WEYERHAEUSER CO. v. ROSS-SIMMONS HARD- WOOD LUMBER CO., INC.

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Syllabus
WEYERHAEUSER CO. v. ROSS-SIMMONS HARD-
WOOD LUMBER CO., INC.
certiorari to the united states court of appeals for
the ninth circuit
No. 05–381. Argued November 28, 2006—Decided February 20, 2007
Respondent Ross-Simmons, a sawmill, filed suit under § 2 of the Sherman
Act, alleging that petitioner Weyerhaeuser drove it out of business by
bidding up the price of sawlogs to a level that prevented Ross-Simmons
from being profitable. The District Court, inter alia, rejected Weyer
haeuser’s proposed predatory-bidding jury instructions that incorpo
rated elements of the test applied to predatory-pricing claims in Brooke
Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U. S. 209. The
jury returned a verdict against Weyerhaeuser. The Ninth Circuit af
firmed, rejecting Weyerhaeuser’s argument that Brooke Group’s stand
ard should apply to predatory-bidding claims.
Held: The test this Court applied to predatory-pricing claims in Brooke
Group also applies to predatory-bidding claims. Pp. 318–326.
(a) Predatory pricing is a scheme in which the predator reduces the
sale price of its product hoping to drive competitors out of business and,
once competition has been vanquished, raises prices to a supracompeti
tive level. Brooke Group established two prerequisites to recovery on
a predatory-pricing claim: First, a plaintiff must show that the prices
complained of are below cost, 509 U. S., at 222, because allowing recov
ery for above-cost price cutting could chill conduct—price cutting—that
directly benefits consumers. Second, a plaintiff must show that the al
leged predator had “a dangerous probabilit[y] of recouping its invest
ment in below-cost pric[ing],” id., at 224, because without such a proba
bility, it is highly unlikely that a firm would engage in predatory pricing.
The costs of erroneous findings of predatory-pricing liability are quite
high because “ ‘[t]he mechanism by which a firm engages in predatory
pricing—lowering prices—is the same mechanism by which a firm stim
ulates competition,’ ” and, therefore, mistaken liability findings would
“ ‘ “chill the very conduct the antitrust laws are designed to protect.” ’ ”
Id., at 226. Pp. 318–320.
(b) Predatory bidding involves the exercise of market power on the
market’s buy, or input, side. To engage in predatory bidding, a pur
chaser bids up the market price of an input so high that rival buyers
cannot survive, thus acquiring monopsony power, which is market
power on the buy side of the market. Once a predatory bidder causes

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competing buyers to exit the market, it will attempt to drive down input
prices to reap supracompetitive profits that will at least offset the losses
it suffered in bidding up input prices. Pp. 320–321.
(c) Predatory-pricing and predatory-bidding claims are analytically
similar. And the close theoretical connection between monopoly and
monopsony suggests that similar legal standards should apply to both
sorts of claims. Both involve the deliberate use of unilateral pricing
measures for anticompetitive purposes and both require firms to incur
certain short-term losses on the chance that they might later make su
pracompetitive profits. More importantly, predatory bidding mirrors
predatory pricing in respects deemed significant in Brooke Group. Be
cause rational businesses will rarely suffer short-term losses in hopes
of reaping supracompetitive profits, Brooke Group’s conclusion that
“ ‘predatory pricing schemes are rarely tried, and even more rarely suc
cessful,’ ” 509 U. S., at 226, applies with equal force to predatory-bidding
schemes. And like the predatory conduct in Brooke Group, actions
taken in a predatory-bidding scheme are often “ ‘ “the very essence of
competition,” ’ ” ibid., because a failed predatory-bidding scheme can be
a “boon to consumers,” see id., at 224. Predatory bidding also presents
less of a direct threat of consumer harm than predatory pricing, which
achieves ultimate success by charging higher prices to consumers, be
cause a predatory bidder does not necessarily rely on raising prices in
the output market to recoup its losses. Pp. 321–325.
(d) Given these similarities, Brooke Group’s two-pronged test should
apply to predatory-bidding claims. A predatory-bidding plaintiff must
prove that the predator’s bidding on the buy side caused the cost of the
relevant output to rise above the revenues generated in the sale of those
outputs. Because the risk of chilling procompetitive behavior with too
lax a liability standard is as serious here as it was in Brooke Group,
only higher bidding that leads to below-cost pricing in the relevant out
put market will suffice as a basis for predatory-bidding liability. A
predatory-bidding plaintiff also must prove that the defendant has a
dangerous probability of recouping the losses incurred in bidding up
input prices through the exercise of monopsony power. Making such a
showing will require “a close analysis of both the scheme alleged by the
plaintiff and the [relevant market’s] structure and conditions,” 509 U. S.,
at 226. Pp. 325–326.
(e) Because Ross-Simmons has conceded that it has not satisfied the
Brooke Group standard, its predatory-bidding theory of liability cannot
support the jury’s verdict. P. 326.
411 F. 3d 1030, vacated and remanded.
Thomas, J., delivered the opinion for a unanimous Court.

