# Oreck Corporation v. Whirlpool Corporation and Sears, Roebuck & Co.

> Court of Appeals for the Second Circuit · May 1, 1978 · 579 F.2d 126

URL: https://www.frixlaw.com/law-library/cases/9464903

## Case

- **Full name:** ORECK CORPORATION, Plaintiff-Appellee, v. WHIRLPOOL CORPORATION and Sears, Roebuck & Co., Defendants-Appellants
- **Court:** Court of Appeals for the Second Circuit
- **Decided:** May 1, 1978
- **Citations:** 579 F.2d 126; 1978 U.S. App. LEXIS 11410
- **Precedential status:** Published
- **Opinion:** Dissent by Mansfield
- **Judges:** Anderson, Feinberg, Mansfield, Mulligan, Timbers, Gurfein, Van Graafeiland Meskill
- **Cited by:** 170 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9464903

## How later opinions describe it (automated extraction)

- concluding that, without further showing of anticompetitive effect, a competitor’s alleged tortious interference with plaintiffs business did not amount to an antitrust violation

## Opinion text

MANSFIELD, Circuit Judge,
dissenting in an opinion in which FEINBERG, Circuit Judge, concurs.
This antitrust appeal turns on two major interlocking issues, one factual and the other legal: (1) Did Whirlpool and Sears combine and conspire to oust Oreck as a competitor of Sears in the sale of Whirlpool-made vacuum cleaners? (2) If so, should the conspiracy be treated as per se illegal? In my view both questions must be answered affirmatively. Therefore, I dissent.
The majority opinion is based on certain materially mistaken premises. It assumes (1) that the complaint charges only a general conspiracy “to exclude Oreck from the vacuum cleaner market in the United States and Canada” (Maj.Opin. p. 128, supra). (2) that Oreck’s case rested solely upon Whirlpool’s failure to renew its agreement for distributorship of Whirlpool vacuum cleaners and parts, possibly as the result of “inducements by Sears” which “may have amounted to tortious interference” (Maj.Opin. p. 133), and (3) that the jury credited the testimony of one or two Whirlpool officers regarding Whirlpool’s reasons for termination of its agreement with Oreck rather than the evidence offered by Oreck (Maj.Opin. p. 128; n.2).
Only on the basis of these erroneous assumptions is the majority able to conclude that the termination of the Whirlpool-Oreck distributorship agreement did not constitute a per se violation of § 1 of the Sherman Act, and that there could be no violation of that Act in the absence of proof of a restraint of “trade unreasonably in the vacuum cleaner industry in the United States and/or Canada.” However, when the case is viewed in the light of (1) the issues framed by the pleadings, (2) the evidence presented at trial (including the inferences which the jury could reasonably have drawn from that evidence), and (3) the applicable principles of antitrust law as charged by the trial judge, the reversal is unwarranted.
Turning first to the complaint, the First Claim alleges essentially a conspiracy between Whirlpool and Sears to restrain Oreck from competing against Sears in the sale of Whirlpool-made vacuum cleaners, attachments and parts. It is claimed that pursuant to a written Whirlpool-Oreck distributorship agreement dated August 7, 1963, Oreck invested substantial funds, time and effort in building up a successful sales and service organization for the distribution of Whirlpool vacuum cleaners and that Oreck’s success enabled it “to compete seriously” with Sears, the pre-existing and only other distributor of Whirlpool-made vacuum cleaners, which sold the cleaners under the “Kenmore” label. (Compl. H 14). The complaint further alleges that as a result of Oreck’s successful competition against Sears, Whirlpool was induced by Sears, its major distributor, to “eliminate any serious competition to Sears, Roebuck from Oreck” (H 15) and to combine and conspire with Sears “to deprive Oreck of its market for the sale of vacuum cleaners, attachments and parts under the Whirlpool name and label” (1! 25). The conspiracy was allegedly carried out by (1) forcing Oreck in 1968 to reduce its distributorship to “two Whirlpool products, one vacuum cleaner and one set of attachments to a different vacuum cleaner,” (2) limiting or cutting off from Oreck replacement parts, tools, drawings, improvements and modifications for Whirlpool *135 vacuum cleaners, and (3) forcing or persuading suppliers not to furnish vacuum cleaner components to Oreck, all “with the intent and effect of foreclosing Oreck from numerous customers and potential customers and reducing Oreck’s competition with Sears, Roebuck.” (H 21). The purpose and effect of the alleged conspiracy is then stated as follows:
“25. The purpose and effect of such contracts, combinations or conspiracies, and each of them, have been to deprive Oreck of its market for the sale of vacuum cleaners, attachments and parts under the Whirlpool name and label, and Oreck has substantially lost such market as a result of the actions referred to above.
