362 U.S. 29 (1960), 20, United States v. Parke, Davis & Co.

Docket NºNo. 20
Citation362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505
Party NameUnited States v. Parke, Davis & Co.
Case DateFebruary 29, 1960
CourtUnited States Supreme Court

Page 29

362 U.S. 29 (1960)

80 S.Ct. 503, 4 L.Ed.2d 505

United States

v.

Parke, Davis & Co.

No. 20

United States Supreme Court

Feb. 29, 1960

Argued November 10, 1959

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Syllabus

In a civil suit under § 4 of the Sherman Act charging appellee with combining and conspiring to maintain resale prices of its products in areas which have no "fair trade" laws, the Government introduced evidence showing that appellee had (1) announced a policy of refusing to deal with retailers who failed to observe appellee's suggested minimum resale prices or who advertised discount prices on. appellee's products, (2) discontinued direct sales to those retailers who failed to abide by the announced policy, (3) induced wholesale distributors to stop selling appellee's products to the offending retailers, (4) secured unanimous adherence by informing a number of the retailers that, if each of them would adhere to the announced policy, one of their principal competitors would also do so, and (5) permitted the retailers to resume purchasing its products after they had indicated willingness to observe the policy. The evidence further established that appellee had terminated these practices after becoming aware that the Department of Justice had begun an investigation of its price maintenance activities. The District Court dismissed the complaint on the ground that the Government had not shown a right to relief.

Held: The judgment is reversed, and the case remanded with directions to enter an appropriate judgment enjoining appellee from further violations of the Sherman Act, unless it elects to submit evidence in defense and refutes the Government's right to injunctive relief established by the present record. Pp. 30-49.

(a) The District Court erred in holding that these practices constituted only unilateral action by appellee in selecting its customers, as permitted by United States v. Colgate Co., 250 U.S. 300. Appellee did not merely announce its policy and then decline to have further dealings with retailers who failed to abide by it, but, by utilizing wholesalers and other retailers, it actively induced unwilling retailers to comply with the policy. The resulting concerted action to maintain the resale prices constituted a conspiracy or combination in violation of the Sherman Act, although it was not based on any contract, express or implied . Pp. 36-47.

Page 30

(b) Rule 52 of the Federal Rules of Civil Procedure does not require affirmance of the District Court's ultimate finding that respondent did not violate the Sherman Act, because that conclusion was based on an erroneous interpretation of the law. Pp. 43-45.

(e) The District Court's alternative holding that dismissal of the complaint was warranted because there was no reasonable probability that appellee would resume its attempts to maintain resale prices is erroneous, because it is not supported by the evidence. Pp. 47-48.

164 F.Supp. 827 reversed.

BRENNAN, J., lead opinion

[80 S.Ct. 505] MR. JUSTICE BRENNAN delivered the opinion of the Court.

The Government sought an injunction under § 4 of the Sherman Act against the appellee, Parke, Davis & Company, on a compliant alleging that Parke Davis conspired and combined, in violation of §§ 1 and 3 of the Act,1 with

Page 31

retail and wholesale druggists in Washington, D.C., and Richmond, Virginia, to maintain the wholesale and retail prices of Parke Davis pharmaceutical products. The violation was alleged to have occurred during the summer of 1956, when there was no Fair Trade Law in the District of Columbia or the State of Virginia.2 After the Government completed the presentation of its evidence at the trial, and without hearing Parke Davis in defense, the District Court for the District of Columbia dismissed the complaint under Rule 41(b) on the ground that, upon the facts and the law, the Government had not shown a right to relief. 164 F.Supp. 827. We noted probable jurisdiction of the Government's direct appeal under § 2 of the Expediting Act.3 359 U.S. 903.

Parke Davis makes some 600 pharmaceutical products which it markets nationally through drug wholesalers and

Page 32

drug retailers. The retailers buy these products from the drug wholesalers or make large quantity purchases directly from Parke Davis. Sometime before 1956, Parke Davis announced a resale price maintenance policy in its wholesalers' and retailers' catalogues. The wholesalers' catalogue contained a Net Price Selling Schedule listing suggested minimum resale prices on Parke Davis products sold by wholesalers to retailers. The catalogue stated that it was Parke Davis' continuing policy to deal only with drug wholesalers who observed that schedule and who sold only to drug retailers authorized by law to fill prescriptions. Parke Davis, when selling directly to retailers, quoted the same prices listed in the wholesalers' Net Price Selling Schedule, but granted retailers discounts for volume purchases. Wholesalers were not authorized to grant similar discounts. The retailers' catalogue contained a schedule of minimum [80 S.Ct. 506] retail prices applicable in States with Fair Trade Laws, and stated that this schedule was suggested for use also in States not having such laws. These suggested minimum retail prices usually provided a 50% markup over cost on Park Davis products purchased by retailers from wholesalers, but, because of the volume discount, often in excess of 100% markup over cost on products purchased in large quantities directly from Parke Davis.

