Albrecht v. Herald Company, No. 43

CourtUnited States Supreme Court
Writing for the CourtWHITE
Citation88 S.Ct. 869,390 U.S. 145,19 L.Ed.2d 998
Decision Date04 March 1968
Docket NumberNo. 43
PartiesLester J. ALBRECHT, Petitioner, v. The HERALD COMPANY, d/b/a Globe-Democrat Publishing Co

390 U.S. 145
88 S.Ct. 869
19 L.Ed.2d 998
Lester J. ALBRECHT, Petitioner,

v.

The HERALD COMPANY, d/b/a Globe-Democrat Publishing Co.

No. 43.
Argued Nov. 9, 1967.
Decided March 4, 1968.
Rehearing Denied April 8, 1968.

See 390 U.S. 1018, 88 S.Ct. 1258.

Page 146

Gray L. Dorsey, Chesterfield, Mo., for petitioner.

Lon Hocker, St. Louis, Mo., for respondent.

Mr. Justice WHITE delivered the opinion of the Court.

A jury returned a verdict for respondent in petitioner's suit for treble damages for violation of § 1 of the Sherman Act.1 Judgment was entered on the verdict and the Court of Appeals for the Eighth Circuit affirmed. 367 F.2d 517 (1966). The question is whether the denial of petitioner's motion for judgment notwithstanding the verdict was correctly affirmed by the Court of Appeals. Because this case presents important issues under the antitrust laws, we granted certiorari. 386 U.S. 941, 87 S.Ct. 976, 17 L.Ed.2d 872 (1967).

Page 147

We take the facts from those stated by the Court of Appeals. Respondent publishes the Globe-Democrat, a morning newspaper distributed in the St. Louis metropolitan area by independent carriers who buy papers at wholesale and sell them at retail. There are 172 home delivery routes. Respondent advertises a suggested retail price in its newspaper. Carriers have exclusive territories which are subject to termination if prices exceed the suggested maximum. Petitioner, who had Route 99, adhered to the advertised price for some time but in 1961 raised the price to customers.2 After more than once objecting to this practice, respondent wrote petitioner on May 20, 1964, that because he was overcharging and because respondent had reserved the right to compete should that happen, subscribers on Route 99 were being informed by letter that respondent would itself deliver the paper to those who wanted it at the lower price. In addition to sending these letters to petitioner's customers, respondent hired Milne Circulation Sales, Inc., which solicited readers for newspapers, to engage in telephone and house-to-house solicitation of all residents on Route 99. As a result, about 300 of petitioner's 1,200 customers switched to direct delivery by respondent. Meanwhile respondent continued to sell papers to petitioner but warned him that should he continue to overcharge, respondent would not have to do business with him. Since respondent did not itself want to engage in home delivery, it advertised a new route of 314 customers as available without cost. Another carrier, George Kroner, took over the route knowing that respondent would not tolerate overcharging and understanding that he might have to return the

Page 148

route if petitioner discontinued his pricing practice.3 On July 27 respondent told petitioner that it was not interested in being in the carrier business and that petitioner could have his customers back as long as he charged the suggested price. Petitioner brought this lawsuit on August 12. In response, petitioner's appointment as a carrier was terminated and petitioner was given 60 days to arrange the sale of his route to a satisfactory replacement. Petitioner sold his route for $12,000, $1,000 more than he had paid for it but less than he could have gotten had he been able to turn over 1,200 customers instead of 900.4

Petitioner's complaint charged a combination or conspiracy in restraint of trade under § 1 of the Sherman Act.5 At the close of the evidence the complaint was amended to charge only a combination between respondent and 'plaintiff's customers and/or Milne Circulation Sales, Inc. and/or George Kroner.' The case went to the jury on this theory, the jury found for respondent, and judgment in its favor was entered on the verdict. The court denied petitioner's motion for judgment notwithstanding the verdict, which asserted that under United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), and like cases, the undisputed facts showed as a matter of law a combination to fix resale prices of newspapers which was per se illegal under the Sherman Act. The Court of Appeals affirmed. In its view 'the

Page 149

undisputed evidence fail(ed) to show a Sherman Act violation,' because respondent's conduct was wholly unilateral and there was no restraint of trade. The previous decisions of this Court were deemed inapposite to a situation in which a seller establishes maximum prices to be charged by a retailer enjoying an exclusive territory and in which the seller, who would be entitled to refuse to deal, simply engages in competition with the offending retailer. We disagree with the Court of Appeals and reverse its judgment.

