Amicus Curiae Brief — Business Electronics Corp. v. Sharp Electronics Corp.

FIDED

, | AUG 22 1987

No. 85-1910 JOSEPH F. SPANIOL, JE

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

BUSINESS ELECTRONICS CORPORATION,

‘ Petitioner,

SHARP ELECTRONICS CORPORATION,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF AMICUS CURIAE OF

NATIONAL MASS RETAILING INSTITUTE

IN SUPPORT OF PETITIONER

WILLIAM D. COSTON

(Counsel of Record)

KAREN ABRAMS

BISHOP, COOK, PURCELL

& REYNOLDS

1200 17th Street, N.W.

Washington, D.C. 20036

(202) 857-9818

ROBERT J. VERDISCO

MORRISON G. CAIN

NATIONAL MASS RETAILING

INSTITUTE

1901 Pennsylvania Ave., N.W.

Washington, D.C. 20006

(202) 861-0774

Counsel for Amicus Curiae

National Mass Retailing

August 22, 1987 Institute

WILSON - EPEes PRINTING Co.. INC. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF CONTENTS

py SP iy gs | EN

INTEREST OF AMICUS CURIAE .......00020022--2e.2-ec000-s

SUMMARY OF ARGUMENT ...........2...2----.csscsseseseesseesees

REIS ictartttncstneideisiinntdcneranntiinnnnmninnninnnaon

I,

II.

A CONSPIRACY TO ELIMINATE PRICE

COMPETITION BY TERMINATING A DIS-

COUNTER IS A PER SE VIOLATION OF

THE ANTETRUSE LAWS. .....20..22-ccceccccencccccccesses

A. The Per Se Rule In Vertical Pricing Cases:

5 TRS Leen ee en

B. Resale “Price Fixing” Includes A Conspiracy

To Eliminate A Price Cutter ...........................

IN THE CONTEXT OF THE ENTIRE TRIAL,

THE JURY INSTRUCTIONS WERE APPRO-

PRIATE

EEE EEE EEE EEE EEE EEE EERE EERE EEE ERED te

CFR TEN cescnessssrscasecsnscenenssenseenensssceeneerensenovenenscumate

Page

ii

TABLE OF AUTHORITIES

Cases Page

Albrecht v. Herald Co., 390 U.S. 145 (1968) ........ 8,9,17

Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940) .. 8

Arizona v. Maricopa County Medical Soc’y, 457

ie EF a rR ee Tes s

Broadcast Music, Inc. v. Columbia Broadcasting

System, Inc., 441 U.S. 1 (1979) ........2-----.cccce---e000 18

Bunch v. Walter, 673 F.2d 127 (5th Cir. 1982)... 23

California Retail Liquor Dealers Ass’n v. Midcal

Aluminum, Inc., 445 U.S. 97 (1980) ~......... 6, 7, 9, 10, 16

Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643

CIID caccssescsssccmneiconadieaeneuaie 6, 7, 14, 15, 16, 17

Cernuto, Inc. v. United Cabinet Corp., 595 F.2d

ke ft: | , aaa ee 16, 17, 18, 19

Continental T.V., Inc. v. GTE Sylvania Ince., 433

8 EF: ; Ee Ph 9,10

Dr. Miles Medical Co. v. John D. Park & Sons Co.,

be 2: |) ae 8, 9, 16, 17

FTC v. Beech-Nut Packing Co., 257 U.S. 441

ee ene a 9

FTC v. Cement Inst., 333 U.S. 683 (1948) -.............. 15

Kiefer-Stewart Co. v. Joseph E. Seagram & Sons,

™ 2:° | fF) | eee ee 9, 16

Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

F's BR fy | ee ee 16

Monsanto Co. v. Spray-Rite Service Corp., 465

TE, THe CII ecccescctnstinineccincieesinenasebiassianne passim

National Soc’y of Professional Eng’rs v. United

States, 486 U.S. 679 (1978) .......2..-cccccceccccccccccccceee 15

NCAA v. Board of Regents of Univ. of Okla., 468

CEs Ge GRID ~<ccnsnccneesssemisnsiaseipeteinasataiensaeminniaaamned 19

Northern Pac. R. Co. v. United States, 356 U.S. 1

CD ccencoinuncnssassnscscntssunitieniesiainniaaan 4, 16

Rice v. Norman Williams Co., 458 U.S. 654

CD ecucecnconsnsesecnasiitictiiteeaaainesa nn - 9,21

Spray-Rite Service Corp. v. Monsanto Co., 684

F.2d 1226 (7th Cir. 1982), aff'd on other

grounds, 465 U.S. 752 (1984) —............ saneddammieanie 17

824 Liquor Corp. v. Duffy, 107 S.Ct. 720 (1987)... 9,10

ee ee

iii

TABLE OF AUTHORITIES—Continued

Page

United States v. A. Schrader’s Son, Inc., 252 U.S.

i sssebetdqnessncosoces 9

United States v. Container Corp. of America, 393

er cenerirseemibossenenecse 15

United States v. Colgate & Co., 250 U.S. 300

ES OR 9

United Stetes v. Line Material Co., 333 U.S. 287

i sasieasisievabedesosescs 9

United States v. Parke, Davis & Co., 362 U.S. 29

ESS ES OO 9

United States v. Socony-Vacuum Oil Co., 310 U.S.

EES EEL LE 6, 14, 15, 17

United States v. United States Gypsum Ceo., 438

ES 15, 22

United States v. Waldbaum, Inc., 1985-2 Trade Cas.

(CCH) % 66,689 (D. Conn. 1984) —.........---.. 6, 18

Victorian House, Inc. v. Fisher Camuto Corp., 769

ccc cncesscevccensececccees 16

Ziddell Explorations, Inc. v. Conval Int’l, Ltd., 719

SS 16, 17

Statutes

Consumer Goods Pricing Act of 1975, Pub. L. No.

