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OVITRON CORP. v. GMC

January 28, 1969

Ovitron Corp., Plaintiff
v.
General Motors Corp., Defendant


Bryan, District Judge.


The opinion of the court was delivered by: BRYAN

BRYAN, District Judge:

Defendant in this action was the low bidder on and was awarded a United States Army contract for a large quantity of squad radios, a lightweight portable radio, the receiver of which can be attached to the standard military helmet. Plaintiff was the second lowest bidder on this contract.

 Plaintiff charges in substance that defendant purposefully monopolized the market in squad radios by knowingly and intentionally bidding below cost and thus excluded plaintiff from this market. The amended complaint sounds in three counts, the first for alleged violations of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2; the second for common law unfair competition; and the third for alleged violation of the Indiana Acts against combinations and monopolies. Defendant's answer in substance denies any wrongdoing or liability.

 Defendant has moved for summary judgment pursuant to Rule 56, F.R.C.P. Defendant's papers in support of its motion do not materially change the factual picture presented in the amended complaint. The question here is, basically, whether the amended complaint alleges a claim for relief and if so whether there are material issues of fact which require a trial.

 In 1962 Delco Radio (Delco), a division of defendant General Motors Corp., was one of a number of manufacturers invited by the Army to submit bids for the design and development of a squad radio. Delco was awarded the "Development Contract" on the basis of its total submission, although it was not the lowest bidder.

 In 1964, 1965 and 1966 contracts for small quantities of squad radios were negotiated between Delco and the Army. Then in June, 1966, Delco contracted to supply the Army with over 5,000 transmitters and receivers, at a negotiated price.

 On November 14, 1966, the Army invited competitive bids on squad radios. Bidders were asked to submit bids for 3,200 radios for a single year or alternatively for 28,811 radios on a multi-year basis. Quite naturally, the bids per squad radio submitted by most of the sixteen bidders were lower under the multi-year proposal than under the single year alternative.

 Delco's bid of $273.10 for each squad radio under the single year alternative and $169.75 under the multi-year alternative was the lowest. It is plaintiff's contention that this bid was below defendant's cost. Defendant has not seriously attempted to controvert this contention on the present motion, but does not, other than for the purposes of the motion, concede this to be the fact. Accordingly, for present purposes only, it will be assumed that defendant's bid was below cost.

 In any case, the Army Contracting Officer recommended to the Board of Award of the United States Army Electronics Command that Delco be awarded the contract. This recommendation was followed and Delco was given the award on the basis of its multi-year offer. The 28,811 radios were to be delivered over a three year period between February 1968 and January 1971.

 Plaintiff was the second lowest bidder with bids of $279.40 under the single year and $211.61 under the multi-year alternatives.

 Subsequent to the award of this contract, the Army negotiated two additional contracts with Delco for 7,821 and 5,010 squad radios at a price of $279 each, *fn1" to meet urgent Army needs. Apparently, certified cost and pricing data was submitted to the Army by Delco during the course of these negotiations.

 The nub of plaintiff's claim is that Delco wilfully and intentionally bid below cost on the competitive squad radio contract, with the object and purpose of obtaining a monopoly in the market for this unique product and succeeded in so doing. Plaintiff charges that Delco's conduct was in violation of Section 2 of the Sherman Act.

 The claim based on a conspiracy theory under Section 1 of the Sherman Act, alleged in the amended complaint, is not presently pressed.

 Bearing in mind the Supreme Court's admonition in Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 7 L. Ed. 2d 458, 82 S. Ct. 486 (1962), that "summary procedures should be used sparingly in complex antitrust litigation", I turn to the merits. See also South Carolina ...


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