissible competition and the possibility that the alleged conspirators acted independently.32 API's delay in licensing its monogram to Consolidated, even if hindsight shows it to be unjustified, is not enough in itself to fall within the forbidden category. It is axiomatic that trade standards must exclude some things as substandard33 and it is unsurprising that standard-setting bodies sometimes err. A single such error does not amount to a conspiracy.

Consolidated offers no evidence that API's product approval program is merely a ploy to obscure a conspiracy against competing producers. On its face, Spec. 11B is, in the language of Radiant Burners, both "reasonable" and "objective".34 It contains requirements for the strength and durability of the steel used and requirements for standard dimensions and threads on the coupler heads. These requirements reflect a sensible concern for the users of the equipment. Further, Spec. 11B explains these requirements with diagrams and engineering specifications that are neither vague, judgmental, nor imprecise. In short, nothing about Spec. 11B suggests that it is a sham.

2. Unlawful purpose as proof of unreasonable restraint. Even if Consolidated could show a conspiracy, it fails to offer any evidence of an unreasonable restraint of trade. Under section 1, an unreasonable restraint of trade "may be established by proof of either an unlawful purpose or an anticompetitive effect".35

Other than the possible lack of justification for the delay, Consolidated offers scant evidence suggesting an unlawful purpose behind API actions. The evidence suggests that in processing Consolidated's application for the monogram, API followed its normal procedure for analysis of a new product. Although the user subcommittee's initial verdict on Consolidated's application does not make clear how the three-piece threaded rod could be made to comply with API standards, it did not foreclose the possibility.36 There are no indications that approval was delayed in bad faith.37 Indeed, that API certified the three-piece welded rod design at the same time it passed over Consolidated's three-piece threaded design suggests the absence of any desire to suppress innovative products.

Moreover, API's user committee, which found that Consolidated's rod design did not meet Spec. 11B, is composed not of Consolidated's competitors but of buyers of sucker rods--businesses who could have no motive for driving Consolidated from the market.38 Although it is at least conceivable that the API staff in charge of licensing the monogram might have been influenced by competing manufacturers to drive Consolidated from the market,39 Consolidated presents no evidence suggesting this possibility. The evidence in the written record suggests nothing more than a technical debate among engineers.40

3. Anticompetitive effect as proof of unreasonable restraint. Neither does Consolidated offer evidence that could show that API's actions had an anticompetitive effect. There is no dispute that the API monogram is very important to buyer acceptance of sucker rods.41 But this alone is not enough to prove that denial of API certification amounts to a restraint of trade barred by section 1.42

As we have said, Consolidated offers no evidence that its customers were coerced by API or otherwise constrained to buy only monogrammed products.43 Absent evidence of coercion, there is no reason to assume that buyers do not rely voluntarily on the API monogram. Product information is crucial to a competitive market.44 Consumers seek it out, for example, by reading Consumer Reports, or relying upon the Good Housekeeping and Underwriters Laboratories seals of approval. This information saves buyers the trouble of investigating products themselves and the risk of trying untested products. API product approval may be important to user acceptance of new sucker rods just as a favorable review in Consumer Reports magazine, the "Good Housekeeping Seal of Approval", and the seal of the Underwriters Laboratories are important to buyer acceptance of new consumer goods.45 Even if user reliance gives API significant influence over the market, that influence may enhance, not reduce, competition and consumer welfare.46

Although there is some danger that API could use its influence to reduce competition, this danger is small so long as users rely voluntarily upon the API monogram.47 If users choose freely to rely on API approval, API has influence principally because it has done a good job evaluating products. If API fails to evaluate products accurately, consumers free to sample non-monogrammed goods will gradually discover the monogram's diminished usefulness and cease relying upon it. Thus, the greatest threat to competition is in the short run, before a significant number of buyers shop around. Even this threat is mitigated to the extent that producers of unmonogrammed equipment have alternative means of reassuring consumers of the quality of their products. They may, for example, offer warranties, commission product tests by someone other than API, provide free (or low-cost) samples of their product, and advertise.48

Here, however, Consolidated had no trouble gaining acceptance of its product even in the short run; it was able to sell substantial amounts of its rods as soon as production began. Consolidated's problem is better characterized as difficulty retaining its business when overall demand for rods slackened. We do not know if Consolidated lost a greater proportion of its sales during the decline of domestic oil production than other sucker rod producers. But even if it did, absent evidence of anticompetitive animus or buyer coercion by API, there is no reason to believe that it was due to anything other than customer dissatisfaction.49

In sum, it is not enough to meet the plaintiff's burden under the rule of reason that the plaintiff was harmed because the defendant refused without justification to promote, approve, or buy the plaintiff's product. Neither anticompetitive animus nor the other elements of a section 1 claim can be inferred solely from the incorrectness of a single business decision by a standard-setting trade association. The "reasonableness" of a restraint is judged by its general effect on the market, not by the circumstances of a particular application. An individual business decision that is negligent or based on insufficient facts or illogical conclusions is not a sound basis for antitrust liability.50

Were this not so, the federal courts would become boards of automatic review for trade association standards committees, product testing services, and countless other business transactions. Not only would this tax the abilities of the federal courts, but fear of treble damages and judicial second-guessing would discourage the establishment of useful industry standards.51 Under such a regime, the antitrust laws would stifle, not protect, the competitive market.

Because Consolidated presents no genuine dispute of facts material to its section 1 claim under either the rule of reason or the per se rule, the judgment of the district court is AFFIRMED.