94-145, 89 Stat. 801 (1975) (amending 15 U.S.C.

cs acccsscsecocceces .....4, 10, 11, 12

Departments of Commerce, Justice, and State, the

Judiciary, and Related Agencies Appropriations

Act, Pub. L. No. 98-166, § 510, 97 Stat. 1071,

EE ELE TR 12

Departments of Commerce, Justice, and State, the

Judiciary, and Related Agencies Appropriations

Act, Pub. L. No. 99-180, § 605, 99 Stat. 1136,

Ne ceneneveseces 12, 13, 19

Departments of Commerce, Justice, and State, the

Judiciary, and Related Agencies Appropriations

Act, Pub. L. No. 99-591, § 605, 100 Stat. 3341,

Tee eumssecncccs 12

Miller-Tydings Act of August 17, 1937, ch. 690, 50

Stat. 693 (amending 15 U.S.C. §1) (repealed

a essascneenonceoes ete 10

iv

IN THE

TABLE OF AUTHORITIES—Continued P

nn Suprenve Court of the United States

McGuire Act of July 14, 1952, ch. 745, §§ 1, 2, 60 OCTOBER TERM, 1987

Stat. 632 (amending 15 U.S.C. § 45, 45 note)

I I iid iiincicinicticiinih sates sntideiailosidndietiialiabionetiae 10

Legislative and Administrative Materials No. 85-1910

121 Cong. Rec. 38,049-50 (1975) ..............-.--....----00--- 11

Hearings on H.R. 2384 Before the Subcomm. on

Monopolies and Commercial Law of the House

Judiciary Comm., 94th Cong., Ist Sess. 1 BUSINESS ELECTRONICS CORPORATION,

ECE OS EE OEE es Sarin eno 11 Petitioner,

H.R. 2763, 100th Cong., 1st Sess. § 605 (1987)........ 12 Vv.

H.R. Rep. No. 341, 94th Cong., Ist Sess. 2 (1975) .. 11

H.R. Rep. No. 399, 99th Cong., Ist Sess. 14 SHARP ELECTRONICS CORPORATION,

(EBD) 40-0-n--cccescecerenenncareneossseneneseasees -nnenapeneenevecsooees 7, 12, 13 Respondent.

H.R. Rep. No. 182, 100th Cong., 1st Sess. 70 (1987) .. 12

S. 938, 100th Cong., Ist Sess. § 404 (1987) -.............. 12 :

S. Rep. No 466, 94th Cong., Ist Sess. 1 (1975) _...... 10, 11 On Writ of Certiorari to the

S. Rep. No. 72, 100th Cong., Ist Sess. 26 (1987) .... 12 United States Court of Appeals

11 Weekly Comp. Pres. Doc. 1368 (Dec. 12, 1975).. 11, 12 | for the Fifth Circuit

Miscellaneous

A.B.A. Sec. Antitrust, Antitrust Civil Jury In-

structions (1980 and Supp. 1986) .........00...00....... 22 | BRIEF AMICUS CURIAE OF

True Look of the Discount Industry, 26 The Dis- NATIONAL MASS RETAILING INSTITUTE

count Merchandiser 37 (1986) -........................... 2 | IN SUPPORT OF PETITIONER

Vertical Restraint Guidelines, Department of Jus-

tice, 1 Trade Reg. Rep. (CCH) No. 687, pt. LI,

at 1 (Jan. 23, 1985) ............. viisiensipiichoneitaieaalauaentiiies . 2219

United States v. Waldbaum, Inc., Crim. No. B-84- | INTEREST OF AMICUS CURIAE!

51 (D. Conn., indictment filed Aug. 15, 1984)... 17, 18 The National Mass Retailing Institute (“NMRI”) is a

nonprofit trade association of mass merchandise retailers.

NMRI’s 140 members operate over 20,000 retail stores

throughout the United States and generate over $126 bil-

1 Pursuant to Supreme Court Rule 36.2, both parties to this case—

Business Electronics Corporation and Sharp Electronics Corpora-

tion—have granted written consents to this filing. Those consents

have been filed with the Clerk of the Court.

2

lion in annual sales. NMRI members range in size from

one-store businesses in rural communities to multi-billion

dollar chains operating thousands of stores throughout

the nation.

Although of diverse sizes, NMRI members share a

common marketing approach: mass retailers offer con-

sumers a wide variety of quality products at competitive,

discount prices. NMRI members believe that consumers

benefit from vigorous retail competition—be it competi-

tion among stores selling different products (inter-brand

competition) or competition among stores selling the same

product (intra-brand competition). In either case, con-

sumers enjoy the lower prices which result from competi-

tion. At the same time, NMRI members know that con-

sumers often desire certain services, such as promotional

information, point-of-sale instructions, warranty protec-

tion, repair capability, or product return policies. NMRI

members provide those services. In short, NMRI mem-

bers strive to offer consumers the desired blend of low

prices and needed services. If statistics are any measure,

consumers have embraced the industry’s marketing ap-

proach: mass retailers’ sales volume, it has been esti-

mated, has grown over 3400% in the last 25 years.’

Above all else, the mass retailing industry owes its

success, and its survival, to a retailer’s ability to offer

brand name products at competitive, discount prices.

Mass retailers’ operations, as a rule, are marked by high

volume sales at low profit margins; prices to consumers

are generally well below manufacturers’ suggested retail

prices. Absent the legal ability to discount, the mass re-

tailing industry could vanish; armed with the right to

discount, however, the industry will continue to contrib-

ute substantially to the national economy.

NMRI is no stranger to the issues raised in this case.

For over a decade, NMRI has labored to preserve the rule

2 True Look at the Discount Industry, 26 The Discount Merchan-

diser 37, 43 (1986).

3

of law that resale price maintenance is illegal per se.

Mass retailers have sought to protect their right to offer

discounts without fear of being terminated by manufac-

turers, acting in concert with competing dealers which

have raised price competition complaints. Over the years,

NMRI has testified before Congress, conferred with the

executive branch, and participated in litigation, urging

the continued retention of the venerable rule of antitrust

law that resale price maintenance, in all of its various

manifestations, is per se illegal.

For example, in 1975, NMRI and others urged Con-

gress to repeal the federal statutes enabling states to

enact so-called “fair trade” laws which permitted manu-

facturers to fix the resale price of brand name goods.

These efforts culminated in Congress’ enactment of the

Consumer Goods Pricing Act of 1975, Pub. L. No. 94-145,

89 Stat. 801 (1975) (amending 15 U.S.C. §§1, 45(a)

(1976) ). That Act was tantamount to a codification of

the per se rule prohibiting resale price maintenance.

During the past seven years, as some antitrust enforce-

ment officials have criticized the per se rule, NMRI has

actively urged Congress to preserve the rule. Congress,

in turn, has repeatedly forbidden the antitrust law en-

forcement agencies from taking steps to change the per

se rule. NMRI also filed an amicus brief in this Court

in Monsanto Co. v. Spray-Rite Service Corp., 465 U.S.

752 (1984), urging the retention of the per se prohibi-

tion of resale price maintenance.

In short, because the right to discount is the industry’s

life blood, NMRI has been and remains active on this

important issue. NMRI’s views are consistent and

straightforward: (1) resale price maintenance is and

must remain illegal per se; and (2) the per se ban ap-

plies to conspiracies between manufacturers and higher

priced merchants to deny products to lower priced dealers

simply because those dealers discount.

