The Ghost of Albrecht: Caribe BMW, Inc. v. Bayerische Motoren Werke Aktiengesellschaft

• Author: Roger D. Blair
• Published date: 01 March 1995
• Date: 01 March 1995
• DOI: http://doi.org/10.1177/0003603X9504000104
• Subject Matter: Article

The Antitrust Bulletin/Spring 1995

The ghost

of

Albrecht:

Caribe

BMW; Inc. v.

Bayerische

Motoren

Werke

Aktiengesellschaft

BY ROGER D. BLAIR*

I.

Introduction

205

Our newest Supreme Court appointee, Stephen Breyer, is widely

acclaimed

for his

sophisticated

thinking on

economic

issues

before the bench.' Many economists believe that Justice Breyer

*Huber Hurst Professor of Business and Legal Studies, Department

of Economics, University of Florida.

AUTHOR'S NOTE: The financial support

of

the College

of

Business Admin-

istration at the University

of

Florida is gratefully acknowledged. Without

implicating them in what follows, the constructive comments

of

Stephen

Calkins, William Curran, III, Robert Emerson, Jeffrey Harrison, and John

Lopatka are also gratefully acknowledged.

See, e.g., Paul M. Barrett, Supreme Court Nominee Wins Busi-

ness's Approval,

WALL

ST.J., May 16, 1994, at B1, col. 5; Peter Passell,

Economists See an Intellectual Ally in Supreme Court Nominee, N.Y.

TIMES,

May 26, 1994, at C2, col. 1; and Clinton Nominates Antitrust

Scholar to Succeed Retiring Justice

of

Court, 66

ANTITRUST

&

TRADE

REG.

REP.

567 (1994).

©1995 by Federal Legal Publications, Inc.

2

206

The antitrust bulletin

will push the Court in the direction of greater consistency on eco-

nomic issues and focus the Court's attention on economic effi-

ciency. In what may be seen as the ultimate irony, Peter Passell

predicted that

One antitrust area in which Judge Breyer's cool logic may have the

most impact is "vertical restraint" cases, where economists have been

far more receptive than the courts to arguments as to why producers

should be allowed to dictate the behavior of wholesalers and retailers.?

Recently, however, Justice Breyer dropped the ball in his analysis

of an antitrust rule that prohibits maximum resale price fixing and

is inconsistent with the goals of antitrust policy.

In Caribe BMl¥, Inc.

v.

Bayerische Motoren Werke Aktienge-

sellschaft

Ja BMW dealer (Caribe) in Puerto Rico complained

inter

alia

that the German manufacturer, Bayerische Motoren

Werke (BMW AG), imposed maximum resale prices in violation

of section 1 of the Sherman Act." The district court dismissed for

failure to state a claim upon which relief can be granted.> Unfor-

tunately, the First Circuit's review of this decision was haunted by

the

ghost

of

Albrecht»

Exercising

judicial

restraint,"

Justice

Passell, supra note 1.

19 F.3d 745

(Ist

Cir. 1994).

4Section 1 of the Sherman Act forbids "[e]very contract, combina-

tion in the form of trust or otherwise, or conspiracy, in restraint of trade

or commerce

....

15 U.S.c. §1. Caribe also alleged that BMW AG also

engaged in price discrimination in violation

of

section 2 of the Clayton

Act, 15

U.S.c.

§13, which is commonly referred to as the Robinson-Pat-

man Act.

821 F. Supp. 802, 823 (D. Puerto Rico 1993).

6Albrecht v. Herald Company, 390 U.S. 145 (1968). The Albrecht

decision is reviewed infra at notes 10-25 and accompanying text.

Given the procedural posture of the case, Justice Breyer had little

discretion. Under the standards for review of a Federal Rules of Civil

Procedure 12(b)(6) determination that a plaintiff has failed to state a

claim upon which relief can be granted, Justice Breyer was duty bound to

be a friend of Caribe, i.e., to take the facts presented in the complaint and

interpret them in the light most favorable to Caribe. This, however, does

not excuse Justice Breyer's subsequent economic analysis.