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314 WEYERHAEUSER CO. v. ROSS-SIMMONS HARDWOOD
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Opinion of the Court
Andrew J. Pincus argued the cause for petitioner. With
him on the briefs were Charles A. Rothfeld, Guy C. Stephen
son, Stephen V. Bomse, M. Laurence Popofsky, Kevin J. Ar
quit, and Joseph F. Tringali.
Kannon K. Shanmugam argued the cause for the United
States as amicus curiae urging reversal. With him on the
brief were Solicitor General Clement, Assistant Attorney
General Barnett, Deputy Solicitor General Hungar, Deputy
Assistant Attorney General Masoudi, Catherine G. O’Sulli
van, and Adam D. Hirsh.
Michael E. Haglund argued the cause for respondent.
With him on the brief were Michael K. Kelley and Roy
Pulvers.*
Justice Thomas delivered the opinion of the Court.
Respondent Ross-Simmons, a sawmill, sued petitioner
Weyerhaeuser, alleging that Weyerhaeuser drove it out of
*Briefs of amici curiae urging reversal were filed for AT&T Inc. et al.
by A. Douglas Melamed, Jonathan Nuechterlein, William M. Schur, Ron
ald A. Stern, John Thorne, and Paul J. Larkin, Jr.; for the Business
Roundtable et al. by Janet L. McDavid, Catherine E. Stetson, Jessica L.
Ellsworth, Jan S. Amundson, and Quentin Riegel; for the Chamber of
Commerce of the United States of America et al. by Roy T. Englert, Jr.,
Donald J. Russell, Mark T. Stancil, Stephen A. Bokat, Robin S. Conrad,
Amar D. Sarwal, and Richard S. Wasserstrom; for Economists by Joe
Sims and Beth Heifetz; for Law Professors by Joseph J. Simons and Moses
Silverman; and for Timberland Owners and Managers by Jeffrey A. Lam
ken and Barnes H. Ellis.
Briefs of amici curiae urging affirmance were filed for the State of
California et al. by Hardy Myers, Attorney General of Oregon, and Tim
D. Nord, Senior Assistant Attorney General, by Bill Lockyer, Attorney
General of California, Thomas Greene, Chief Assistant Attorney General,
Kathleen E. Foote, Senior Assistant Attorney General, and Emilio E. Var
anini IV, Deputy Attorney General, and by the Attorneys General for
their respective States as follows: Terry Goddard of Arizona, Thomas J.
Miller of Iowa, Charles C. Foti, Jr., of Louisiana, Mike McGrath of Mon
tana, Darrell V. McGraw, Jr., of West Virginia, and Peggy A. Lauten
schlager of Wisconsin; for the American Antitrust Institute by Jonathan
L. Rubin, Jonathan W. Cuneo, and Robert H. Lande; and for Forest Indus
try Participants by R. Daniel Lindahl.