4

This Court’s position on this issue has been equally

consistent: for over 75 years, the Court has recognized

that price fixing is illegal per se and, further, that con-

spiracies to eliminate price competition are included

within the per se prohibition. Nonetheless, the opinion

issued below by the United States Court of Appeals for

the Fifth Circuit seeks to erode the per se rule by requir-

ing proof not readily found in every “price fixing” case:

proof that there was a direct agreement to fix prices “at

some level,” rather than “merely” proof of a direct agree-

ment to eliminate price competition. This opinion

threatens NMRI’s members, for it, in effect, sanctions all

agreements between manufacturers and higher priced

retailers to terminate discounters simply because they are

discounters. To protect the mass retailing industry’s hard-

earned market position and—more importantly—to pre-

serve consumers’ benefits derived from vigorous price com-

petition, NMRI urges the Court to reverse the decision

below and to reinstate the jury’s verdict. That jury, prop-

erly instructed in the law, correctly condemned a con-

sipracy between Sharp Electronics Corporation (“Sharp”)

and a higher priced retailer, Hartwell, to terminate peti-

tioner, Business Electronics Corporation (‘Business Elec-

tronics”), because of its competitive prices.

SUMMARY OF ARGUMENT

The purpose of the Sherman Act is to preserve ‘free

and unfettered competition.” Northern Pac. R. Co. v.

United States, 356 U.S. 1, 4-5 (1958). To accomplish

that purpose, this Court and Congress have declared that

both intra-brand price and inter-brand price fixing con-

spiracies are illegal per se. This Court and Congress have

defined “price fixing” to include a wide variety of prac-

tices aimed at eliminating price competition. The present

case involves one such practice: the agreement between

a higher priced retailer and a manufacturer to eliminate

intra-brand competition by eliminating a price cutting

5

retail competitor as a vendor of the manufacturer’s

product.

At its simplest level, this case may be only a routine

jury instruction case, of importance principally to the

litigants. It concerns the propriety of a specific jury in-

struction in the context of the parties’ trial strategies,

the evidence presented, and the defendant’s seeming ac-

ceptance of the notion that the per se rule embraces the eli-

mination of price discounting. At that level of analysis,

affirmance of the jury’s verdict and the trial court’s judg-

ment is an easy matter for this Court: the trial court did

not grant the particular instruction subsequently man-

dated by the appellate court for the good and sufficient

reason that defendant Sharp, in its entire package of

proposed instructions, had not consistently insisted on that

instruction.

Rather, Sharp had agreed with plaintiff Business Elec-

tronics that, if the per se rule was appropriate to any

vertical case, it applied to a conspiracy to “eliminate price

competition.” Indeed, in proposed instruction No. 24,

Sharp requested such an instruction. That Sharp did so

is hardly surprising—well-settled antitrust jurisprudence

has long equated the concerted elimination of price com-

petition, or the concerted elimination of price cutting,

with “price fixing.” Viewing Sharp’s proposed instruc-

tions as a whole, Sharp simply did not consistently insist

on, and the trial judge thus did not give, an instruction

that the jury must find an agreement that prices would

be set “at some level.” Had the defendant: consistently

insisted on that instruction, the issue ostensibly before

the Court would be more clear-cut: must there be an

agreement on resale prices “at some level” to implicate

the per se rule in vertical price cases?

That issue, while a more substantial public policy issue,

can also ke easily resolved by this Court. Decades of Con-

gressional findings and judicial rulings on price fixing

issues compel a reversal of the decision below. An agree-

6

ment between a manufacturer and a higher priced retailer

to terminate a price cutter, and thereby eliminate price

competition, is illegal per se. That agreement serves no

procompetitive purpose; indeed, it is the antithesis of

intra-brand price competition. It is starkly at odds with

the mandate of the antitrust laws that there shall be “free

and unfettered” price competition, be it inter-brand com-

petition or intra-brand competition. An agreement to

eliminate a price cutter aliows the complaining dealer,

with the manufacturer’s approval, to set prices free from

competition from the discounter. That agreement produces

the same economic effect as if the manufacturer and its

dealers were illegally to agree on a specific price for the

product. In either case, there is an agreement to eliminate

intra-brand price competition between dealers, which will

almost always result in higher prices for the product. See,

e.g., California Retail Liquor Dealers Ass’n v. Midcal

Aluminum, Inc., 445 U.S. 97, 102-03 (1980).

Certainly under the jurisprudence of horizontal anti-

trust cases, agreements to eliminate price competition have

always been treated as per se illegal “price fixing.” For

example, the United States has recently. brought criminal

charges against competitors who agreed only to eliminate

discount coupons for branded products and did not also

agree to set prices “at some level.” United States v. Wald-

baum, Inc., 1985-2 Trade Cas. (CCH) { 66,689 (D. Conr

1984).

This Court, too, has long upheld price fixing charges

against defendants who sought to defend antitrust charges

by denying the existence of an agreement to fix prices “at

some level.” From United States v. Socony-Vacuum Oil

Co., 310 U.S. 150 (1940) to Catalano, Inc. v. Target

Sales, Inc., 446 U.S. 643 (1980), this Court has ruied

that an agreement to eliminate discounts “falls squarely

within the traditional per se rule against price fixing.”

446 U.S. at 648. It is a very short step—indeed, no step

at all—to conclude that, in vertical cases too, an agree-

7

ment to eliminate discounters also “falls squarely within

the traditional per se rule against [vertical] price fixing.”

Id. While some may suggest analytical differences be-

tween horizontal and vertical non-price restraints, there

should be no different result in defining what is “price

fixing” in a horizontal case and what is “price fixing” in

a vertical case. Midcal, 445 U.S. at 102-03. Price fixing

in either context includes a concerted agreement to elimi-

nate discounts—or discounters. In either context, the

effect is the same: higher prices.

Finally, even if there were any further doubt about it,

Congress has recently resolved the issue. Within the last

two years, Congress declared that a successful prosecution

of a vertical price fixing case does not depend on proof of

an explicit agreement to set specific prices. H.R. Rep. No.

399, 99th Cong., lst Sess. 14 (1985).

In short, this Court’s precedent, Congressional enact-

ments, economic policy, and even the defendant’s own

package of jury instructions point to one conclusion: con-

spiracies to eliminate discounters, simply because they are

“price cutters,” are illegal per se.