“26. The purpose and effect of such contracts, combinations or conspiracies, and each of them, have also been substantially to exclude Oreck from the market for vacuum cleaners, attachments and parts in the United States and its possessions, and to lessen competition in such market.” (Emphasis added).
Thus, although the complaint includes allegations of restraint of trade in vacuum cleaners generally in the United States and Canada, it charges primarily a conspiracy to deprive Oreck of the sale of Whirlpool cleaners in competition with Sears. The case was tried on the latter basis and if the plaintiff succeeded in proving a conspiracy limited to the objective alleged in ¶ 25, it would be entitled to recover without proving the broader claims in H 26 that it was excluded from the sale of vacuum cleaners of any kind in the United States. United States v. General Motors, 384 U.S. 127 , 86 S.Ct. 1321 , 16 L.Ed.2d 415 (1966); Klor's, Inc. v. Broadway-Hale Stores, 359 U.S. 207 , 79 S.Ct. 705 , 3 L.Ed.2d 741 (1959); Silver v. N. Y. Stock Exchange, 373 U.S. 341, 348, n.5 , 83 S.Ct. 1246 , 10 L.Ed.2d 389 (1963). The Second Claim of the complaint (the only other pertinent claim for present purposes) adds to the foregoing allegations the charge that Sears and Whirlpool also conspired “to prevent Oreck from selling vacuum cleaners and other Whirlpool products in Canada.” 1
Prom the outset it was recognized that Oreck could not establish an unreasonable restraint in the distribution of vacuum cleaners generally in the United States, since Whirlpool cleaners represent but a small percentage of the entire market. As a practical matter, therefore, the issue tried was whether Sears and Whirlpool had combined to restrain Oreck’s competition against Sears by precluding Oreck from selling Whirlpool-made vacuum cleaners, attachments and parts. The record, which must at this stage be viewed most favorably to Oreck, Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 , 82 S.Ct. 1404 , 8 L.Ed.2d 777 (1962), discloses more than ample evidence to establish this specific and limited conspiracy. Since 1925 Sears has been the principal distributor of Whirlpool products, currently purchasing more that two-thirds of Whirlpool’s total appliance production and, at the time of the events here involved, more than 90% of Whirlpool’s vacuum cleaner output for resale under Sears’ “Kenmore” label. In addition Sears, beginning in 1925, purchased a substantial block of Whirlpool’s common stock and by 1960 became its largest single shareholder, owning 251,192 shares and usually electing one or more of its executives to Whirlpool’s board of directors. Senior officers of Sears sometimes became Whirl *136 pool executives. Sears, therefore, has been in a position to exercise considerable leverage over Whirlpool’s sales and distribution policies and decisions.
Prior to the formation of Oreck in 1963, Whirlpool had periodically attempted to broaden the sales of its vacuum cleaners by marketing them under its own brand name, but had found that its existing distribution network was inadequate and that Sears’ sales of Whirlpool-manufactured vacuum cleaners at high retail prices posed a barrier to Whirlpool’s entry into price competition against other brands as long as its relationship with Sears deterred it from competing against Sears in the sale of Whirlpool-made machines. As a result, Whirlpool in 1961 discontinued efforts to sell its product independently under its own name and H. Thomas Stroop, a Whirlpool executive, prepared a report entitled “Appraisal of Vacuum Cleaner Business — RCA Whirlpool.” He concluded that:
“Unlike other appliances, Sears sells their [vacuum] cleaners for a high or higher prices than major brand competition.
