Amicus Curiae Brief — State Oil Co. v. Khan

No. 96-871

In THE

Supreme Court of the United States

OCTOBER TERM, 1996

STATE Ort COMPANY,

7 Petitioner,

BARKAT U. KHAN, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

BRIEF AMICUS CURIAE OF THE

NATIONAL BEER WHOLESALERS ASSOCIATION, INC.

IN SUPPORT OF PETITIONER

ERNEST GELLHORN

(Counsel of Record)

Suite 100

2907 Normanstone Lane, N.W.

Washington, D.C. 20008-2725

(202) 319-7104

Of Counsel: Counsel for Amicus Curiae

DONALD I. BAKER The National Beer Wholesalers

W. Topp MILLER Association, Inc.

BAKER & MILLER, PLLC

Suite 615

700 Eleventh Street, N.W.

Washington, D.C. 20001-4507

(202) 637-9499

CEE SRE EO

WILSON - Eres Printinc Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

et

a

I. THE ALBRECHT RULE OF PER SE ILLE-

GALITY IS HARMFUL TO CONSUMER

INTERESTS, ERRONEQUSLY INSULATES

OPPORTUNISM, AND UNDERCUTS THE

BENEFITS OF EXCLUSIVE TERRITORIES.. .

A. Exclusive Territeries Are Important Tools

for Efficient Distribution Systems Which

Benefit Consumers, Supplicrs and Dealers...