There are some 260 drugstores in Washington, D.C., and some 100 in Richmond, Virginia. Many of the stores are units of Peoples Drug Stores, a large retail drug chain. There are five drug wholesalers handling Parke Davis products in the locality who do business with the drug retailers. The wholesalers observed the resale prices suggested by Parke Davis. However, during the spring and early summer of 1956, drug retailers in the two cities advertised and sold several Parke Davis vitamin products at prices substantially below the suggested minimum retail prices; in some instances, the prices apparently

Page 33

reflected the volume discounts on direct purchases from Parke Davis, since the products were sold below the prices listed in the wholesalers' Net Price Selling Schedule. The Baltimore office manager of Parke Davis in charge of the sales district which included the two cities sought advice from his head office on how to handle this situation. The Parke Davis attorney advised that the company could legally "enforce an adopted policy arrived at unilaterally" to sell only to customers who observed the suggested minimum resale prices. He further advised that this meant that

we can lawfully say "we will sell you only so long as you observe such minimum retail prices" but cannot say "we will sell you only if you agree to observe such minimum retail prices," since, except as permitted by Fair Trade legislations [sic], agreements as to resale price maintenance are invalid.

Thereafter, in July, the branch manager put into effect a program for promoting observance of the suggested minimum retail prices by the retailers involved. The program contemplated the participation of the five drug wholesalers. In order to insure that retailers who did not comply would be cut off from sources of supply, representatives of Parke Davis visited the wholesalers and told them, in effect, that not only would Parke Davis refuse to sell to wholesalers who did not adhere to the policy announced in its catalogue, but also that it would refuse to sell to wholesalers who sold Parke Davis products to retailers who did not observe the suggested minimum retail prices. Each wholesaler was interviewed individually, but each was informed that his competitors were also being apprised of this. The wholesalers, without exception, indicated a willingness to go along.

Representatives called contemporaneously upon the retailers involved, individually, and told each that, if he did not observe the suggested minimum retail prices, Parke Davis would refuse to deal with him, and that, furthermore,

Page 34

he would be unable to purchase any Parke Davis products from the wholesalers. Each of the retailers was also told that his competitors were being similarly informed.

Several retailers refused to give any assurances of compliance, and continued after these July interviews to advertise and sell Parke Davis products at prices below the suggested minimum retail prices. Their names were furnished by Parke Davis to the wholesalers. Thereafter, Parke Davis refused to fill direct orders from such retailers, and the wholesalers likewise refused to fill their orders.4 This ban was not limited to the Parke Davis products being [80 S.Ct. 507] sold below the suggested minimum prices, but included all the company's products, even those necessary to fill prescriptions.

The president of Dart Drug Company, one of the retailers cut off, protested to the assistant branch manager of Parke Davis that Parke Davis was discriminating against him because a drugstore across the street, one of the Peoples Drug chain, had a sign in its window advertising Parke Davis products at cut prices. The retailer was told that, if this were so, the branch manager "would see Peoples and try to get them in line." The branch manager testified at the trial that thereafter he talked to a vice-president of Peoples, and that the following occurred:

Q. Well, now, you told Mr. Downey [the vice-president of Peoples] at this meeting, did you not, Mr. Powers [the assistant branch manager of Parke Davis], that you noticed that Peoples were cutting prices?

A. Yes.

Page 35

Q. And you told him, did you not, that it had been the Parke, Davis policy for many years to do business only with individuals that maintained the scheduled prices?