ARGUMENT

I. A CONSPIRACY TO ELIMINATE PRICE COMPE-

TITION BY TERMINATING A DISCOUNTER IS A

PER SE VIOLATION OF THE ANTITRUST LAWS

Resale price maintenance is illegal per se. This clear

rule, although much vilified in certain sectors of academia

and under close inspection by lower courts in the past few

years, has nonetheless survived. It remains a pillar of

antitrust jurisprudence and the source of support for the

mass retz2iling industry and its price-conscious customers.

It is a rule which rests on the well-founded premise that

intra-brand price competition is good because it enhances

consumer welfare. That is, the rule enforces the national

judgment that consumers are far better off if vendors are

obligated to compete with each other in pricing products

8

for resale. See generally Albrecht v. Herald Co., 390 U.S.

145, 157 (1968) (Harlan, J., dissenting). First crafted

by this Court over 75 years ago and repeatedly ratified

and adopted by Congress over the last two decades, the

per se rule should not be discarded.°

The present case requires the Court to reiterate which

vertical price agreements are subject to the per se rule.*

Specifically, does the per se ban include an agreement to

terminate a retailer because its prices are too low—be-

cause it is a “price cutter” or “discounter?” The answer

is yes: a conspiracy to terminate a vendor because it is

a price cutter is per se illegal. That answer is drawn

from this Court’s precedent in both vertical and horizonta:

cases and Congressional findings and laws in the area.

That answer is drawn as well from common sense: a

price “cutter” necessarily is one who “cuts” prices below

some acceptable level. An agreement to terminate a vendor

because it cuts prices necessarily requires some conscious

commitment by the manufacturer and a higher priced

vendor to a scheme of maintaining higher retail prices.

Such an agreement must be condemned as per se illegal

under the antitrust laws.

A. The Per Se Rule In Vertical Pricing Cases: An

Overview

Resale price maintenance agreements—that it, agree-

ments to fix or maintain resale prices—were first declared

to be illegal by this Court in Dr. Miles Medical Co. v.

3 See, e.g., Arizona v. Maricopa County Medical Soc’y, 457 U.S.

332, 354-55 (1982) (“[A]rguments against application of the per se

rule in this case therefore are better directed to the Legislature’).

See also Apex Hosiery Co. v. Leader, 310 U.S. 469, 488-89 (1940).

* See Maricopa County, 457 U.S. at 361-62 (Powell, J., dissent-

ing) (“It is settled law that once an arrangement has been labeled

as ‘price fixing’ it is to be condemned per se... . The inquiry in an

antitrust case is . .. ‘to characterize the challenged conduct as

falling within or without that category of behavior to which we

apply the label ‘per se price fixing.’’”) (citation omitted).

9

John D. Park & Sons Co., 220 U.S. 373 (1911). The case

involved a manufacturer of proprietary medicines, Dr.

Miles, which fixed the prices of its products at both the

wholesale and retail level. A wholesale drug concern,

John D. Park & Sons, sought to introduce competition

into the distribution of Dr. Miles products by buying

them at discount prices and selling them at discount prices.

Unhappy that its products were being discounted, Dr.

Miles sued Parks & Sons for inducing wholesalers and

retailers to breach their contracts. This Court upheld the

lower courts’ decisions dismissing Dr. Miles’ complaint.

The Court deemed the manufacturer’s price fixing agree-

ments to be illegal per se, stating that “agreements or

combinations between dealers, having for their sole pur-

pose the destruction of competition and the fixing of

prices, are injurious to the public interest and void.” 220

US. at 408.

The ruling in Dr. Miles—that resale price fixing is per

se illegal—-has been affirmed by this Court at every subse-

quent opportunity it has had to discuss the doctrine.°

The Court’s most recent pronouncement on resale price

maintenance, 324 Liquor Corp. v. Duffy, 107 S.Ct. 720

(1987), involved a New York statute which sought to

impose a resale price maintenance scheme on all New

York liquor retailers. Noting first that “[rJesale price

5 See United States v. Colgate & Co., 250 U.S. 300, 307-08 (1919) ;

United States v. A. Schrader’s Son, Inc., 252 U.S. 85, 100 (1920) ;

FTC v. Beech-Nut Packing Co., 257 U.S. 441, 452-53 (1922);

United States v. Line Material Co., 333 U.S. 287, 307-08 and n.21

(1948); Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc.,

340 U.S. 211, 213 (1951); United States v. Parke, Davis & Co.,

362 U.S. 29, 39, 43-44 (1960) ; Albrecht v. Herald Co., 390 U.S. 145,

151-52 (1668); Continental T.V., Inc. v. GTE Sylvania Inc., 433

U.S. 36, 51 n.18 (1977); California Retail Liquor Dealers Ass’n

v. Midcal Aluminum, Inc., 445 U.S. 97, 102-038 (1980); Rice v.

Norman Williams Co., 458 U.S. 654, 659-60 (1982); Monsanto Co.

v. Spray-Rite Service Corp., 465 U.S. 752, 761 (1984); 324 Liquor

Corp. v. Duffy, 107 S.Ct. 720, 724 (1987).

10

maintenance has been a per se violation of § 1 of the Sher-

man Act ‘since the early years of national antitrust en-

forcement.’” 107 S.Ct. at 724 (citing Monsanto, 465 U.S.

at 761), the Court then observed that resale price fixing

is illegal because it “prevents manufacturers and whole-

salers from allowing or requiring retail price competi-

tion.” 107 S.Ct. at 724. In short, resale price mainte-

nance was condemned because it prevented “price com-

petition.”

This is the common focus of this Court’s resale price

maintenance jurisprudence: because intra-brand price

competition is a desired goal, the per se rule applies to

those agreements which “prevent price competition. . . .”

Midcal, 445 U.S. at 103.

Congress, too, has firmly concluded that all resale price

maintenance schemes are per se violations of the antitrust

laws. In 1975, Congress enacted the Consumer Goods

Pricing Act and thereby repealed the “fair trade laws”

which had authorized states to permit resale price main-

tenance.* This Court subsequently interpreted the Con-

gressional action as an “express[ion] [of Congress’] ap-

proval of a per se analysis of vertical price restrictions.

...” Continental T.V., Inc. v. GTE Sylvania Inc., 433

U.S. 36, 51 n.18 (1977). See Midcal, 445 U.S. at 102-03.

That interpretation is correct, as the legislative history of

the Act evidences a clear Congressional endorsement of

the per se rule.”

6 Miller-Tydings Act of August 17, 1937, ch. 690, 50 Stat. 693

(amending 15 U.S.C. §1) (repealed 1975) and McGuire Act of

July 14, 1952, ch. 745, §§ 1, 2, 60 Stat. 632 (amending 15 U.S.C.

