1. Describe the competitors in the Utah Pie frozen pie market.

2. Is it significant that the national competitors were selling their pies at different prices in Utah?

3. Does it matter that the size of the pie market (i.e., number of pies sold) increased during the period examined?

Utah Pie Company is a Utah corporation that for 30 years has been baking pies in its plant in Salt Lake City and selling them in Utah and surrounding states. It entered the frozen pie business in 1957 and was immediately successful with its new line of frozen dessert pies—apple, cherry, boysenberry, peach, pumpkin, and mince.

Continental Baking Company, Pet Milk, and Carnation, all based in California, entered the pie market in Utah. When these companies entered the Utah market, a price war began. In 1958 Utah Pie was selling pies for $4.15 per dozen. By 1961, as all the pie companies competed, it was selling the same pies for $2.75 per dozen. Continental’s price went from $5.00 per dozen in 1958 to $2.85 in 1961. Pet’s prices went from $4.92 per dozen to $3.46, and Carnation’s from $4.82 per dozen to $3.30. Utah Pie filed suit, charging price discrimination. The district court found for Utah Pie. The Court of Appeals reversed, and Utah Pie appealed.

JUDICIAL OPINION

WHITE, J…. We deal first with petitioner’s case against the Pet Milk Company…. Pet’s initial emphasis was on quality, but in the face of competition from regional and local companies and in an expanding market where price proved to be a crucial factor, Pet was forced to take steps to reduce the price of its pies to the ultimate consumer. These developments had consequences in the Salt Lake City market which are the substance of petitioner’s case against Pet.

First, Pet successfully concluded an arrangement with Safeway, which is one of the three largest customers for frozen pies in the Salt Lake market, whereby it would sell frozen pies to Safeway under the latter’s own “Bel-air” label at a price significantly lower than it was selling its comparable “Pet-Ritz” brand in the same Salt Lake market and elsewhere….

Second, it introduced a 20-ounce economy pie under the “Swiss Miss” label and began selling the new pie in the Salt Lake market in August 1960 at prices ranging from $3.25 to $3.30 for the remainder of the period. This pie was at times sold at a lower price in the Salt Lake City market than it was sold in other markets. Third, Pet became more competitive with respect to the prices for its “Pet-Ritz” proprietary label…. According to the Court of Appeals, in seven of the 44 months Pet’s prices in Salt Lake were lower than prices charged in the California markets. This was true although selling in Salt Lake involved a 30- to 35-cent freight cost.

The Court of Appeals almost entirely ignored other evidence which provides material support of the jury’s conclusion that Pet’s behavior satisfied the statutory test regarding competitive injury. This evidence bore on the issue of Pet’s predatory intent to injure Utah Pie. As an initial matter, the jury could have concluded that Pet’s discriminatory pricing was aimed at Utah Pie; Pet’s own management, as early as 1959, identified Utah Pie as an “unfavorable factor,” one which “d[u]g holes in our operation” and posed a constant “check” on Pet’s performance in the Salt Lake City market.

Moreover, Pet candidly admitted that during the period when it was establishing its relationship with Safeway, it sent into Utah Pie’s plant an industrial spy to seek information that would be of use to Pet in convincing Safeway that Utah Pie was not worthy of its customers…. Finally, Pet does not deny that the evidence showed it suffered substantial losses on its frozen pie sales during the greater part of time involved in this suit, and there was evidence from which the jury could have concluded that the losses Pet sustained in Salt Lake City were greater than those incurred elsewhere. It would not have been an irrational step if the…………………….