B. The Benefits to Consumers From Exclusive

Dealer Territories Are Undercut by the Pro-

hibition on Maximum RPM

D. Maximum RPM Allows Suppliers to Choose

the Most Efficient Distribution System for

. ALBRECHT IS BASED ON THE OVER-

RULED HOLDING IN SCHWINN AND IS

WHOLLY INCONSISTENT WITH THE RUL-

ING IN SYLVANIA

B. Albrecht Cannot Be Reconciled With the Rule

of Reason Standard Applied to Nonprice Re-

ii

TABLE OF CONTENTS—Continued

Ill. THE ILLOGIC AND INCONSISTENCY OF

ALBRECHT’S CONDEMNATION OF MAXI-

MUM RPM HARMS COMPETITION AND

CAUSES PARTIES TO RELY ON LESS EFFI-

CIENT VERTICAL RESTRAINTS

IV. THIS IS AN APPROPRIATE OCCASION TO

OVERRULE THE OUTMODED PER SE PRO-

HIBITION OF MAXIMUM RPM

B. Contrary to the Situation in Toolson and

Flood, Reversal of Albrecht Would Not Inter-

fere With an Industry’s Reasonable Expecta-

tions or Eliminate a Rule That Had Been

Implicitly Approved by Congress

CONCLUSION

Page

13

15

15

16

18

iii

TABLE OF AUTHORITIES

Cases: Page

AAA Liquors, Inc. v. Joseph E. Seagram & Sons,

Ine., 705 F.2d 1208 (10th Cir. 1982), cert. de-

nied, 461 U.S. 919 (1988)... nee 14

Acquaire v. Canada Dry Bottling Co. of N.Y., Inc.,

24 F.3d 401 (2d Cir. 1994 )...... “ 14

Albrecht v. Herald Co., 390 U.S. 145 (1968) ome eam

Arizona v. Maricopa County Medical Soc’y, 457

il AE 11

Atlantic Richfield Co. v. USA Petroleum Co., 495

ey ID cccrttthtnretenritdibibilinndeienechtcnennentiitinctieniited passim

Business Electronics Corp. v. Sharp Electronics

Corp., 485 U.S. 717 (1988)... --ccececeeeeeneeees 4,17

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

8 NATE SE ee passim

Copperweld Corp. v..Independence Tube Corp., 467

Sf NER a 4, 15, 16

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

a 4, 18

Federal Baseball Club of Baltimore, Inc. v. Na

tional League of Professional Baseball Clubs,

EE TE 16, 17

Flood v. Kuhn, 407 U.S. 258 (1972) —..................... 17

Jack Walters & Sons Corp. v. Morton Building,

Inc., T3837 F.2d 698 (7th Cir.), cert. denied, 459

a eueintinee 18, 14

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

Fre., 840 US. B11 (19G1) 2. 2e.---nnc.-nnneee-n--s----s- 11, 16

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

ER 4,17

North Dakota v. United States, 495 U.S. 423

(1990) 9

Northern Pac. Ry. Co. v. United States, 856 U.S. 1

(1958) 7

Paschall v. Kansas City Star Co., 727 F.2d 692

(8th Cir.) (en banc), cert. denied, 469 U.S. 872

(1984) m 12

Simpson v. Union Oil Co., 877 U.S. 18 (1964)... 8

Slowiak v. Land O'Lakes, Inc., 987 F.2d 1298 (7th

Sy IIE” Unies bennblcthanitetvasietebitpenhdatiintiedtintmbmendmenentes 14

iv

TABLE OF AUTHORITIES—Continued

Page

Tooleon v. New York Yankees, Inc., 346 U.S. 356

CHD exttenntierace Beta Deals 6 20 Nal LAr OS ha. ele 17

United States v. Arnold, Schwinn & Co., 388 U.S.

365 (1967) .. passim

United States «. '/nited States Gypsum Co., 438

U.S. 422 (1978) 12

United States v. Yellow Cab Co., 382 U.S. 218

(1947) 16

Wisconsin Music Network, Inc. v. Muzak Ltd.

Partnership, 5 F.3d 218 (7th Cir. 1998) —.......... 14

Statutes:

15 U.S.C. $1 Sie he Re Mm a MR de Ss Sate passim

15 U.S.C. § 45 (a) 17

Consumer Goods Pricing Act, 89 Stat. 801 (1975),

amending 15 U.S.C. §§ 1 and 45(a) —................ 17

Miller-Tydings Act, 50 Stat. 693 (1987) 17

McGuire Act, 66 Stat. 631 (1952) om 17

Legislative Materials:

S. Rep. No. 42, 102d Cong., ist Seas. (1991) .......... 18

S. Rep. No. 466, 94th Cong., Ist Sess. (1975), re-

printed in 1975 U.S. Code Cong. & Admin. News

ad teckenameasaaeaee pat BPN cal. Dio dll 17

Other:

P. Areeda, VIII ANTITRUST LAW (1989) ................ 12, 13

Steve L. Barsby & Assocs., Inc., BEER WHOLESAL-

ERS: THER ROLE AND ECONOMIC PERFORMANCE

(2d ed. 1995) .. 2

Steve L. Barsby & Assoc., Inc., ECoNomMIC COoNn-

TRIBUTIONS OF THE BEER INDUSTRY, 1995

(1996) i)

R. Blair & A. Esquibel, Maximum Resale Price

Restraints in Franchising, 65 Antitrust L.J. 157

(1996) 13

R. Bork, THE ANTITRUST PARADOX (rev. ed. 1993) .. 13

F. Easterbrook, Maximum Price Fixing, 48 U.

Chi. L. Rev. 886 (1981) ...... 6

v

TABLE OF AUTHORITIES—Continued

H. Hovenkamp, FEDERAL ANTITRUST PoLicy (2d

ed. 1994)

H. Hovenkamp, Vertical Integration by the News-

paper Monopoliset, 69 Iowa L. Rev. 451 (1984).

Miller Brewing Company, GUIDE TO READING

Competitive Cope DATEs (rev. July 1994)...

R. Posner, ANTITRUST LAW, AN ECONOMIC PER-

SPECTIVE (1976)

S. Ross, PRINCIPLES OF ANTITRUST LAW (19938)...

F. Scherer & D. Ross, INDUSTRIAL MARKET STRUC-

TURE AND ECONOMIC PERFORMANCE (3d ed.

1990) ....

A. Shepard, Contractual Form, Retail Price, and

Asset Characteristics in Gasoline Retailing, 24

Rand J. Econ. 58 (1993)

R. Steuer, Monsanto and the Mothball Fleet of

Antitrust, 30 Antitrust Bull. 1 (1985) —..........