§ 45, 45 note) (repealed 1975).

7 Both the Senate and House Reports on the Consumer Goods

Pricing Act provide that resale price maintenance should be illegal

per se. The Senate Report states:

This proposed legislation repeals the Miller-Tydings Act Which

enables the States to enact fair trade laws and the McGuire

Act which permits states to enact nonsigner provisions. With-

11

On many subsequent occasions, Congress again declared

that resale price maintenance is illegal per se. As a recent

example, Congress, in appropriations legislation for three

out these exemptions the agreements they authorize would vio-

late the antitrust laws.

S. Rep. No. 466, 94th Cong., Ist Sess. 1 (1975) (emphasis added)

[hereinafter cited as Senate Report).

The House Report was even more explicit:

An agreement between a manufacturer and a retailer that the

retailer will not resell the manufacturer’s product below a

specified price is an abvious [sic] form of price fixing. As such

it is per se illegal under Section 1 of the Sherman Act.

H.R. Rep. No. 341, 94th Cong., Ist Sess. 2 (1975) [hereinafter

cited as House Report).

Both the House and Senate sponsors, in explaining the legisla-

tion to their colleagues, emphasized that the effect of the Consumer

Goods Pricing Act was to subject resale price fixing agreements to

the per se standard. For example, Rep. Rodino, Chairman of the

House Judiciary Committee and the Subcommittee on Monopolies

and Commercial Law and a co-sponsor of the bill, stated, while

presiding over Subcommittee hearings, that resale price mainte-

nance would be per se illegal on passage of the Consumer Goods

Pricing Act:

Agreements, whether vertical or horizontal, to fix and main-

tain prices are a classic restraint of trade. They have long

been considered per se illegal under our antitrust laws.

Hearings on H.R. 2384 Before the Subcomm. on Monopolies and

Commercial Law of the House Judiciary Comm., 94th Cong., 1st

Sess. 1 (1975) [hereinafter cited as House Hearings}.

Sen. Brooke, the Senate sponsor of the bill, stated:

Without these Federal statutes [the Fair Trade laws], these

interstate price-fixing conspiracies would be in violation of the

most basic of our antitrust laws—the Sherman Antitrust Act

and the Federal Trade Commission Act.

121 Cong. Rec. 38,049-50 (1975).

The final proof of the purpose of the Consumer Goods Pricing

Act of 1975 is found in the statement of then President Gerald R.

Ford who, upon signing the bill, stated that the legislation:

will make it illegal for manufacturers to fix the prices of con-

sumer products sold by retailers. This new legislation will

repeal laws . . . which amended the Federal antitrust laws so

12

of the last four years, has prohibited the Department of

Justice from engaging in any efforts to overturn or alter

the per se rule. See Departments of Commerce, Justice,

and State, the Judiciary, and Related Agencies Appro-

priations Act, Pub. L. No. 98-166, § 510, 97 Stat. 1071,

1102-03 (1983); Departments of Commerce, Justice, and

State, the Judiciary, and Related Agencies Appropriations

Act, Pub. L. No. 99-180, § 605, 99 Stat. 1136, 1169-70

(1985); Departments of Commerce, Justice, and State,

the Judiciary, and Related Agencies Appropriations Act,

Pub. L. No. 99-591, § 605, 100 Stat. 3341, 3341-73 (1986).

Even as this brief is filed, Congress continues its efforts

to direct the Justice Department to enforce the per se rule.

See H.R. Rep. 2763, 100th Cong., 1st Sess. § 605 (1987) ;

S. 938, 100th Cong., ist Sess. § 404 (1987); H.R. Rep.

No. 182, 100th Cong., Ist Sess. 70 (1987); S. Rep. No.

72, 100th Cong., 1st Sess. 26 (1987).

Congress has not only embraced the per se rule, but has

defined it to include the concerted elimination of price

cutting. In a Report accompanying Congressional enact-

ment of § 605 of Pub. L. No. 99-180, the House of Repre-

sentatives strongly criticized the “Vertical Restraint

Guidelines” issued by the Department of Justice on Janu-

ary 23, 1985 (See 1 Trade Reg. Rep. (CCH) No. 687, pt.

II, at 1 (Jan. 23, 1985)). H.R. No. 399, 99th Cong., 1st

Sess. 14, 16 (1985). The Report concluded that:

Other “restatements” of law exist in the Guidelines

that attempt to dilute or trivialize the generality of

the per se rule against price fixing, both horizontal

and vertical. The Division claims, again without ac-

companying authorities, that vertical price fixing is

lawful so long as the agreement to fix prices does not

set “specific” resale prices and is ancillary to one or

States could authorize otherwise illegal agreements between

manufacturers and retailers setting the price at which a prod-

uct would be sold to consumers.

11 Weekly Comp. Pres. Doc. 1368 (Dec. 12, 1975).

13

more non-price restraints. . . . Such a statement ap-

pears to reject or ignore any consideration of the

effects of a restraint on price in determining whether

there is a price fixing agreement.

In all these respects, the Guidelines are inconsistent

with existing law and are also demonstrably unsound

as a matter of policy.

Id.®

In sum, Congress continues to emphasize that resale

price maintenance—whether it be through the elimina-

tion of price cutting or through a direct agreement on

specific prices—is illegal per se. As has this Court for

nearly eighty years, Congress, too, has concluded that

intra-brand price competition is a vital goal of antitrust

policy. See Monsanto, 465 U.S. at 769 (Brennan, J.,

concurring).

8In the legislation condemning the “Vertical Restraint Guide-

lines,” Congress concluded that the “Vertical Restraint Guidelines”

did not represent an accurate statement of antitrust law. Congress

stated:

Whereas such policy guidelines are inconsistent with estab-

lished antitrust law, ... in stating that vertical restraints that

have an impact upon prices are subject to the per se rule of

illegality only if there is an ‘explicit agreement as to the

specific prices’; ...

7 & & $

Now, therefore, be it

Resolved, That it is the sense of the Congress that the anti-

trust enforcement policy guidelines stated in “Vertical Re-

straints Guidelines,” published by the Department of Justice

on January 23, 1985—

(1) are not an accurate expression of Federal antitrust laws

or of congressional intent with regard to the application of

such laws to resale price maintenance and other vertical re-

straints of trade; [and]

(2) shall not be accorded any force of law or be treated by

the courts of the United States as binding or persuasive; ....

