Cleveland Thermal Electric Company v. Cleveland Electric Illuminating

Cleveland Thermal Electric Company (CTEC) purchased a district steam heating system from Cleveland Electric Illuminating (CEI) under an agreement that if CTEC subsequently built a co-generator that produced both electricity and steam, it would be required to offer to sell electricity to CEI at CEI's avoided costs. Several years later, CTEC alleged that this provision of the Non-Competition Agreement (NCA) violated Section 1 of the Sherman Act and was therefore invalid and unenforceable. CTEC sued for lost profits. Analysis Group Managing Principal Rodney Frame prepared an expert report for CEI responding to these anticompetitive claims. According to Mr. Frame, "a central flaw in CTEC's argument is its premise that but for the NCA, it could have sold electricity at a price that exceeded CEI's avoided costs." CEI's avoided costs should in fact approximate market price, and Mr. Frame concluded, therefore, that the NCA had not harmed CTEC. The case was settled by the parties prior to trial.