In THE

Supreme Court of the United States

OcToBER TERM, 1996

No. 96-871

STATE Or. COMPANY,

¥. Petitioner,

BaRKAT U. KHAN, et al.,

Responderts.

On Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

BRIEF AMICUS CURIAE OF THE

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premises of modern antitrust law ar-

ticulated by this Court during the past two decades. Al-

&

3 FEEPREEE

2 Hi uit : i:

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AHH HEHE “aiil

The flat Albrecht prohibition should be replaced by the

rule of reason for the reasons articulated in Sylvania.

asci? eelgas, 5 §

fia $3 | 7

Ht it

brecht (decided in 1968) is an historic relic. Its Schwinn-

derived premise—that exclusive territories are illegal per

se—was overturned by this Court in Sylvania in 1977.

The

arrange-

re-

ments between wholesalers and their suppliers and

tailers is central to the effective operation of the free mar-

ket distribution system. In addition, because every state .

except Indiana either permits or requires brewers to desig-

nate exclusive territories for their wholesalers,” NBWA

sofar as it involves an application of the rationale of Con-

of the

restraints.

pricing

to

® Of these, 29 states mandate exclusive territories. S. Barsby,

supra note 2, at 6-7.

tinental T.V., Inc. v. GTE Sylvania Inc., 433 US. 36

(1977).

tive consequences of vertical distributi

wholesalers have a special

proper application of the antitrust laws

aut

iin tall

al atl

(2d ed. 1996).

4

include exclusive arrangements. Both are adopted to in-

tensify interbrand competition.

Maximum RPM does not eliminate any interbrand price

competition; it does eliminate sales-retarding oppcrtun-

ism; and it directly benefits consumers by assuring that

price promotions are actually offered to them. Maximum

RPM is different in purpose and effect from minimum

RPM, and does not present any credible risk of becoming

a vehicle supporting a horizontal cartel among supplicrs

or dealers.

The Albrecht rule should be reversed just as other out-

moded antitrust doctrines were overturned by this Court

in Sylvania and Copperweld.

ARGUMENT

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

U.S. 36 (1977), this Court repudiated its ten-year old

rule of per se illegality applied to exclusive territories and

other nonprice vertical restraints. In adopting a ruie of

reason for evaluating such restrictions, Sylvani« specifi-

cally left undisturbed the per se rule first applied to ver-

tical minimum price restraints in Dr. Miles Medical Co.

v. John D. Park & Sons Co., 220 U.S. 373 (1911), that

had been extended to maximum resale price maintenance

(“RPM”) in Albrecht v. Herald Co., 390 US. 145

(1968). See Sylvania, 433 US. at 51 n. 18. In the

intervening 20 years, the Court has had several oppor-

tunities to review both minimum and maximum vertical

scope,* but it has not directly considered whether the per

se rule applicable to maximum RPM should be continued.

*In Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984),

and Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S.

717 (1988), the Court limited the per se prohibition of vertical price

agreements by establishing more stringent evidentiary require-

5

This case directly presents the Court with the question

of whether to reconsider Albrecht, perhaps the most heav-

ily criticized relic of antitrust’s “mothball fleet,”* and to

apply a consistent test fc vertical distribution restrictions

designed to ensure effective product promotion and serv-

ice. We urge the Court to take advantage of this oppor-

tunity and to overrule Albrecht. ?

I. THE ALBRECHT RULE OF PER SE ILLEGALITY

IS HARMFUL TO CONSUMER INTERESTS, ERRO-

NEOUSLY INSULATES OPPORTUNISM AND

UNDERCUTS THE BENEFITS OF EXCLUSIVE

TERRITORIES

Price ceilings on the resale of a product, or their more

costly surrogates,’ are adopted by suppliers and dealers *

to ensure that a product or service is not overpriced and

that the full benefits of exclusive territorial agreements are

obtained. Consumers benefit from maximum RPM be-

cause it lowers prices and assures greater product avail-

ability. Dealers recognize that maximum price limits are

necessary adjuncts to grants of protected intrabrand ter-

ritories and that they serve to prevent free-riding oppor-

tunism. Suppliers seek these price agreements with dealers

to maximize sales and fully penetrate markets. And pub-

ments. Plaintiffs must now demonstrate that an agreement had

been reached (a mere showing of coercion is not enough) and that

the agreement set a specific price or price levels. And in Atlantic

Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 389 (1990)

(“ARCO”), the Court held that a competitor could not suffer anti-

trust injury as a matter of law where the maximum price was not

predatory.