99 Stat. at 1169-70.

14

B. Resale “Price Fixing” Includes A Conspiracy To

Eliminate A Price Cutter

In both vertical and horizontal cases, this Court and

lower courts have defined “price fixing” to include the

concerted agreement to eliminate price competition. In

United States v. Socony-Vacuum Oil Co., 310 U.S. 150

(1940), the Court reviewed an agreement by major oil

refiners to participate in a common effort to purchase,

and keep off the market, surplus gasoline. The intent

was to “stabilize prices.” There was no explicit agree-

ment to set prices at some level, only an agreement to

take action to stabilize prices. The Court, applying the

per se rule, concluded:

Any combination which tampers with price structures

is engaged in an unlawful activity. Even though the

members of the price-fixing group were in no position

to control the market, to the extent they raised, low-

ered, or stabilized prices they would be directly inter-

fering with the free play of market forces. The Act

places all such schemes beyond the pale and protects

that vital part of our economy against any degree of

interference.

310 U.S. at 221 (emphasis added).

More recently, in Catalano, Inc. v. Target Sales, Inc.,

446 U.S. 643 (1980) this Court, in a per curiam opinion,

condemned an agreement among beer wholesalers to re-

fuse to extend interest-free credit to retailers. The agree-

ment was not one to fix prices at “some level,” but

merely an agreement to eliminate what was, in effect,

a discount to retailers. The Court, applying the per se

rule, stated:

It is virtually self-evident that extending interest-

free credit . . . is equivalent to giving a discount.

. . . Thus, credit terms must be characterized as an

inseparable part of the price. An agreement to ter-

minate the practice of giving credit is thus tanta-

mount to an agreement to eliminate discounts, and

15

thus falls squarely within the traditional per se rule

against price fixing.

446 U.S. at 648 (footnotes omitted) (emphasis added).

In between Socony and Catalano, this Court similarly

condemned a variety of agreements as per se unlawful

“price fixing” even where there was no explicit agree-

ment on the level of prices. In FTC v. Cement Inst.,

333 U.S. 683, 690-93 (1948), the Court invalidated an

agreement to use a specific method of quoting prices. In

United States v. Container Corp. of America, 393 U.S.

333 (1969), the Court prohibited an agreement by which

container manufacturers exchanged price information.

That agreement, which apparently had the tendency to

stabilize prices, was treated as per se illegal, as it

“chillfed] the vigor of price competition.” Jd. at 337.

According to the majority, “[s]tabilizing prices as well

as raising them is within the ban of § 1 of the Sherman

Act.” Id. Justice Marshall’s dissent suggested that he

would have joined the majority in condemning the agree-

ment if the evidence showed “a deliberate attempt to

stabilize prices.” Jd. at 344. That is, all of the Justices

seemed to agree that a conspiracy with the purpose of

stabilizing prices is illegal even absent an agreement on

prices at some level. See United States v. United States

Gypsum Co., 438 U.S. 422, 436 n.13 (1978).

All of these cases view unrestrained price competition

as the most critical goal of our antitrust laws. These

cases reflect the importance of price as the “central ner-

vous system” of our economy. National Soc’y of Pro-

fessional Eng’rs v. United States, 435 U.S. 679, 692

(1978) (citing Socony, 310 U.S. at 226 n.59). Fairly

summarized, these cases—admittedly, all arising in a

horizontal context—condemn outright concerted agree-

ments which deliberately tamper with the free market

determination of price. They condemn agreements which

were intended to stabilize prices, or minimize price com-

petition, even if they did not include a commitment to a

16

particular price or some level of pricing. All of these

cases underscore the purpose of the Sherman Act: to

preserve “free and unfettered competition.’”’ Northern

Pac. R. Co., 356 U.S. at 4-5.

The analysis and the result should be no different in

vertical cases—there, too, vigorous intra-brand price com-

petition is a critical goal, as evidenced by continued leg-

islative and judicial affirmation of the per se prohibition

against resale price maintenance. Congress and this

Court have, time and time again, declared that intra-

brand price competition is an important goal. Thus,

application of horizontal price fixing principles in verti-

cal price fixing cases is appropriate and hardly novel.

This Court frequently applies horizontal precedent to

vertical settings—and vice versa. For example, this

Court recently applied conspiracy standards developed in

a vertical case to a horizontal antitrust case. Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 106 S.Ct. 1348,

1357, 1360, 1362 (1986) (adopting vertical conspiracy

standards of Monsanto).® So, too, should this Court con-

tinue to apply the logic and language of horizontal price

opinions to vertical price cases. Indeed, one of the under-

pinnings of the per se rule prohibiting resale price fixing

is that the practice is akin to horizontal price fixing be-

tween retailers. Dr. Miles, 220 U.S. at 408; Midcal, 445

U.S. at 103.

Following this rationale, an agreement to eliminate

discounts—per se illegal in a horizontal setting under

Catalano—is identical to an agreement to eliminate a

discounter—illegal under the Cernuto line of cases devel-

oped in the appellate courts. Cernuto, Inc. v. United

Cabinet Corp., 595 F.2d 164 (3d Cir. 1979).

® See also Kiefer-Stewart, 340 U.S. at 213-15 (assessing restraint

as both horizontal and vertical and applying same analysis).

10 See, e.g., Victorian House, Inc. v. Fisher Camuto Corp., 769

F.2d 466 (8th Cir. 1985) ; Ziddell Explorations, Inc. v. Conval Int'l,

17

In fact, the logic of the Cernuto line of cases is pre-

cisely that of this Court in Socony and Catalano (id. at

169) :

If the purpose and effect of the challenged conduct is

to restrain price movement and the free play of

market forces, it is then illegal per se.

That is, a vertical agreement between a manufacturer

and a retailer to stabilize prices by eliminating a price

competitor—even if not accompanied by a commitment

to an exact price or an exact level—-is well within the

ambit of the per se prohibition of Dr. Miles and its

progeny. Indeed, one need look no further than this

Court’s seminal decision in Monsanto to verify that con-

clusion: there, the jury was allowed to find, based in

large part on evidence of dealer complaints and retail

price “stabilization,” that there was a per se violation of

the antitrust laws. Monsanto, 465 U.S. at 768-69 n.14

(discussing evidence of retail price “stabilization” as

evidence of a “price-fixing conspiracy.”). See also

Albrecht, 390 U.S. at 149 (“the [per se illegal] combina-

tion with wholesalers arose because they cooperated in

terminating price-cutting retailers.”) (emphasis added).