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business by bidding up the price of sawlogs to a level that
prevented Ross-Simmons from being profitable. A jury re
turned a verdict in favor of Ross-Simmons on its monopo
lization claim, and the Ninth Circuit affirmed. We granted
certiorari to decide whether the test we applied to claims of
predatory pricing in Brooke Group Ltd. v. Brown & Wil
liamson Tobacco Corp., 509 U. S. 209 (1993), also applies to
claims of predatory bidding. We hold that it does. Accord
ingly, we vacate the judgment of the Court of Appeals.
I
This antitrust case concerns the acquisition of red alder
sawlogs by the mills that process those logs in the Pacific
Northwest. These hardwood-lumber mills usually acquire
logs in one of three ways. Some logs are purchased on the
open bidding market. Some come to the mill through stand
ing short- and long-term agreements with timberland own
ers. And others are harvested from timberland owned by
the sawmills themselves. The allegations relevant to our
decision in this case relate to the bidding market.
Ross-Simmons began operating a hardwood-lumber saw
mill in Longview, Washington, in 1962. Weyerhaeuser en
tered the Northwestern hardwood-lumber market in 1980 by
acquiring an existing lumber company. Weyerhaeuser grad
ually increased the scope of its hardwood-lumber operation,
and it now owns six hardwood sawmills in the region. By
2001, Weyerhaeuser’s mills were acquiring approximately 65
percent of the alder logs available for sale in the region.
App. 754a, 341a.
From 1990 to 2000, Weyerhaeuser made more than $75
million in capital investments in its hardwood mills in the
Pacific Northwest. Id., at 159a. During this period, pro
duction increased at every Northwestern hardwood mill that
Weyerhaeuser owned. Id., at 160a. In addition to increas
ing production, Weyerhaeuser used “state-of-the-art tech
nology,” id., at 500a, including sawing equipment, to increase
the amount of lumber recovered from every log, id., at 500a,

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549a. By contrast, Ross-Simmons appears to have engaged
in little efficiency-enhancing investment. See id., at 438a–
441a.
Logs represent up to 75 percent of a sawmill’s total costs.
See id., at 169a. And from 1998 to 2001, the price of alder
sawlogs increased while prices for finished hardwood lumber
fell. These divergent trends in input and output prices cut
into the mills’ profit margins, and Ross-Simmons suffered
heavy losses during this time. See id., at 155a (showing a
negative net income from 1998 to 2000). Saddled with sev
eral million dollars in debt, Ross-Simmons shut down its mill
completely in May 2001. Id., at 156a.
Ross-Simmons blamed Weyerhaeuser for driving it out of
business by bidding up input costs, and it filed an antitrust
suit against Weyerhaeuser for monopolization and attempted
monopolization under § 2 of the Sherman Act. See 26 Stat.
209, as amended, 15 U. S. C. § 2 (2000 ed., Supp. IV). Ross-
Simmons alleged that, among other anticompetitive acts,
Weyerhaeuser had used “its dominant position in the alder
sawlog market to drive up the prices for alder sawlogs to
levels that severely reduced or eliminated the profit margins
of Weyerhaeuser’s alder sawmill competition.” App. 135a.
Proceeding in part on this “predatory-bidding” theory,
Ross-Simmons argued that Weyerhaeuser had overpaid for
alder sawlogs to cause sawlog prices to rise to artificially
high levels as part of a plan to drive Ross-Simmons out of
business. As proof that this practice had occurred, Ross-
Simmons pointed to Weyerhaeuser’s large share of the alder
purchasing market, rising alder sawlog prices during the al
leged predation period, and Weyerhaeuser’s declining profits
during that same period.
Prior to trial, Weyerhaeuser moved for summary judg
ment on Ross-Simmons’ predatory-bidding theory. Id., at
6a–24a. The District Court denied the motion. Id., at 58a–
69a. At the close of the 9-day trial, Weyerhaeuser moved
for judgment as a matter of law, or alternatively, for a new

