The Supreme Court and the Antitrust Laws: 1971–1972

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

THE

SUPREME

COURT AND THE ANTITRUST LAWS:

1971-1972

by

J. G.

VAN

CISE-

The decisions of the Supreme Court in the 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 and Clayton Acts which adhered to existing

law;

one

interpreting the Federal Trade Commission Act

that

ex-

panded the powers of the Commission; two in which principles

borrowed from

antitrust

were applied to regulated industries;

and three involving procedural issues

that

included dicta

in one case commenting favorably upon class actions.

In

short,

something old, something new, something borrowed and (for

harassed defendants) something "blue."

These decisions collectively reflected a reasonably 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 to the parties presently before them,

they proceeded in significant rulings to redirect the law of

the future in favor of the consumer. The Court would seem

to have agreed with Dean Roscoe 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 a cooperative association of ap-

proxiniately 25 small and medium-sized regional food super-

market chains, which operated as independent business enti-

ties under their individual names in some 33 states. The

combined retail sales of its members in the United States

were in excess 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 about 6%. The by-laws of Topco allocated exclusive and

non-exclusive territories to its members, and prohibited them,

without its consent, from reselling 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 the territorial

divisions and the wholesale restrictions imposed by Topco

upon its members, alleging

that

they represented violations

of Section 1 of the Sherman Act. The District Court entered

judgment for Topco; but the 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 under Section 1 of the Sherman Act is .

usually to be determined by an application of what is known

as the "rule of reason":

Were §1 to be read in the narrowest possible way, any

commercial contract could be deemed to violate it. . . .

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

adopted a "rule of reason" analysis for determining

whether most business combinations or 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 business relationships,however, it

had decided to classify those few 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 alleged to be

violative of the Sherman Act, it has also developed the

doctrine

that

certain business relationships

are

per se

violations of the Act without regard to a consideration of

their reasonableness. (p. 607)