“Sears becomes very unhappy if RCA Whirlpool product is retailed for less than Sears product manufactured by Whirlpool. For this reason, we understand that it has been decided that the RCA Whirlpool brand should have retail prices comparable to Sears. “Our challenge then . . ‘Can we sell cleaners in volume at high retail prices . . . and if so how?’ ” (PI. Ex.160).
Thereafter, until the events giving rise to this case, Whirlpool-made vacuum cleaners were sold to the public only by Sears.
In April, 1963, Whirlpool’s interest in selling its vacuum cleaners under its own brand name was revived. Jack Sparks, Vice President of Whirlpool, approached David Oreck, who prior to 1961 had been in charge of Whirlpool vacuum cleaner sales for “Bruno New York” and had been the most successful distributor of Whirlpool vacuum cleaners under its own brand name before Whirlpool discontinued such sales. Sparks and Oreck agreed that the newly-formed Oreck Corporation, plaintiff-appel-lee, would function as the exclusive United States distributor of Whirlpool brand vacuum cleaners. Sparks advised Oreck that he was “not to conflict with Sears, Roebuck on price” and an internal Whirlpool letter confirmed that Oreck’s prices would “emphasize specialty [i. e., high-priced] selling.”
Oreck soon found that it could operate profitably only by selling Whirlpool-made vacuum cleaners through direct mail or institutional supply houses, which would, by reducing or eliminating the middleman’s mark-up, enable Oreck to sell competitively. Accordingly, in 1967 Oreck began a large-scale mail solicitation campaign which dramatically increased its sales of Whirlpool machines from a low in 1967 of 8,384 units to an all-time high of 78,203 units in 1971, the year Whirlpool terminated its distributorship. Oreck planned to realize its profits principally from the sale of dust bags and accessories over the 10 -15 year life of the product. Despite the prospects for increased mail order sales, which actually developed, three Whirlpool executives — Jack Sparks, Sol Sweet and John Payne, Whirlpool’s primary contact with Oreck — all expressed disapproval of Oreck’s mail order campaign, Payne advising Oreck that Whirlpool’s unhappiness was attributable to the company’s “other customer” (Sears), which did not like the mail solicitation. Indeed, Sid Boyar, a Sears vice-president and director who was also a director of Whirlpool, forwarded to Whirlpool an Oreck mail solicitation for sale of Whirlpool machines, with a note advising that this “type of selling gave Whirlpool a bad name.” Payne also told Oreck that the “other customer [Sears] got to the head of the company [Whirlpool].” As a mail order house, Sears might be adversely affected by Oreck’s solicitation of mail order business for vacuum cleaners made by the same company (Whirlpool), which were similar in appearance and design to those sold by Sears. 2 Moreover, *137 although Oreck had originally concentrated on sale of the higher-priced “top-of-the-line” Whirlpool machines, after it shifted to mail order sales and sales to institutional supply houses, its prices for the Whirlpool upright units (which it sold in these markets) were lowered.
That a Whirlpool-Sears combination had been formed to stop Oreck’s competition against Sears was further evidenced by events during the preceding year, 1966, when David Oreck sought to obtain Whirlpool’s approval of Oreck’s plan to market in Canada, where Sears operated under the name of Simpson-Sears Ltd. Whirlpool refused to make the minor changes in the Whirlpool vacuum cleaner necessary to conform to Canadian Standards Association requirements, as Whirlpool had done for Sears, and Payne later wired Oreck that it could not market in Canada because Whirlpool could not “obtain a waiver to the current franchise,” meaning approval by Sears.
By 1968 the Whirlpool-Sears combination was putting pressure on Oreck to force it to lessen its competition against Sears. In that year Whirlpool refused to manufacture private label vacuum cleaners for certain of Oreck’s large customers, and Payne attributed the refusal to “objections from our customer . . .”, which could be interpreted by the jury as obviously referring to Whirlpool’s only other customer, Sears. When Oreck persisted, Payne eventually advised him that “another vacuum cleaner customer” had informed Whirlpool that “they are not interested in having another competitor in the vacuum cleaner business.” In 1969 and 1970, Whirlpool refused to make minor changes in Oreck’s shipping1 carton to meet parcel post requirements and thereby avoid a penalty charge, even though Whirlpool had provided Sears with an acceptable box for its mail orders. Payne, who handled the matter, attributed the refusal not to engineering difficulties but to a “corporate” decision.