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trial. The motions were based in part on Weyerhaeuser’s
argument that Ross-Simmons had not satisfied the standard
this Court set forth in Brooke Group, supra. App. 940a–
942a. The District Court denied Weyerhaeuser’s motion.
Id., at 720a, App. to Pet. for Cert. 46a. The District Court
also rejected proposed predatory-bidding jury instructions
that incorporated elements of the Brooke Group test. App.
725a–730a, 978a. Ultimately, the District Court instructed
the jury that Ross-Simmons could prove that Weyerhaeus
er’s bidding practices were anticompetitive acts if the jury
concluded that Weyerhaeuser “purchased more logs than it
needed, or paid a higher price for logs than necessary, in
order to prevent [Ross-Simmons] from obtaining the logs
they needed at a fair price.” Id., at 978a. Finding that
Ross-Simmons had proved its claim for monopolization, the
jury returned a $26 million verdict against Weyerhaeuser.
Id., at 967a. The verdict was trebled to approximately $79
million.
Weyerhaeuser appealed to the Court of Appeals for the
Ninth Circuit. There, Weyerhaeuser argued that Brooke
Group’s standard for claims of predatory pricing should also
apply to claims of predatory bidding. The Ninth Circuit
disagreed and affirmed the verdict against Weyerhaeuser.
Confederated Tribes of Siletz Indians of Ore. v. Weyer
haeuser Co., 411 F. 3d 1030, 1035–1036 (2005).
The Court of Appeals reasoned that “buy-side predatory
bidding” and “sell-side predatory pricing,” though similar,
are materially different in that predatory bidding does not
necessarily benefit consumers or stimulate competition in the
way that predatory pricing does. Id., at 1037. Concluding
that “the concerns that led the Brooke Group Court to estab
lish a high standard of liability in the predatory pricing con
text do not carry over to this predatory bidding context with
the same force,” the Court of Appeals declined to apply
Brooke Group to Ross-Simmons’ claims of predatory bidding.
411 F. 3d, at 1038. The Court of Appeals went on to con

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clude that substantial evidence supported a finding of lia
bility on the predatory-bidding theory. Id., at 1045. We
granted certiorari to decide whether Brooke Group applies
to claims of predatory bidding. 548 U. S. 903 (2006). We
hold that it does, and we vacate the Court of Appeals’
judgment.
II
In Brooke Group, we considered what a plaintiff must
show in order to succeed on a claim of predatory pricing
under § 2 of the Sherman Act.1 In a typical predatory
pricing scheme, the predator reduces the sale price of its
product (its output) to below cost, hoping to drive competi
tors out of business. Then, with competition vanquished,
the predator raises output prices to a supracompetitive level.
See Matsushita Elec. Industrial Co. v. Zenith Radio Corp.,
475 U. S. 574, 584–585, n. 8 (1986) (describing predatory pric
ing). For the scheme to make economic sense, the losses
suffered from pricing goods below cost must be recouped
(with interest) during the supracompetitive-pricing stage of
the scheme. Id., at 588–589; Cargill, Inc. v. Monfort of
Colo., Inc., 479 U. S. 104, 121–122, n. 17 (1986); see also R.
Bork, The Antitrust Paradox 145 (1978). Recognizing this
economic reality, we established two prerequisites to recov
ery on claims of predatory pricing. “First, a plaintiff seek
ing to establish competitive injury resulting from a rival’s
low prices must prove that the prices complained of are
below an appropriate measure of its rival’s costs.” Brooke
Group, 509 U. S., at 222. Second, a plaintiff must demon
strate that “the competitor had . . . a dangerous probabilit[y]
1 Brooke Group dealt with a claim under the Robinson-Patman Act, but
as we observed, “primary-line competitive injury under the Robinson-
Patman Act is of the same general character as the injury inflicted by
predatory pricing schemes actionable under § 2 of the Sherman Act.” 509
U. S., at 221. Because of this similarity, the standard adopted in Brooke
Group applies to predatory-pricing claims under § 2 of the Sherman Act.
Id., at 222.

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of recouping its investment in below-cost prices.” Id.,
at 224.
The first prong of the test—requiring that prices be below
cost—is necessary because “[a]s a general rule, the exclusion
ary effect of prices above a relevant measure of cost either
reflects the lower cost structure of the alleged predator, and
so represents competition on the merits, or is beyond the
practical ability of a judicial tribunal to control.” Id., at 223.
We were particularly wary of allowing recovery for above
cost price cutting because allowing such claims could, per
versely, “chil[l] legitimate price cutting,” which directly ben
efits consumers. See id., at 223–224; Atlantic Richfield Co.
v. USA Petroleum Co., 495 U. S. 328, 340 (1990) (“Low prices
benefit consumers regardless of how those prices are set, and
so long as they are above predatory levels, they do not
threaten competition”). Thus, we specifically declined to
allow plaintiffs to recover for above-cost price cutting, con
cluding that “discouraging a price cut and . . . depriving con
sumers of the benefits of lower prices . . . does not constitute
sound antitrust policy.” Brooke Group, supra, at 224.
The second prong of the Brooke Group test—requiring
that there be a dangerous probability of recoupment of
losses—is necessary because, without a dangerous probabil
ity of recoupment, it is highly unlikely that a firm would
engage in predatory pricing. As the Court explained in
Matsushita, a firm engaged in a predatory-pricing scheme
makes an investment—the losses suffered plus the profits
that would have been realized absent the scheme—at the
initial, below-cost-selling phase. 475 U. S., at 588–589. For
that investment to be rational, a firm must reasonably expect
to recoup in the long run at least its original investment with
supracompetitive profits. Ibid.; Brooke Group, 509 U. S., at
224. Without such a reasonable expectation, a rational firm
would not willingly suffer definite, short-run losses. Recog
nizing the centrality of recoupment to a predatory-pricing
scheme, we required predatory-pricing plaintiffs to “demon

