United States Gypsum Company V. Indiana Gas Company

Indiana Gas Co. and Citizens Gas & Coke, two utilities that supply natural gas to customers in Indiana, formed a joint venture (called ProLiance Energy) to manage the contracts by which they purchase gas and transportation services from the interstate pipelines that pass through that state. United States Gypsum (USG) purchases substantial quantities of gas for use in manufacturing; it buys gas at the wellhead and deals directly with the pipelines for transportation. In this litigation under sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, USG contends that ProLiance is an unlawful combination that by contract controls a substantial fraction of the transport capacity between the gas fields and Indiana, and that it has used this market power to monopolize. Even though USG buys transportation directly from the pipelines, it alleges, the price the pipelines can charge for their services depends on what ProLiance has done with its portion of the capacity. According to USG, pipelines have been able to charge more for their residual capacity because of ProLiance's existence (and practices) than the pipelines would have been able to charge in its absence.