On December 31, 1971, despite Oreck’s highest‘sales level since it had begun selling Whirlpool vacuum cleaners, Whirlpool terminated the Oreck distributorship. Whirlpool witnesses conceded at trial that Oreck was “doing a nice job, no question about that” and “we had no argument with the amounts he was selling.” Yet, immediately following the termination, Whirlpool refused to sell Oreck 30,000 units in inventory at $30 each on a cash basis but sold them instead to third parties at $15 per unit.
The foregoing, together with other evidence and witnesses viewed by the jury, supported the jury’s conclusion that Whirlpool terminated Oreck as the result of the combined efforts of Sears and Whirlpool to put an end to Oreck’s competition against Sears in the sale of Whirlpool machines, including mail-order solicitation, to which Sears objected because of the possible adverse effect on its sale of Whirlpool vacuum cleaners under its own label in the United States and Canada. No substantial evidence was offered to show that Oreck was terminated for some possibly lawful reason, such as failure to increase Whirlpool sales or Whirlpool’s desire to protect its trade name, other than testimony of Jack D. Sparks and John Payne that Oreck had failed to market to “major accounts.” This purported rationale for the termination was understandably rejected by the jury in view of the tremendous increase in Oreck’s sales of Whirlpool cleaners from 1967 to 1971.
With the foregoing allegations and evidence before him, the trial judge instructed the jury
“[Tjhat in order to recover under Count 1 Oreck has the burden of proving each of the following propositions:
“That Whirlpool and Sears combined or conspired to exclude Oreck from the market for Whirlpool vacuum cleaners, or from the vacuum cleaner market generally in the United States and its possessions and to lessen the competition in either of these markets.
“Two. That as a result of said combination or conspiracy Oreck was partially or wholly excluded from the vacuum cleaner market as I have described above.
*138 “Three. That as a proximate result of said exclusion Oreck in fact suffered damage.” (Emphasis supplied). 3
On the evidence and this instruction the jury could have found that Oreck had by a preponderance of the evidence established the more specific and limited conspiracy alleged in its First Claim, namely, a combination between Whirlpool and Sears to eliminate Oreck as a competitor of Sears in the distribution of Whirlpool vacuum cleaners, parts and attachments. Indeed, the majority virtually concedes this, stating:
“Under such instructions, the jury could simply have found an agreement by Sears and Whirlpool to exclude Oreck from the sale of Whirlpool vacuum cleaners and, on that basis, have found them guilty (as it in fact did) of a per se violation of § 1 of the Sherman Act. ... On the instant reconsideration en banc, the issue is whether the per se standard, under which the trial judge charged the jury, was appropriate in light of the nature of the alleged Whirlpool/Sears agreement.” (Maj.Opin. pp. 129-130) (Emphasis in original).
Accepting the legal issue as framed by the majority, the answer is furnished in clear and unmistakable terms by a long line of Supreme Court decisions consistently holding that where two or more competitors agree to cut off supplies to a third, such a combination or agreement to boycott is sufficiently pernicious in its purpose and effect to be unreasonable per se and hence illegal without the necessity of inquiring into the precise economic harm in the market caused by the agreement or into the amount of commerce affected. United States v. General Motors, 384 U.S. 127, 145-46 , 86 S.Ct. 1321 , 16 L.Ed.2d 415 (1966) (agreement between GM and its Chevrolet dealers to cut off supply to price-discounters selling Chevrolets); Klor’s, Inc. v. Broadway-Hale Stores, 359 U.S. 207 , 79 S.Ct. 705 , 3 L.Ed.2d 741 (1959) (conspiracy between one merchant and suppliers to deprive competing merchants of goods); United States v. Topco Associates, Inc., 405 U.S. 596 , 92 S.Ct. 1126 , 31 L.Ed.2d 515 (1972); Northern Pac. R. Co. v. United States, 356 U.S. 1 , 78 S.Ct. 514 , 2 L.Ed.2d 545 (1958); Fashion Originators’ Guild of America, Inc. v. FTC, 312 U.S. 457 , 61 S.Ct. 703 , 85 L.Ed. 949 (1941). Such a combination “is not to be tolerated merely because the victim is just one merchant whose business is so small that his destruction makes little difference to the economy,” Klor’s, supra, 359 U.S. at 213, 79 S. Ct. at 710 (footnote omitted).