On the undisputed facts recited by the Court of Appeals respondent's conduct cannot be deemed wholly unilateral and beyond the reach of § 1 of the Sherman Act. That section covers combinations in addition to contracts and conspiracies, express or implied. The Court made this quite clear in United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), where it held that an illegal combination to fix prices results if a seller suggests resale prices and secures compliance by means in addition to the 'mere announcement of this policy and the simple refusal to deal * * *.' Id., at 44, 80 S.Ct. at 512. Parke, Davis had specified resale prices for both wholesalers and retailers and had required wholesalers to refuse to deal with noncomplying retailers. It was found to have created a combination 'with the retailers and the wholesalers to maintain retail prices * * *.' Id., at 45, 80 S.Ct. at 512. The combination with retailers arose because their acquiescence in the suggested prices was secured by threats of termination; the combination with wholesalers arose because they cooperated in terminating price-cutting retailers.

If a combination arose when Parke, Davis threatened its wholesalers with termination unless they put pressure on their retail customers, then there can be no doubt that a combination arose between respondent, Milne, and Kroner to force petitioner to conform to the advertised retail price. When respondent learned that

Page 150

petitioner was overcharging, it hired Milne to solicit customers away from petitioner in order to get petitioner to reduce his price. It was through the efforts of Milne, as well as because of respondent's letter to petitioner's customers, that about 300 customers were obtained for Kroner. Milne's purpose was undoubtedly to earn its fee, but it was aware that he aim of the solicitation campaign was to force petitioner to lower his price. Kroner knew that respondent was giving him the customer list as part of a program to get petitioner to conform to the advertised price, and he knew that the might have to return the customers if petitioner ultimately complied with respondent's demands. He undertook to deliver papers at the suggested price and materially aided in the accomplishment of respondent's plan. Given the uncontradicted facts recited by the Court of Appeals, there was a combination within the meaning of § 1 between respondent, Milne, and Kroner, and the Court of Appeals erred in holding to the contrary.6

Page 151

The Court of Appeals also held there was no restraint of trade, despite the long-accepted rule in § 1 cases that resale price fixing is a per se violation of the law whether done by agreement or combination.7 United States v.

Page 152

Trenton Potteries Co., 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700 (1927); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940); Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U.S. 211, 71 S.Ct. 259, 95 L.Ed. 219 (1951); United States v. McKesson & Robbins, Inc., 351 U.S. 305, 76 S.Ct. 937, 100 L.Ed. 1209 (1956).

In Kiefer-Stewart, supra, liquor distributors combined to set maximum resale prices. The Court of Appeals held the combination legal under the Sherman Act because in its view setting maximum prices '* * * constituted no restraint on trade and no interference with plaintiff's right to engage in all the competition it desired.' 182 F.2d 228, 235 (C.A.7th Cir.1950). This Court rejected that view and reversed the Court of Appeals, holding that agreements to fix maximum prices 'no less than those to fix minimum prices, cripple the freedom of traders and thereby restrain their ability to sell in accordance with their own judgment.'8 340 U.S. 211, 213, 71 S.Ct. 259, 260.

We think Kiefer-Stewart was correctly decided and we adhere to it. Maximum and minimum price fixing may have different consequences in many situations. But schemes to fix maximum prices, by substituting the perhaps erroneous judgment of a seller for the forces of the competitive market, may severely intrude upon the ability of buyers to compete and survive in that market. Competition, even in a single product, is not cast in a single mold. Maximum prices may be fixed too low for

Page 153

the dealer to furnish services essential to the value which goods have for the consumer or to furnish services and conveniences which consumers desire and for which they are willing to pay. Maximum price fixing may channel distribution through a few large or specifically advantaged dealers who otherwise would be subject to significant nonprice competition. Moreover, if the actual price charged under a maximum price scheme is nearly always the fixed maximum price, which is increasingly likely as the maximum price approaches the actual cost of the dealer, the scheme tends to acquire all the attributes of an arrangement fixing minimum prices.9 It is our view, therefore, that the combination formed by the respondent in this case to force petitioner to maintain a specified price for the resale of the newspapers which he had purchased from respondent constituted, without more, an illegal restraint of trade under § 1 of the Sherman Act.

We also reject the suggestion of the Court of Appeals that...

