1. Law 552 - Antitrust - Instructor: Dwight Drake United States v. Arnold, Schwinn & Co. (Sup. Ct. 1967) What had happened to Schwinn’s market share? Three restrictions imposed by Schwinn: - Territorial restrictions on distributors - Distributors could only sell franchised retailers - Retailers could not sell nonfranchised retailers Which did Court say were per se illegal? Why did Court draw distinction between consigned sales and outright sales?

2. Law 552 - Antitrust - Instructor: Dwight Drake Albrecht v. Herald Co. (Sup. Ct. 1968) Basic Facts: Herald newspaper imposed maximum price constraints on its independent carriers. Terminated carrier for violating. Did Court draw any distinction between maximum and minimum price constraints? What was Court’s rationale for saying maximum price constraints are absolute violation of Sherman 1? Who is helped by Court’s rule?

3. Law 552 - Antitrust - Instructor: Dwight Drake Continental T.V., Inc. v. GTE Sylvania Inc. (Sup. Ct. 1977) Basic Facts: Sylvania, TV manufacturer with mini market share, developed new marketing plan that limited retail franchises in an area and required franchisees to sell only out of specific locations. Continental, upset that Sylvania authorized new competing retailer in S.F. and refused Continental’s request to sell in Sacramento, moved merchandise to Sacramento. Credit line was reduced, payments weren’t made, and Continental was sued. Continental claimed territory restrictions violated Sherman 1 under Schwinn Case. What was Continental’s market share pre- and post- plan? Did majority distinguish Schwinn? Did concurring? Did 9 th Cir.? Did Dist. Ct. apply per se? Did 9 th Cir.? What was significance of intrabrand and interbrand distinction?

4. Law 552 - Antitrust - Instructor: Dwight Drake Continental T.V., Inc. v. GTE Sylvania Inc. (1977) Holding: Schwinn overruled. Vertical territory restraints not per se violation of Sherman 1. Subject to “rule of reason” and issue is economic efficiency. - No substantive difference than Schwinn Case. - Schwinn per se rule can’t meet demanding standards of per se. - Impact of vertical restrictions complex. - Relative economic impact of restrain need be evaluated. - Vertical restriction hurt intrabrand competition, but help interbrand. - Manufactures have incentives to maintain as much intrabrand competition as possible to remain interbrand competitive. - No showing that Sylvania’s restrictions hurt competition or lack any redeeming virtue. White: (Concurring): Would not overrule Schwinn. Here, only territory restraints, not customer restraints. Shouldn’t judge non-price restraints only by their relative economic impact. If so, vertical price restraints will Soon be legal.

5. Law 552 - Antitrust - Instructor: Dwight Drake Business Electronics Corp. v. Sharp Electronics Corp (Sup. Ct. 1988) Basic Facts: Sharp, calculator manufacturer, terminated Houston dealer who was selling below suggested retail when Hartwell, other Houston distributor, demanded termination or it would terminate relationship. Hartwell alleged other retailer was “free-riding”. There was no agreement between Hartwell and Sharp on selling prices. Dist. Ct. gave per se instruction. Why did fifth circuit reverse? How does case compare to Sylvania? Was price the central issue? What was Hartwell’s free riding claim?

6. Law 552 - Antitrust - Instructor: Dwight Drake Business Electronics Corp. v. Sharp Electronics Corp (1988) Holding: Vertical restraint not per se illegal unless it included agreement on price or price levels. - Sylvania held interbrand competition is “primary concern” of antitrust. - Per se not needed to protect intrabrand competition. Interbrand will provide a “significant check.” - Difference between price and non-price restrains. - Market-freeing effects of Sylvania shouldn’t be frustrated. If per se applied every time a dealer terminated because of alleged price cutting, Sylvania could be “dismantled.” Price allegation would always be threat to manufacture. - Vertical restraints not equivalent to horizontal. - Economic analysis supports view there can be no per se without agreement on price. Dissent: (Stevens, White): Case is all about price. Sharp, pressured by Hartwell agreed to cut out tough-price competition. Purely anticompetitive. Per se illegal agreement to control price.

7. Law 552 - Antitrust - Instructor: Dwight Drake State Oil Company v. Khan (Sup. Ct. 1997) Basic Facts: State Oil, gas distributor, demanded station owner remit any profits realized by selling gas above level of 3.25 cents over cost per gallon. Effect was to impose maximum price constraint. Dist. Ct, applied “rule of reason” and dismissed because no market definition evidence. Ct. of Appeals (Posner) reversed on basis of Albrecht. What did Posner think of vertical price restraints? What are the different impacts of minimum and maximum vertical price restraints? How is interbrand competition, the darling of antitrust, impacted by minimum and maximum vertical price constraints?

8. Law 552 - Antitrust - Instructor: Dwight Drake State Oil Company v. Khan (Sup. Ct. 1997) Holding: Albrecht overruled to extent it applies per se analysis to maximum price vertical price constraints? Such restrains subject to rule of reason. - Primary purpose to protect interbrand competition. - Low price maintenance is essence of competition. - Maximum price different. - If manufacture grants distributor some monopoly power, may want to restrict ability of distributor to take advantage. This riskier after Sylvania because likelihood of dealer monopoly power increased. - Albrecht per se on maximum prices may hurt consumers and manufactures. - Stare decisis not exorable demand; antitrust must adapt to changed circumstances. - Maximum price constraints still subject to rule of reason.

9. Law 552 - Antitrust - Instructor: Dwight Drake NYNEX Corp. v. Discon, Inc (Sup. Ct. 1998) Basic Facts: AT&T Tech contracted telephone removal services with NYNEX at fraudulently high prices that were passed onto consumers. Discon, former supplier to AT&T Tech, went out of business and sued, alleging illegal boycott in violation of Sherman 1 and 2. Any question conduct was fraudulent? Why die Plaintiff rely so heavily on Klor’s case? How did Court distinguish Klor’s? Why did the Court refuse to find a per se illegal boycott? What did Court say about the freedom of companies to switch suppliers?