Amicus Brief Urges Third Circuit to Correct Misinterpretation of Clayton Act Provision on Exclusive Dealing

Brief Concerning Reading Hospital v. Hill-Rom Holdings Argues Court Must Restore Distinct and Stronger Clayton Act Standard to Protect Fair Competition 

Washington, DC — The Open Markets Institute today filed an amicus brief in the U.S. Court of Appeals for the Third Circuit in support of the plaintiffs in Reading Hospital v. Hill-Rom Holdings. The case concerns the monopolistic manufacturer of hospital beds, Hill-Rom, using exclusive dealing with health systems like Reading Hospital to perpetuate its dominance. The OMI brief urges the court to correct a serious doctrinal error that has weakened enforcement of the Clayton Act, which Congress expressly enacted to rein in the use of exclusive dealing by dominant firms. 

Congress enacted the Clayton Act precisely because the Sherman Act was not strong enough. Specifically, Section 3 of the Clayton Act was designed to stop exclusive dealing in its incipiency—before the practice ripens into illegal monopolization. Representative Webb, the floor manager of the bill that became the Clayton Act, declared, “we are not aiming at monopoly per se in this section, but at a contract or contracts which lead to monopoly. Monopoly is covered by the Sherman law, and we are trying to prevent those contracts which build up and lead to such monopoly.” 

The brief emphasizes that Supreme Court precedent is clear: the Clayton Act imposes a broader and more protective standard than the Sherman Act. Under Section 3 of the Clayton Act, exclusive dealing is unlawful where it substantially forecloses a market. That distinction, OMI argues, was improperly erased by a 2012 Third Circuit decision that applied the same monopolist-friendly rule of reason to both Clayton and Sherman Act claims. 

OMI argued that this decision flatly contradicts decades of a series of Supreme Court rulings. In decisions like Standard Fashion, Standard Oil, and Tampa Electric, the Court made clear that Section 3 prohibits a larger set of exclusive arrangements than the Sherman Act does and accordingly adopted and affirmed the substantial foreclosure test. 

In this case, the plaintiffs plausibly alleged substantial foreclosure—long recognized as the proper test under Section 3 by the Supreme Court. Indeed, the plaintiffs’ baseline foreclosure of 20% is sufficient to establish liability under older Third Circuit precedent. Dismissing the case at the pleading stage, the brief says, conflicts with both antitrust law and modern pleading standards. 

Finally, the brief urges the Court to use this case as an opportunity to realign Third Circuit doctrine with binding Supreme Court precedent. This appeal presents a clear chance to restore the Clayton Act to its intended role as a frontline defense against unfair competitive practices. Doing so is essential to protecting competition, especially in critical healthcare markets where exclusivity can raise costs and limit choice. 

The Open Markets Institute thanks Jason Rathod of Migliaccio & Rathod LLP for serving as local counsel on this brief. 

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The Open Markets Institute is a transatlantic team of journalists, researchers, lawyers, economists, and advocates working together to expose and reverse the stranglehold that corporate monopolies have on society. Learn more at www.openmarketsinstitute.org.