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strate that there is a likelihood that the predatory scheme
alleged would cause a rise in prices above a competitive level
that would be sufficient to compensate for the amounts ex
pended on the predation, including the time value of the
money invested in it.” Id., at 225.
We described the two parts of the Brooke Group test as
“essential components of real market injury” that were “not
easy to establish.” Id., at 226. We also reiterated that the
costs of erroneous findings of predatory-pricing liability were
quite high because “ ‘[t]he mechanism by which a firm en
gages in predatory pricing—lowering prices—is the same
mechanism by which a firm stimulates competition,’ ” and,
therefore, mistaken findings of liability would “ ‘ “chill the
very conduct the antitrust laws are designed to protect.” ’ ”
Ibid. (quoting Cargill, supra, at 122, n. 17).
III
Predatory bidding, which Ross-Simmons alleges in this
case, involves the exercise of market power on the buy side
or input side of a market. In a predatory-bidding scheme, a
purchaser of inputs “bids up the market price of a critical
input to such high levels that rival buyers cannot survive (or
compete as vigorously) and, as a result, the predating buyer
acquires (or maintains or increases its) monopsony power.”
Kirkwood, Buyer Power and Exclusionary Conduct, 72 Anti
trust L. J. 625, 652 (2005) (hereinafter Kirkwood). Monop
sony power is market power on the buy side of the market.
Blair & Harrison, Antitrust Policy and Monopsony, 76 Cor
nell L. Rev. 297 (1991). As such, a monopsony is to the buy
side of the market what a monopoly is to the sell side and is
sometimes colloquially called a “buyer’s monopoly.” See id.,
at 301, 320; Piraino, A Proposed Antitrust Approach to Buy
ers’ Competitive Conduct, 56 Hastings L. J. 1121, 1125 (2005).
A predatory bidder ultimately aims to exercise the monop
sony power gained from bidding up input prices. To that
end, once the predatory bidder has caused competing buyers

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to exit the market for purchasing inputs, it will seek to “re
strict its input purchases below the competitive level,” thus
“reduc[ing] the unit price for the remaining input[s] it pur
chases.” Salop, Anticompetitive Overbuying by Power
Buyers, 72 Antitrust L. J. 669, 672 (2005) (hereinafter Salop).
The reduction in input prices will lead to “a significant cost
saving that more than offsets the profit[s] that would have
been earned on the output.” Ibid. If all goes as planned,
the predatory bidder will reap monopsonistic profits that will
offset any losses suffered in bidding up input prices.2 (In
this case, the plaintiff was the defendant’s competitor in the
input-purchasing market. Thus, this case does not present
a situation of suppliers suing a monopsonist buyer under § 2
of the Sherman Act, nor does it present a risk of significantly
increased concentration in the market in which the monopso
nist sells, i. e., the market for finished lumber.)
IV
A
Predatory-pricing and predatory-bidding claims are ana
lytically similar. See Hovenkamp, The Law of Exclusionary
Pricing, 2 Competition Policy Int’l, No. 1, pp. 21, 35 (Spring
2006). This similarity results from the close theoretical con
nection between monopoly and monopsony. See Kirkwood
653 (describing monopsony as the “mirror image” of monop
oly); Khan v. State Oil Co., 93 F. 3d 1358, 1361 (CA7 1996)
(“[M]onopsony pricing . . . is analytically the same as monop
oly or cartel pricing and [is] so treated by the law”), vacated
and remanded on other grounds, 522 U. S. 3 (1997); Vogel v.
2 If the predatory firm’s competitors in the input market and the output
market are the same, then predatory bidding can also lead to the bidder’s
acquisition of monopoly power in the output market. In that case, which
does not appear to be present here, the monopsonist could, under certain
market conditions, also recoup its losses by raising output prices to monop
olistic levels. See Salop 679–682 (describing a monopsonist’s predatory
strategy that depends upon raising prices in the output market).

