A case potentially being heard by the U.S. Supreme Court this term could decide the future of Duke Energy’s business practices. “Duke Energy v. NTE Carolinas”, which involves the company’s operations in Fayetteville, N.C., the sixth-largest city in the state. The case is awaiting input from the U.S. Solicitor General before it proceeds to the U.S. Supreme Court.
NTE Carolinas first sued Duke Energy in 2019, alleging that Duke Energy has monopoly power over North Carolina’s energy market and has practiced anticompetitive conduct to maintain that power.
Duke Energy is one of the largest domestic energy companies in the U.S., serving almost 8 million customers and dominating the energy market in the Carolinas. NTE Carolinas is a Florida-based company that builds and operates power plants, but relies on the transmission lines of other companies, like Duke Energy, to get electricity to customers.
The case centers around whether Duke Energy prevented NTE from negotiating with the city of Fayetteville by offering immense discounts and disrupting the construction of a new power plant that NTE was building amid the contract negotiations. The North Carolina Western District Court ruled in favor of Duke Energy in 2022, finding it did not engage in anticompetitive behavior.
The 4th U.S. Circuit Court of Appeals reversed this decision, finding the district court did not consider the whole of Duke’s conduct and there were genuine disputes over its actions. The court sent the case back to the district court level for further arguments.
Duke Energy has petitioned the Supreme Court to review the decision, saying the legal theory the appeals court used in its decision is outdated and legally incorrect. The dispute centers around the ‘monopoly broth’ theory, which “permits the aggregation of independently lawful business practices into a single antitrust violation.”
“If an antitrust plaintiff pleads a series of independently lawful acts, each of which does not violate this Court’s precedents, those acts cannot together add up to some nebulous antitrust violation,” Duke’s lawyers wrote. “The court of appeals concluded otherwise, embracing a ‘monopoly broth’ theory prominent in the 1960s to 1980s but long since discarded.”
Lawyers for NTE Carolinas argued that anticompetitive behavior can’t always be neatly labeled, and a reasonable jury would look at the sum of all their actions as anticompetitive.
“Because this Court’s specific tests for common types of monopolistic conduct do not cover all the ‘many different forms’ of anticompetitive conduct, which ‘cannot always be categorized,’ the court below also considered Duke’s course of conduct ‘as a whole’ and found that a reasonable jury could find it anti-competitive,” NTE Carolinas’ lawyers wrote.
Kent Chandler and Joshua Macey wrote in Bloomberg Law the importance of this case and called for the government to pursue more of these antitrust cases in the future.
“Federal regulators should follow the Fourth Circuit’s lead and do more to prevent monopolies from maintaining their position through non-economic, anticompetitive conduct,” they said. “Until they do, electric bills across the country will be unnecessarily high, and existing monopolists will keep new resources out of the market.
The Court is considering taking up the case but is awaiting input from the U.S. Solicitor General before deciding to formally hear arguments in it. Now that the Court’s October term has begun, the decision to hear the case could come soon. If it does not decide to take the case, the case will be sent back down to the district court.