“[Wjhere businessmen concert their actions in order to deprive others of access to merchandise which the latter wish to sell to the public, we need not inquire into the economic motivation underlying their conduct. See Barber, Refusals To Deal Under the Federal Antitrust Laws, 103 U.Pa.L.Rev. 847, 872-885 (1955). Exclusion of traders from the market by means of combination or conspiracy is so inconsistent with the free-market principles embodied in the Sherman Act that it is not to be saved by reference to the need for preserving the collaborators’ profit margins or their system for distributing automobiles, any more than by reference to the allegedly tortious conduct against which a combination or conspiracy may be directed — as in Fashion Originators’ Guild of America, Inc. v. Federal Trade Comm’n, supra, at 468 [ 61 S.Ct. 703 at 708 ].” United States v. General Motors, supra, 384 U.S. at 146-47 , 86 S.Ct. at 1331 .
*139 The present case is governed by these basic principles. The jury found that Whirlpool, a large manufacturer of appliances, including vacuum cleaners, combined with Sears, Roebuck, a merchandising giant that depended on mail order business and had for 40-odd years distributed the lion’s share of Whirlpool’s entire output, to stop Oreck, the only other distributor of Whirlpool-made vacuum cleaners, from competing against Sears in the sale of Whirlpool-made machines.
Before Oreck was terminated by the Sears-Whirlpool combination as a competing distributor, the public had the benefit of Oreek’s competition, including price competition, in the marketing of Whirlpool cleaners, the sales of which had been dramatically increased by Oreck from 8,384 units to 78,203 units in the preceding four years, resulting in profits to Whirlpool and Oreck. 4 After the termination the public could buy Whirlpool machines only from Sears at such prices as Sears might decide, unaffected by any Oreck competition.
The majority’s legalization of this Whirlpool-Sears conspiracy on the theory that “something more than an agreement between Whirlpool and Sears to eliminate Oreck must be shown” (Maj.Opin. p. 133), and that Whirlpool could lawfully have accomplished the same result by unilaterally exercising its contract right to terminate or not to renew, simply is unsupportable, either by logic or by precedent. Had Whirlpool not agreed with Sears to oust Oreck, as the jury found, Whirlpool not only could have, but probably would have, continued to distribute its product through Oreck, in view of the latter’s outstanding success in selling Whirlpool cleaners during the four years immediately preceding the 1971 termination. As the jury found, the cutoff was directly attributable to the Sears-Whirlpool combination, not to any unilateral exercise by Whirlpool of its rights under its distribution contract with Oreck. The existence of a contract right to terminate Oreck does not create a mantle of protection against an anticompetitive agreement between a manufacturer and a distributor to terminate the distributor’s sole competitor.