The Justice Department, in its brief urging the denial

of the writ of certiorari, recognizes the power of the

horizontal precedent holding that agreements “to elimi-

nate price competition generally serve[] no procompeti-

tive purpose.” Department of Justice Brief to Petition

Nos. 85-1910 and 85-2094 for a Writ of Certiorari (“DOJ

Br.”) at 7. Indeed, even in the last few years when it

has re-examined enforcement policies, the Justice De-

partment has brought criminal charges against companies

accused of interfering with price competition by agree-

ing to eliminate discounts—even absent an agreement to

fix prices at some level. E.g., United States v. Waldbaum,

Ltd., 719 F.2d 1465 (9th Cir. 1983). See also Spray-Rite Service

Corp. v. Monsanto Co., 684 F.2d 1226, 1234 (7th Cir. 1982), aff'd

on other grounds, 465 U.S. 752 (1984).

18

Inc., Crim. No. B-84-51 (D. Conn., indictment filed Aug.

15, 1984). In that case, the Justice Department claimed

that an agreement between competing grocery stores to

eliminate double coupons was a “price fixing” agreement.

That agreement was claimed to be unlawful because it

restrained intra-brand price competition between the re-

tailers on those brand name products where manufac-

turers offered coupons. See Waldbaum, 1985-2 Trade

Cas. (CCH) { 66,689 (D. Conn. 1984) (sustaining chal-

lenge to indictment).

Applying the government’s own logic to the present

price fixing case compels a comparable conclusion: a

concerted agreement by a manufacturer and a higher

priced dealer to eliminate brand name product discounts

(by terminating a discounter of that product) is illegal

because it eliminates price competition.

The Justice Department protests such an application of

“horizontal price fixing” precedent to “vertical price fix-

ing” situations by contending that, because some non-

price vertical restraints may be procompetitive, the

Court should “paint[] with a narrower brush,” in the

vertical field. DOJ Br. at 7. That protest is hollow for

several reasons. First, there are also horizontal re-

straints which are deemed procompetitive, but their ex-

istence has not erased the per se rule prohibiting naked

price fixing. See, e.g., Broadcast Music, Inc. v. Columbia

Broadcasting System, Inc., 441 U.S. 1, 18-23 (1979).

The mere existence of some procompetitive restraints has

not compelled this Court to eliminate the per se rule

altogether or to refuse to apply it where the restraint’s

principal purpose is to restrain price competition. Second,

the Justice Department’s comments, fairly interpreted,

reflect its complete disdain for any per se rules in the

vertical context (see Monsanto, 465 U.S. at 761-62 n.7).

That bias, not this Court’s precedent, compels the gov-

ernment’s suggestion of a “narrower brush.” Finally, as

the Cernuto opinion emphasizes, a conspiracy to eliminate

19

a discounter, initiated by a higher priced competitor’s

complaint and desire to avoid price competition at the

retail level, cannot be justified as an attempt to promote

inter-brand competition at the manufacturer level.

Cernuto, 595 F.2d at 168.

To be sure, in both horizontal and vertical cases there

are lines to be drawn to distinguish per se cases from

“rule of reason” cases. But, in both areas, the line must

be and can be drawn in a way which condemns agree-

ments whose substantial purpose is to stabilize prices by

eliminating price competition. In such cases, the proba-

bility is extremely high that the consequences are anti-

competitive and, as a result, the per se rule should apply.

See NCAA v. Board of Regents of Univ. of Okla., 468

U.S. 85, 100 (1984). Congress and this Court have re-

peatedly drawn a line that is transgressed by the court’s

opinion below. An agreement which has as its purpose

the elimination of price discounts—to be distinguished

from other vertical agreements which may tolerate price

competition—is per se unlawful.

If further support were required for this proposition,

Congress has recently supplied it. Congress recently con-

demned the Justice Department’s “Vertical Restraint

Guidelines.” In Pub. L. No. 99-180, § 605, 99 Stat. at

1169-70, Congress rejected the Department’s Guideline

which stated that the per se rule against vertical price

fixing applies only where “(tjhere is direct or circum-

stantial evidence (other than effects on price) establish-

ing an explicit agreement as to the specific prices at

which goods or services would be resold.” 1 Trade Reg.

Rep. (CCH), supra p. 12, at 10. Congress rejected

that statement: there need not be an explicit agreement

on specific prices in order to invoke the per se rule. 99

Stat. at 1169-70. Applying that Congressional directive

here, the jury’s verdict must stand: the agreement be-

tween Sharp and a higher priced retailer to eliminate

Business Electronics because it was a discounter is il-

legal price fixing.

~~

20

II. IN THE CONTEXT OF THE ENTIRE TRIAL, THE

JURY INSTRUCTIONS WERE APPROPRIATE

The final reason to affirm this jury verdict—albeit a

reason that pales in significance to decades of antitrust

precedent and precise Congressional directions on this

issue—is derived from defendant Sharp’s own package

of proffered jury instructions. Among other instructions,

Sharp also requested an instruction (No. 24) which re-

quired that the jury find an agreement “to eliminate

price competition.” " In so doing, Sharp recognized that

11 Defendant’s Requested Jury Instruction No. 24: “Necessity of

Manufacturer Motive To Fix Prices”:

When a dealer demands that a manufacturer terminate an-

other existing dealer—in effect tells the manufacturer “You

must choose between him or me’’—even if the dealer is moti-

vated by a desire to eliminate price competition, it is not in

and of itself illegal for the manufacturer thereafter to termi-

nate the existing dealer. Instead, it must be shown that the

munufacturer agreed with the complaining dealer to terminate

the existing dealer and that, in so agreeing, the manufacturer

shared with the complaining dealer the same desire of eliminat-

ing price competition for the complaining dealer.

Thus, for plaintiffs to establish in this case an agreement

between Mr. Hartweil and Sharp that unreasonably restrains

trade, they must show (1) that Sharp agreed with Mr.

Hartwell to terminate plaintiffs’ dealership, and (2) not only

that Mr. Hartwell was motivated by a desire to eliminate price

competition but also that Sharp was motivated by the same

desire to eliminate price competition for Mr. Hartwell. In

other words, even if you conclude that Mr. Hartwell and Sharp

agreed that plaintiffs should be terminated and that in mak-

ing the agreement Mr. Hartwell was motivated by a desire to

eliminate price competition, you cannot find an agreement that

unreasonably restrains trade unless you also find that Sharp

was motivated by the same desire to eliminate price competi-

tion for Mr. Hartwell. Otherwise, there would be no unity of

purpose, or common design an” understanding, or meeting of

the minds, which is essential to a conspiracy. (emphasis added).