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374 practice notes
  • Knutson v. Daily Review, Inc., No. C-73-1354-CBR.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • September 23, 1974
    ...Plaintiffs' first claim for relief asserts a per se violation of § 1 of the Sherman Act, 15 U.S.C. § 1. Citing Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998, rehearing denied, 390 U.S. 1018, 88 S.Ct. 1258, 20 L.Ed.2d 169 (1968), plaintiffs contend that the Dealer's Agre......
  • Freeman v. San Diego Assn. of Realtors, No. D030553.
    • United States
    • California Court of Appeals
    • December 27, 1999
    ...perceive no similar reason here to limit the ordinary rule that a producer may choose its own distributors. (Albrecht v. Herald Co. (1968) 390 U.S. 145, 150, 88 S.Ct. 869, 19 L.Ed.2d 998, overruled on other grounds by State Oil Co. v. Khan (1997) 522 U.S. 3, 118 S.Ct. 275, 139 L.Ed.2d 199.)......
  • INTERN. ASS'N OF MACHINISTS v. ORG'N OF PETROLEUM, No. 78-5012-AAH (SX).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • September 18, 1979
    ...or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court. 2 See Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), reh. den. 390 U.S. 1018, 88 S.Ct. 1258, 20 L.Ed.2d 169; United States v. General Motors, 384 U.S. 127, ......
  • Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., CEL-TECH
    • United States
    • California Court of Appeals
    • November 20, 1997
    ...at trial but her deposition was admitted into evidence and relied on by the trial court. 11 Plaintiffs cite Albrecht v. Herald Co. (1968) 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998, overruled on other grounds by State Oil Co. v. Khan (1997) 522 U.S. 3, 118 S.Ct. 275, 139 L.Ed.2d 199, for th......
  • Request a trial to view additional results
352 cases
  • Knutson v. Daily Review, Inc., No. C-73-1354-CBR.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • September 23, 1974
    ...Plaintiffs' first claim for relief asserts a per se violation of § 1 of the Sherman Act, 15 U.S.C. § 1. Citing Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998, rehearing denied, 390 U.S. 1018, 88 S.Ct. 1258, 20 L.Ed.2d 169 (1968), plaintiffs contend that the Dealer's Agre......
  • Freeman v. San Diego Assn. of Realtors, No. D030553.
    • United States
    • California Court of Appeals
    • December 27, 1999
    ...perceive no similar reason here to limit the ordinary rule that a producer may choose its own distributors. (Albrecht v. Herald Co. (1968) 390 U.S. 145, 150, 88 S.Ct. 869, 19 L.Ed.2d 998, overruled on other grounds by State Oil Co. v. Khan (1997) 522 U.S. 3, 118 S.Ct. 275, 139 L.Ed.2d 199.)......
  • INTERN. ASS'N OF MACHINISTS v. ORG'N OF PETROLEUM, No. 78-5012-AAH (SX).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • September 18, 1979
    ...or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court. 2 See Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), reh. den. 390 U.S. 1018, 88 S.Ct. 1258, 20 L.Ed.2d 169; United States v. General Motors, 384 U.S. 127, ......
  • Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., CEL-TECH
    • United States
    • California Court of Appeals
    • November 20, 1997
    ...at trial but her deposition was admitted into evidence and relied on by the trial court. 11 Plaintiffs cite Albrecht v. Herald Co. (1968) 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998, overruled on other grounds by State Oil Co. v. Khan (1997) 522 U.S. 3, 118 S.Ct. 275, 139 L.Ed.2d 199, for th......
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13 books & journal articles
  • Identifying Anticompetitive Agreements in the United States and the European Union
    • United States
    • Antitrust Bulletin Nbr. 62-2, June 2017
    • June 1, 2017
    ...Timken, supra note 24, at 597–8.70. Klor’s Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 212 (1959).71. Albrecht v. Herald Co., 390 U.S. 145, 152–54 (1968) (maximum RPM); Schwinn, supra note 24, at 379 (vertical territorialrestrictions).72. In Chicago Board of Trade, supra note 18, at 2......
  • The Journey toward an Effects-Based Approach under Article 101 TFEU—The Case of Hardcore Restraints
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    • Antitrust Bulletin Nbr. 55-4, December 2010
    • December 1, 2010
    ...D. Park & Sons Co., 220 U.S. 373 (1911); Keifer-Stewart Co. v. Joseph E. Seagram & Sons Inc., 340 U.S. 211 (1951);Albrecht v. Herald Co., 390 U.S. 145 (1968); and United States v. Arnold,Schwinn & Co., 388 U.S. 365, 376 Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979). 15 FTC v. Superior ......
  • THE POST-CHICAGO ANTITRUST REVOLUTION: A RETROSPECTIVE.
    • United States
    • June 1, 2020
    ...314 (1949) (condemning exclusive dealing contract that would have foreclosed 16% of the market). (16) See, e.g., Albrecht v. Herald Co., 390 U.S. 145, 153 (1968) (holding maximum retail price maintenance illegal per se); United States v. Arnold, Schwinn & Co., 388 U.S. 365, 382 (1967) (......
  • Harvard, Chicago, and Transaction Cost Economics in Antitrust Analysis
    • United States
    • Antitrust Bulletin Nbr. 57-3, September 2012
    • September 1, 2012
    ...by Leegin Creative Leather Prods., Inc. v.PSKS, Inc., 551 U.S. 877 (2007) (RPM to be governed by rule of reason);Albrecht v. Herald Co., 390 U.S. 145 (1968) (maximum RPM unlawful per se),overruled by State Oil Co. v. Khan, 522 U.S. 3 (1997) (maximum RPM broughtunder rule of reason); United ......
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