No one questions the right of a manufacturer unilaterally to terminate a distributorship, whether it be to maximize profits, improve a distribution system, or for some other legitimate reason, see, e. g., United States v. Colgate, 250 U.S. 300 , 39 S.Ct. 465 , 63 L.Ed. 992 (1919), and a manufacturer is not precluded from acting on his own to substitute one exclusive distributor for another, Alpha Distributing Co. v. Jack Daniels Distillery, 454 F.2d 442 , 452 (9th Cir. 1972); Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors Ltd., 416 F.2d 71, 76 (9th Cir. 1969), cert. denied, 396 U.S. 1062 , 98 S.Ct. 752 , 24 L.Ed.2d 755 (1970); Packard Motor Car Co. v. Webster Motor Car Co., 100 U.S.App.D.C. 161 , 243 F.2d 418 , cert. denied, 355 U.S. 822 , 78 S.Ct. 29 , 2 L.Ed.2d 38 (1957); Elder-Beerman Stores Corp. v. Federated Department Stores, Inc., 459 F.2d 138 (6th Cir. 1972). The jury was so instructed. 5 But when the manufacturer agrees with one or more existing competitors of its distributor to cut off the distributor, as the jury found here, the resulting termination is unlawful, United States v. *140 General Motors Corp., supra; Klor’s, Inc. v. Broadway-Hale Stores, supra; E. A. McQuade Tours Inc. v. Consolidated Air Tour Manual Comm., 467 F.2d 178, 186-87 (5th Cir. 1972), cert. denied, 409 U.S. 1109 , 93 S.Ct. 912 , 34 L.Ed.2d 690 (1973); Barber, Refusals To Deal Under the Federal Antitrust Laws, 103 U.Pa.L.Rev. 847, 875 (1955), and cannot be saved by using an otherwise lawful means of termination to carry out an anticompetitive agreement. See Poller v. Columbia Broadcasting System, 368 U.S. 464, 468-69 , 82 S.Ct. 486 , 7 L.Ed.2d 458 (1962).
These basic principles were accepted at trial by Whirlpool’s counsel in a recorded exchange with Judge Owen regarding the instructions to be given by him to the jury:
“The Court: I understand that, but it seems to me that if the jury were to conclude that Sears and Whirlpool had conspired to terminate Oreck to rid Sears of a competitor, they have gone all the farther that they need to go.
“Mr. Turoff [Whirlpool’s counsel]: I see now your Honor’s argument. I think what you are saying is that if the jury finds that we had a conspiracy for the purpose of getting rid of Oreck, that is an unreasonable restraint of trade. That is, I think, a correct statement of the law.”
In view of the jury’s finding of just such a conspiracy, no basis exists for Judge Anderson’s statement (Maj.Opin. p. 133) that “Any alleged inducements by Sears to Whirlpool to allow the contract with Oreck to expire” may have amounted merely to “tortious interference,” and that it would therefore be “inconsistent with the sanctity of contractual arrangements” to require Whirlpool to renew Oreck’s distributorship. The Whirlpool-Sears agreement to “terminate Oreck to rid Sears of a competitor” was not only a “tortious interference” but also a per se unreasonable restraint of competition. United States v. General Motors Corp., supra; Klor’s, Inc. v. Broadway-Hale Stores, Inc., supra.
Nor can the boycott here be legalized on the technicality that it is “vertical” because only one horizontal competitor, Sears, was a member of the conspiracy. It is the participation of this competitor, incidentally one of the country’s merchandising giants, with some 2,800 stores and ' sales offices, that renders illegal the boycott of Oreck by establishing that the Whirlpool-Sears agreement was anti-competitive and designed to benefit Sears at the expense of its competitor, Oreck. Once that objective was shown, the number of the conspirators and their posture — whether vertical or horizontal— has no legal significance. See, e. g., General Motors, supra, where the boycott depended for its success upon vertical conspiratorial efforts by one manufacturer, as here. Moreover, the harmful effect on the victim of the boycott — in this case Oreck — does not depend on the existence of more than one competitor but upon the anticompetitive agreement between the competitor and the supplier. 6
Finally, the majority places heavy reliance on Continental T. V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 , 97 S.Ct. 2549 , 53 L.Ed.2d 568 (1977), which was decided approximately one year after the jury rendered its verdict in this case. In Sylvania the Supreme Court held that the potential harm from nonprice vertical restrictions is insufficient to warrant as a general rule their classification as per se illegal, and that the legality of such commercial practices must be judged by a “rule of reason,” unless the particular challenged practice is shown to have a “pernicious effect on competition” and to lack “any redeeming virtue.” Northern Pac. R. Co. v. United States, 356 U.S. 1, 5 , 78 S.Ct. 514 , 2 L.Ed.2d 545 (1958).
