The Supreme Court and the Antitrust Laws: 1971–1972

• Author: J. G. Van Cise
• DOI: 10.1177/0003603X7201700401
• Published date: 01 December 1972
• Date: 01 December 1972

THE

SUPREME

COURT AND THE ANTITRUST LAWS:

1971-1972

by

J. G.

VAN

CISE-

The decisions of theSupreme Court inthe field of

trade

regulation, during its

1971-1972

term, may be grouped roughly

into four categories as follows:

Four

with respect to the Sher-

man andClayton Actswhich adhered to existing

law;

one

interpreting the Federal Trade Commission Act

that

ex-

panded the powersof theCommission;two in which principles

borrowed from

antitrust

were applied to regulated industries;

and three involving procedural issues

that

included dicta

in one case commentingfavorably upon class actions.

In

short,

something old, something new, something borrowed and (for

harassed defendants) something "blue."

These decisions collectively reflected areasonably uniform

approach to antitrust. While the Justices sought to preserve

the precedents of the

past

on restraints of trade, and to pro-

vide due process of law tothe parties presently before them,

they proceeded in significant rulings to redirect the lawof

the future in favor of the consumer.TheCourt would seem

to have agreed withDeanRoscoe Pound

that

the "law must

be stable but it must not stand still."

SHERMAN

ACT

The principal Sherman Act ruling of the Supreme Court

was in United States v. Topeo Associates, Inc., 405 U.S. 596

(1972).The defendant was acooperative association of ap-

proxiniately 25 smallandmedium-sizedregional food super-

market chains, which operated as independent business enti-

ties under their individual namesin some33 states. The

combined retail sales of itsmembers in theUnited States

were inexcess of$2

billion-a

volume exceeded only by those

-Cahill, Gordon, Sonnett, Reindel &OhI,

~ew

York, N.Y.

975

976

THE

ANTITRUST

BULLETIN

of three national grocery

chains-and

the shares of the re-

spective local markets enjoyed by individual members aver-

aged about6%.The by-laws ofTopco allocatedexclusiveand

non-exclusive territories to its members, andprohibited them,

withoutitsconsent, fromreselling the products which they

purchased under Topco's brand names (representing 10% of

their sales) either in unlicensed territories, or

at

wholesale.

The United States brought suit to enjoin theterritorial

divisions andthe wholesale restrictions imposed by Topco

upon its members, alleging

that

they represented violations

of Section 1 of theSherman Act.The District Court entered

judgment for Topco; butthe Supreme Court(with Justice

Blackmun concurring, Chief Justice Burger dissenting, and

Justices Powell and Rehnquist taking no

part)

reversed.

The Supreme Court acknowledged ·that the legality of a

business transaction underSection 1 of theSherman Act is.

usuallytobe determined by an application of what isknown

as the "rule of reason":

Were§1 to be read in thenarrowest possible way, any

commercial contract could be deemed toviolate it.. . .

In lieu of the narrowest possible reading of§1, theCourt

adopted a "rule of reason" analysis for determining

whether most business combinationsor contracts violate

the prohibitions of the Sherman Act. (p.606)

The Court stated that

after

it had had sufficient experience

with a limited category of businessrelationships,however, it

had decided to classify thosefew categories of conduct as

"per se" violations of this Act:

While the Court has utilized the "rule of reason" in

evaluating the legality of most restraints allegedto be

violative of the Sherman Act,it hasalso developed the

doctrine

that

certain business relationships

are

per se

violationsoftheAct without regard to a consideration of

their reasonableness. (p. 607)