A. I told Mr....

To continue reading

Request your trial
460 practice notes
  • 207 F.Supp. 856 (D.Md. 1962), Civ. 9769, Osborn v. Sinclair Refining Co.
    • United States
    • Federal Cases United States District Courts 4th Circuit District of Maryland
    • July 3, 1962
    ...acting unilaterally to develop his business and to select his customers as he sees fit. See United States v. Parke, Davis & Co., 362 U.S. 29, 37-38, 44-46, 80 S.Ct. 503, 4 L.Ed.2d 505 discussing the development of the law since United States v. Colgate & Co., 250 U.S. 300, 306-308, ......
  • 452 F.2d 124 (8th Cir. 1971), 71-1017, Albrecht v. Herald Co.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • November 17, 1971
    ...a combination to fix a maximum resale price, which as a matter of law was per se illegal under United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), and remanded the case for further proceedings consistent with that opinion. Albrecht v. Herald Co., 390 U.......
  • 460 F.2d 116 (9th Cir. 1972), 25536, Bushie v. Stenocord Corp.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Ninth Circuit
    • March 15, 1972
    ...both on a conspiracy theory and on the theory, recognized by the Supreme Court in such cases as United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960) and Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), that a refusal of a manufac......
  • 633 F.2d 477 (7th Cir. 1980), 80-1081, Trabert & Hoeffer, Inc. v. Piaget Watch Corp.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Seventh Circuit
    • July 29, 1980
    ...uniform adherence by inducing each customer to adhere to avoid ... price competition ...," United States v. Parke, Davis & Co., 362 U.S. 29, 47, 80 S.Ct. 503, 513, 4 L.Ed.2d 505 (1960), is sufficient additional evidence. But to establish liability, direct evidence of an agreement n......
  • Request a trial to view additional results
448 cases
  • 207 F.Supp. 856 (D.Md. 1962), Civ. 9769, Osborn v. Sinclair Refining Co.
    • United States
    • Federal Cases United States District Courts 4th Circuit District of Maryland
    • July 3, 1962
    ...acting unilaterally to develop his business and to select his customers as he sees fit. See United States v. Parke, Davis & Co., 362 U.S. 29, 37-38, 44-46, 80 S.Ct. 503, 4 L.Ed.2d 505 discussing the development of the law since United States v. Colgate & Co., 250 U.S. 300, 306-308, ......
  • 452 F.2d 124 (8th Cir. 1971), 71-1017, Albrecht v. Herald Co.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • November 17, 1971
    ...a combination to fix a maximum resale price, which as a matter of law was per se illegal under United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), and remanded the case for further proceedings consistent with that opinion. Albrecht v. Herald Co., 390 U.......
  • 460 F.2d 116 (9th Cir. 1972), 25536, Bushie v. Stenocord Corp.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Ninth Circuit
    • March 15, 1972
    ...both on a conspiracy theory and on the theory, recognized by the Supreme Court in such cases as United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960) and Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), that a refusal of a manufac......
  • 633 F.2d 477 (7th Cir. 1980), 80-1081, Trabert & Hoeffer, Inc. v. Piaget Watch Corp.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Seventh Circuit
    • July 29, 1980
    ...uniform adherence by inducing each customer to adhere to avoid ... price competition ...," United States v. Parke, Davis & Co., 362 U.S. 29, 47, 80 S.Ct. 503, 513, 4 L.Ed.2d 505 (1960), is sufficient additional evidence. But to establish liability, direct evidence of an agreement n......
  • Request a trial to view additional results
3 firm's commentaries
8 books & journal articles
  • Overruling a Nearly Century-Old Precedent: Why Leegin Got It Right
    • United States
    • Iowa Law Review Nbr. 94-1, November 2008
    • November 1, 2008
    ...is no contract or combination which imposes any limitation on the purchaser."). [28] See United States v. Parke, Davis & Co., 362 U.S. 29, 39-42 (1960) (citing Frey & Son, Inc. v. Cudahy Packing Co., 256 U.S. 208, 210 (1921); FTC v. Beech-Nut Packing Co., 257 U.S. 441, 455 (192......
  • Antitrust Law
    • United States
    • Fundamentals of Franchising, Fourth Edition -
    • January 1, 2015
    ...Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761 (1984). 98. 465 U.S. at 761 (1984). 99. E.g., United States v. Parke, Davis & Co., 362 U.S. 29 (1960) (ruling that supplier may not seek promise from distributor to stop discounting); see JALA v. W. Auto Supply Co., 1995-2 Trade Cas. (C......
  • 1977, January, Pg. 1. Antitrust Enforcement in Colorado: New Directions, New Concerns.
    • United States
    • Colorado Bar Journal Nbr. 1977, January 1977
    • January 1, 1977
    ...272 U.S. 476 (1926). United States v. Bausch and Lomb Optical Co., 321 U.S. 707 (1944); United States v. Parke, Davis and Co., 362 U.S. 29 (1960); Simpson v. Union Oil Company, 377 U.S. 13 (1964); and Albrecht v. Herald Co., 390 U.S. 145 (1968). Albrecht v. Herald Co., 3......
  • Fixing merger litigation 'fixes': reforming the litigation of proposed merger remedies under section 7 of the Clayton Act.
    • United States
    • South Dakota Law Review Vol. 55 Nbr. 2, June 2010
    • June 22, 2010
    ...(237.) United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316 (1961). (238.) Id. at 332 (internal citations omitted). (239.) 362 U.S. 29 (1960). (240.) Id. at 47 (quoting S.E.C. v. Cent. Foundry Co., 167 F. Supp. 821, 829-30 (D.C.N.Y. 1958)). (241.) Id. at 48; see United States v.......
  • Request a trial to view additional results
1 provisions
  • Competitive impact statements and proposed consent judgments: Medical Mutual of Ohio,
    • United States
    • Federal Register October 01, 1998
    • October 1, 1998
    ...abandonment of the unlawful activities from a cessation which seems timed to anticipate suit.'' United States v. Parke, Davis & Co., 362 U.S. 29, 48 (1960). Alternatives to the Proposed Final Judgment An alternative to the proposed Final Judgment would be a full trial on the merits of t......