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American Soc. of Appraisers, 744 F. 2d 598, 601 (CA7 1984)
(“[M]onopoly and monopsony are symmetrical distortions of
competition from an economic standpoint”); see also Hearing
on Monopsony Issues in Agriculture: Buying Power of Proc
essors in Our Nation’s Agricultural Markets before the Sen
ate Committee on the Judiciary, 108th Cong., 1st Sess., 13
(2004). The kinship between monopoly and monopsony sug
gests that similar legal standards should apply to claims of
monopolization and to claims of monopsonization. Cf. Noll,
“Buyer Power” and Economic Policy, 72 Antitrust L. J. 589,
591 (2005) (“[A]symmetric treatment of monopoly and mo
nopsony has no basis in economic analysis”).
Tracking the economic similarity between monopoly and
monopsony, predatory-pricing plaintiffs and predatory
bidding plaintiffs make strikingly similar allegations. A
predatory-pricing plaintiff alleges that a predator cut prices
to drive the plaintiff out of business and, thereby, to reap
monopoly profits from the output market. In parallel fash
ion, a predatory-bidding plaintiff alleges that a predator
raised prices for a key input to drive the plaintiff out of busi
ness and, thereby, to reap monopsony profits in the input
market. Both claims involve the deliberate use of unilateral
pricing measures for anticompetitive purposes.3 And both
claims logically require firms to incur short-term losses on
the chance that they might reap supracompetitive profits in
the future.
3 Predatory bidding on inputs is not analytically different from preda
tory overbuying of inputs. Both practices fall under the rubric of monop
sony predation and involve an input purchaser’s use of input prices in an
attempt to exclude rival input purchasers. The economic effect of the
practices is identical: Input prices rise. In a predatory-bidding scheme,
the purchaser causes prices to rise by offering to pay more for inputs. In
a predatory-overbuying scheme, the purchaser causes prices to rise by
demanding more of the input. Either way, input prices increase. Our
use of the term “predatory bidding” is not meant to suggest that different
legal treatment is appropriate for the economically identical practice of
“predatory overbuying.”

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B
More importantly, predatory bidding mirrors predatory
pricing in respects that we deemed significant to our analysis
in Brooke Group. In Brooke Group, we noted that “ ‘preda
tory pricing schemes are rarely tried, and even more rarely
successful.’ ” 509 U. S., at 226 (quoting Matsushita, 475
U. S., at 589). Predatory pricing requires a firm to suffer
certain losses in the short term on the chance of reaping
supracompetitive profits in the future. Id., at 588–589. A
rational business will rarely make this sacrifice. Ibid. The
same reasoning applies to predatory bidding. A predatory
bidding scheme requires a buyer of inputs to suffer losses
today on the chance that it will reap supracompetitive profits
in the future. For this reason, “[s]uccessful monopsony pre
dation is probably as unlikely as successful monopoly preda
tion.” R. Blair & J. Harrison, Monopsony 66 (1993).
And like the predatory conduct alleged in Brooke Group,
actions taken in a predatory-bidding scheme are often “ ‘ “the
very essence of competition.” ’ ” 509 U. S., at 226 (quoting
Cargill, 479 U. S., at 122, n. 17, in turn quoting Matsushita,
supra, at 594). Just as sellers use output prices to compete
for purchasers, buyers use bid prices to compete for scarce
inputs. There are myriad legitimate reasons—ranging from
benign to affirmatively procompetitive—why a buyer might
bid up input prices. A firm might bid up inputs as a result
of miscalculation of its input needs or as a response to in
creased consumer demand for its outputs. A more efficient
firm might bid up input prices to acquire more inputs as a
part of a procompetitive strategy to gain market share in the
output market. A firm that has adopted an input-intensive
production process might bid up inputs to acquire the inputs
necessary for its process. Or a firm might bid up input
prices to acquire excess inputs as a hedge against the risk of
future rises in input costs or future input shortages. See
Salop 682–683; Kirkwood 655. There is nothing illicit about
these bidding decisions. Indeed, this sort of high bidding is