See also Joint Appendix to Petition No. 85-1910 (“JA”) at 14-19

(Court’s Instructions To The Jury); Business Electronics Corp.

v. Sharp Electronics Corp., No. H-78-1020 (S.D. Tex. 1984): De

21

a plaintiff does not need to prove an explicit agreement

on resale prices “at some level.” In turn, the trial court

did not issue the particular instruction subsequently

mandated by the appellate court (i.e., proof of agreement

to “some level” of prices) for the good and sufficient rea-

son that defendant Sharp had not consistently insisted

on that instruction.”

Rather, the district court instructed the jury that

“'t]he Sherman Act is violated when a seller enters into

an agreement or understanding with one of its dealers to

terminate another dealer because of the other dealer’s

price cutting.” Joint Appendix to Petition No. 85-1910

(“JA”) at 18 (emphasis added).

Subsequently, in its Motion for a New Trial, Sharp

affirmed its acceptance of the “elimination of price dis-

counter” instruction. Sharp contended that the trial court

“erred in failing to give [Sharp’s] Requested Jury In-

fendant’s Motion for Judgment Notwithstanding the Verdict or, in

the Alternative, For a New Trial at 2-3, 8; Brief in Support of

Defendant’s Motion for Judgment Notwithstanding the Verdict, or

in the Alternative, For a New Trial at 11-12. Transcript of Pro-

ceedings at 1598-99, 1602.

12 Sharp did request an instruction that there must be an agree-

ment “to fix or maintain prices of Sharp calculators at a certain

level and not just that the agreement may have had some effect on

price.” Defendant’s Requested Jury instruction No. 23 (JA at 7).

That instruction, taken as a whole, was improper for several

reasons.

The instruction stated that, “anytime a manufacturer terminates

a dealer and replaces him with another dealer, or appoints an exclu-

sive dealer [it is] perfectly legal under the antitrust laws... .” Id.

(emphasis added). That is a gross misstatement of the antitrust

laws. Dealer terminations, if done pursuant to non-price vertical

agreements, are subject to a “rule of reason” inquiry of legality—

they are not per se legal. E.g., Rice v. Norman Williams Co., 458

U.S. 654, 661 (1982).

Moreover, if a dealer is terminated pursuant to a resale price

maintenance scheme, that termination is per se illegal; it is not

“perfectly legal.” E.g., Monsanto, 465 U.S. at 761, 763.

22

truction No. 24 to the effect that plaintiff was required

to prove that, in terminating its dealership, both Sharp

and Hartwell [the complaining dealer] were motivated

by the same desire to eliminate price discounting.” De-

fendant’s Motion for Judgment Notwithstading the Ver-

dict or, in the Alternative, For a New Trial at 8 (em-

phasis added).

On the critical issue before this Court, then—the need

for proof of an agreement on prices “at some level”—

Sharp’s proposed instruction No. 24 was no different than

the one actually given to the jury. Both instructions re-

quired the same finding that there had been an agreement

to eliminate price competition. The variety of terms

used—an elimination of “price competition,” or “price

discounting,” or “price cutting” are synonymous. Thus,

in light of the litigants’ proposals to the trial court, the

trial court did not err in instructing the jury as it did.”

In United States Gypsum Ce., this Court found the jury

instructions regarding participation in a conspiracy, while

not as clear as they might have been, nevertheless were

“sufficient” and “substantially in accord with those gen-

erally given in similar antitrust cases.” 438 U.S. at 463.

The Court further noted that “in any event, the disputed

instruction differed only in minor and immaterial re-

spects from the instruction requested by respondents. Jd.

So too, the disputed instructions in the present case are

in accord with those generally given in similar antitrust

cases and, in any event, differed in only minor and im-

138 The actual instructions given to the jury were also in accord-

ance with the now-current ABA model jury instructions for anti-

trust cases which approve an instruction prohibiting “price stabili-

zation.” A.B.A. Sec. Antitrust, Antitrust Civil Jury Instructions at

92-93 (1980 and Supp. 1986). These instructions are also in accord

with the Monsanto opinion, which, in part, focused its attention

on vertical conspiracies which “stabilize resale prices.” 465 U.S. at

758 n.2. Price “stabilization,” of course, does not require an ex-

plicit agreement on prices at some level, but only an agreement

to remove price competition and thereby stabilize prices.

23

material ways from one of the instructions requested by

Sharp. Given the more than ample existence of “price

fixing” in this record, the jury’s verdict and trial court’s

judgment should be affirmed."*

14 We note that the record did show ample evidence that the

manufacturer, Sharp, and its high-price customer, Hartwell, did

try to fix and stabilize prices at a higher level. Sharp asked Busi-

ness Electronics [““BEC’’] to “clean up [its] pricing structure” and

“sought BEC’s adherence to the suggested retail price list.” Ap-

pendix A to Petition No. 85-1910 for Writ of Certiorari by Business

Electronics (“App.”) at 5a, 15a. Hartwell “complained vigorously”

to Sharp about BEC’s low prices. Jd. Hartwell even tried to engage

BEC in a price fixing agreement between the two retailers. Id.

Hartwell “usually” sold the product at Sharp’s suggested prices.

Id. at 6a.

We note also that one of the trial court’s instructions did in-

struct the jury that the case involved “resale price fixing.” (JA at

17) (“In determining whether Sharp illegally combined or agreed

with another party to fix retail prices. ...”).

In this context—the instructions as a whole, the record evidence,

and the defendant’s own proposed instruction No. 24—the jury ver-

dict can easily be sustained. Under circuit precedent, it should

have been. Bunch v. Walter, 673 F.2d 127, 131-32 (5th Cir. 1982).

24

CONCLUSION

Resale price fixing is illegal per se. In order to promote

intra-brand price competition, Congress and this Court

have repeatedly affirmed this rule.

includes conspiracies to eliminate a discounter. Such con-

spiracies, aimed at the elimination of intra-brand price

competition, deny consumers the benefits of “free and

unfettered” price competition. The per se rule proscribes

the conduct of Sharp and Hartwell in this case. For the

above reasons, the decision of the Court of Appeals for

the Fifth Circuit should be reversed.

August 22, 1987

Respectfully submitted,

WILLIAM D. CosTOoN

(Counsel of Record)

KAREN ABRAMS

BISHOP, COOK, PURCELL

& REYNOLDS

1200 17th Street, N.W.

Washington, D.C. 20036

(202) 857-9818

ROBERT J. VERDISCO

MORRISON G. CAIN

NATIONAL MASS RETAILING

INSTITUTE

1991 Pennsylvania Ave., N.W.

Washington, D.C. 20006

(202) 861-0774

Counsel for Amicus Curiae

National Mass Retailing

Institute

Resale price fixing

+

p

*