Horizontal Price-Fixing by Shoe Retailers: A Comment on U.S. v. Wohl Shoe Co.

• DOI: 10.1177/0003603X7702200303
• Date: 01 September 1977
• Author: John L. Peterman
• Published date: 01 September 1977
• Subject Matter: Article

HORIZONTAL

PRICE-FIXING

BY

SHOE

RETAILERS:

A

COMMENT

ON

U.S.

Y. WOHL

SHOE

CO.

by

JOHN

L.

PETERMAN-

While conducting a study of the two main antitrust cases

against Brown Shoe

CO.,

lI came across another and I am

sure less familiar case involving Brown.

In

this case, the

Wohl Shoe Co., which is owned by Brown and operates shoe

stores and leased departments in cities throughout the coun-

try, and two other shoe retailers were charged by the Anti-

trust Division with price-fixing in violation of Sec. 1 of the

Sherman Act. The retailers were alleged to have

:fixed

prices

above competitive levels in Albuquerque, New Mexico, and to

have maintained them

at

such levels in

part

by means of a

boycott (i.e., by jointly refusing to deal with wholesalers who

supplied "price-cutters" or new entrants in the market).

Charges were also filed against Penobscot Shoe Co., a pro-

ducer and wholesaler of shoes. The reasons for Penobscot's

inclusion in the complaint are not entirely clear, although it

seems this occurred primarily because its activities were be-

lieved to help maintain the price-agreement.' Except for

Wohl, all of the defendants entered stipulated judgments be-

fore the trial, so

that

when the trial occurred, Wohl was the

only defendant who appeared. The court decided against

Wohl,s and its decision was not appealed. Ultimately, all of

the defendants discontinued the practices found objectionable

by the government.

Most of us I am sure would agree

that

the law rightly

condemns agreements by competitors to set non-competitive

prices and to maintain such prices by means of boycotts.

But

in examining the record of this case, I was struck by what

seemed to be obvious and serious shortcomings in the argu-

- Economist, Federal Trade Commission.

AUTHOR'S

NOTE:

The views are the author's and do not neces-

sarily

re:ftect

official

opinion or policy of the FTC.

539

540

THE

ANTITRUST

BULLETIN

ments and evidence presented by the government to support

its charges. The practices of the defendants presented as evi-

dence of a price-fixing agreement and a boycott provide ex-

tremely weak evidence of

either;

and Isay this only in

part

because these practices can be explained along lines unrelated

to harmful collusion. These other explanations were over-

looked by the government throughout the proceedings.

From

the evidence presented, one cannot discover whether the de-

fendants were engaged in

any

harmful activities, although of

course the government and the court concluded

that

they were.

THE

ARGUMENTS

AND

EVIDENCE

The government's evidence involved the practices of the

retailers in pricing certain brands

(or

lines) 4of shoes and

three different incidents believed to illustrate the boycott.

What

was the evidence on

pricing'

Each

of the three

retailers

carried

as

part

of

their

total shoe stocks certain

brands which were also

carried

by

at

least one of the other

retailers. (No

brand

appears

to have been distributed by

all three of them.) These shoes were wholesaled by their

manufacturers who also owned

their

brand

names.

It

was

established

that

the retailers generally charged the "manu-

facturers' suggested retail prices"

for

these "jointly distrib-

uted" brands." Testimony was also presented

that

on a few

occasions, when

their

prices diverged, the retailers discussed

their differences

and

"agreed to the prices they would there-

after

charge." 8This similarity in pricing

and

the discussions

when their prices diverged seems to have convinced the gov-

ernment

that

the defendants

had

fixed the prices of the jointly

distributed brands above competitive levels.

It

is

important

to note

that

the prices charged by the de-

fendants

for

these brands were not unique to Albuquerque

but

were in most instances the same prices as those suggested

by their' manufacturers over much wider geographic areas,

frequently throughout the

nation/Therefore,

unless one as-

sumes

that

retailers also colluded throughout these wider