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essential to competition and innovation on the buy side of
the market.4
Brooke Group also noted that a failed predatory-pricing
scheme may benefit consumers. 509 U. S., at 224. The po
tential benefit results from the difficulty an aspiring predator
faces in recouping losses suffered from below-cost pricing.
Without successful recoupment, “predatory pricing produces
lower aggregate prices in the market, and consumer welfare
is enhanced.” Ibid. Failed predatory-bidding schemes can
also, but will not necessarily, benefit consumers. See Salop
677–678. In the first stage of a predatory-bidding scheme,
the predator’s high bidding will likely lead to its acquisition
of more inputs. Usually, the acquisition of more inputs
leads to the manufacture of more outputs. And increases in
output generally result in lower prices to consumers.5 Id.,
at 677; Blair & Harrison, supra, at 66–67. Thus, a failed
predatory-bidding scheme can be a “boon to consumers” in
the same way that we considered a predatory-pricing scheme
to be. See Brooke Group, supra, at 224.
In addition, predatory bidding presents less of a direct
threat of consumer harm than predatory pricing. A
predatory-pricing scheme ultimately achieves success by
charging higher prices to consumers. By contrast, a
predatory-bidding scheme could succeed with little or no ef
fect on consumer prices because a predatory bidder does not
necessarily rely on raising prices in the output market to
recoup its losses. Salop 676. Even if output prices remain
constant, a predatory bidder can use its power as the pre
4 Higher prices for inputs obviously benefit existing sellers of inputs and
encourage new firms to enter the market for input sales as well.
5 Consumer benefit does not necessarily result at the first stage because
the predator might not use its excess inputs to manufacture additional
outputs. It might instead destroy the excess inputs. See Salop 677,
n. 22. Also, if the same firms compete in the input and output markets,
any increase in outputs by the predator could be offset by decreases in
outputs from the predator’s struggling competitors.

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Cite as: 549 U. S. 312 (2007) 325
Opinion of the Court
dominant buyer of inputs to force down input prices and cap
ture monopsony profits. Ibid.
C
The general theoretical similarities of monopoly and mo
nopsony combined with the theoretical and practical similari
ties of predatory pricing and predatory bidding convince us
that our two-pronged Brooke Group test should apply to
predatory-bidding claims.
The first prong of Brooke Group’s test requires little adap
tation for the predatory-bidding context. A plaintiff must
prove that the alleged predatory bidding led to below-cost
pricing of the predator’s outputs. That is, the predator’s
bidding on the buy side must have caused the cost of the
relevant output to rise above the revenues generated in the
sale of those outputs. As with predatory pricing, the exclu
sionary effect of higher bidding that does not result in
below-cost output pricing “is beyond the practical ability of
a judicial tribunal to control without courting intolerable
risks of chilling legitimate” procompetitive conduct. 509
U. S., at 223. Given the multitude of procompetitive ends
served by higher bidding for inputs, the risk of chilling pro
competitive behavior with too lax a liability standard is as
serious here as it was in Brooke Group. Consequently, only
higher bidding that leads to below-cost pricing in the rele
vant output market will suffice as a basis for liability for
predatory bidding.
A predatory-bidding plaintiff also must prove that the de
fendant has a dangerous probability of recouping the losses
incurred in bidding up input prices through the exercise of
monopsony power. Absent proof of likely recoupment, a
strategy of predatory bidding makes no economic sense be
cause it would involve short-term losses with no likelihood
of offsetting long-term gains. Cf. id., at 224 (citing Matsu
shita, supra, at 588–589). As with predatory pricing,
making a showing on the recoupment prong will require

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326 WEYERHAEUSER CO. v. ROSS-SIMMONS HARDWOOD
LUMBER CO.
Opinion of the Court
“a close analysis of both the scheme alleged by the plaintiff
and the structure and conditions of the relevant market.”
Brooke Group, supra, at 226.
Ross-Simmons has conceded that it has not satisfied the
Brooke Group standard. Brief for Respondent 49; Tr. of
Oral Arg. 49. Therefore, its predatory-bidding theory of lia
bility cannot support the jury’s verdict.
V
For these reasons, we vacate the judgment of the Court of
Appeals and remand the case for further proceedings con
sistent with this opinion.
It is so ordered.