While the Sylvania holding indicates that the trend in antitrust doctrine may be toward increasing application of the rule of reason over the per se approach, the decision is largely irrelevant to this case, which involves a boycott, not a vertical restriction.
*141 Sylvania leaves intact the justification and standard for the creation of per se rules, as articulated in Northern Pacific, supra, and the boycott in this case meets that standard. No redeeming virtue has been asserted to justify the conspiracy between Whirlpool and Sears to terminate Oreck, as found by the jury; nor has it ever been suggested that benefits to the marketplace will result from this conspiratorial termination. Moreover, the harm to intra-brand competition in the sale of Whirlpool-made vacuum cleaners is both immediate and apparent, with no countervailing stimulation of intrabrand competition, the usual saving .grace of a vertical restraint.
Until the Supreme Court decides that a boycott ought not to be evaluated according to the per se rule, I would hold that a combination or conspiracy of two or more persons or entities to eliminate a competitor is per se illegal under § 1 of the Sherman Act. The jury’s conclusion that such a conspiracy existed in this case is supported by the evidence. Therefore, I would affirm.
. Insofar as the claim alleged in Count Two was presented to the jury as charging the defendants with an unlawful vertical location restriction, I agree with the majority that Continental T. V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 , 97 S.Ct. 2549 , 53 L.Ed.2d 568 (1977), which was not decided until almost a year after Judge Owen instructed the jury in this case, now requires trial courts to make a preliminary determination of whether a particular challenged restraint warrants per se treatment or should be judged according to the rule of reason.
Judge Owen did not make this preliminary determination. However, I do not agree with the majority that Judge Owen’s charge on this point necessarily prejudiced the jury’s consideration of the evidence relating to Count One, since the jury verdict on that Count was supported by abundant evidence independent of the proof concerning Whirlpool’s resistance to Oreck’s desire to enter the Canadian market.
. Indeed, despite minor differences, the machines sold by Oreck were so similar to those sold by Sears that they were characterized by an expert as “the same.”
. It is noteworthy that no objection was made to these jury instructions at trial, nor did the defendants claim that the charge was erroneous in their appeal from the jury’s verdict.
The majority contends that Judge Owen’s charge was defective in that it allowed the jury to find antitrust liability on evidence that amounted to no more than “a perfectly legal exclusive distributorship.” (Maj.Opin. p. 130). Judge Owen properly instructed the jury on this point. His charge states:
“The manufacturer may discontinue an exclusive distributorship or may refuse to renew an exclusive distributorship for business reasons which are sufficient to the manufacturer alone and any adverse effect such a decision may have upon the business of the distributor is immaterial in the absence of any arrangement or conspiracy restraining trade or competition.” (Tr. 1839.(emphasis supplied)).
. Although my view of this case does not rest on Oreck’s ability to compete with Sears price-wise, one aspect of the issue of price competition merits discussion. Oreck’s initial brief on appeal strongly suggested in numerous places that the Sears-Whirlpool conspiracy was partly motivated by Sears’ desire to eliminate Oreck because of the competition on prices that Oreck provided. These suggestions were not disputed by the defendants until the en banc briefs were filed.
My panel dissent mistakenly referred to Oreck’s prices for Whirlpool-made vacuum cleaners as “lower” than the Sears prices for its Kenmore version of the same cleaners. The important point, however, is not which cleaners were higher-priced, but whether Sears encountered serious competition from Oreck that motivated it to prevail upon Whirlpool to terminate Oreck. The evidence showed that Oreck was a vigorous competitor, especially in the last years of its distributorship, when its sales rose dramatically. Also, it is undisputed that by 1970, 90% of Oreck’s sales were from mail order solicitations, a traditional preserve of Sears.
. See note 3, supra.
. As Professor Sullivan observed in his discussion of the per se approach to group boycotts, “it is conceivable that only a single firm at the blockaded level [Sears] may succeed in coercing or inducing . . . one important supplier [Whirlpool] . . . from dealing with one or more would-be competitors [Oreck]. . Such an arrangement would display all essential elements of a boycott.” Sullivan, Antitrust, 231, n.l (1977).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9464903. Public record. Not legal advice.