5 See R. Steuer, Monsanto and the Mothball Fleet of Antitrust,

80 Antitrust Bull. 1 (1985).

* See discussion pp. 18-14, infra.

7 Maximum RPM is used in two-tier (supplier-dealer) and three-

tier (supplier-distributor-retailer) arrangements. This Brief uses

the supplier-dealer terms to describe both except when referring to

the beer industry where the terms used are brewer-wholesaler-

retailer.

6

lic welfare is enhanced by maximum RPM because in-

creased output and allocative efficiency result. See, e.g.,

F. Easterbrook, Maximum Price Fixing, 48 U. Chi. L

Rev. 886, 891-900 (1981).

A. Exclusive Territories Are Important Tools for Effi-

cient Distribution Systems Which Benefit Consum-

ers, Suppliers and Dealers

Exclusive territories and related nonprice vertical re-

straints limiting intrabrand competition are justified be-

cause they strengthen interbrand competition. They

are adopted to encourage and protect dealer promotion

of a product or service through advertising, pre- and post-

sale servicing, warranties, market evaluation, and num-

erous other services. Sylvania, 433 U.S. at 54-55.

Beer, for example, is a perishable product. Both draft

and bottle must be rotated—between 45 and 60 days for

draft beer and between 90 and 150 days for bottle beer °

—to ensure the beer’s fresh taste. Beer wholesalers pre-

vent product deterioration by assisting retailers (subject

to the limitations of state law) in product shelving and

inventory control and by accepting returns. These serv-

ices benefit brewers by enhancing the value of their brands.

Beer wholesalers also work closely with brewers to iden-

tify market trends and to install product displays as well

as to advertise and otherwise promote their brands. In

return for exclusive territorial rights, beer wholesalers

have an obligation to serve all retail outlets in their as-

signed territory and to provide such services. The result

of these bilateral agreements is that the product is widely

available and attractive both to retailers and their custom-

ers. Because these generally recognized “redeeming vir-

tues” intensify interbrand competition, nonprice vertical

restraints have, since 1977, generally been upheld against

antitrust challenge. See Sylvania, 433 U.S. at 54 (quot-

® See, e.g., Miller Brewing Company, GUIDE TO READING Com-

PETITIVE Cope DATEs 20 (rev. July 1994).

7

ing Northern Pac. Ry. Co. v. United States, 356 US. 1,

5 (1958) ).

B. The Benefits to Consumers From Exclusive Dealer

Territories Are Undercut by the Prohibition on

Maximum RPM

interbrand competition—generally provides an effective

constraint on any misuse by the dealer, the price of dif-

ferentiated consumer products may not be fully controlled

by such competition. See ARCO, 495 U.S. at 343 n.13

(maximum resale price fixing “may actually protect con-

sumers against exploitation by the dealer”). For such

products, consumers often will not have freely substitut-

able choices if the dealer raises the price. For example,

in Albrecht, the St. Louis newspaper reader of the morn-

ing Globe-Democrat had no alternative delivered source

for the Globe-Democrat—or, indeed, any other morning

newspaper—and the newspaper delivery carrier who had

an exclusive territory could (and did) raise the price of

the newspaper above the advertised price. Albrecht, 390

U.S. at 147. Thus, after Albrecht, the consumer could

be forced to pay more for the newspaper, and to the

extent that newspaper subscribers were price sensitive,

readership and advertising revenues would decline. In

contrast, maximum RPM protects consumers from higher

prices by imposing a ceiling that cannot be exceeded. See

ARCO, 495 U.S. at 340 (“Low prices benefit consumers

regardless of how those prices are set... .”).

Riding

Exclusive territory or customer arrangements prevent

dealers from selling the same product en

signed sales territory and from thereby free riding on

ptr ome gt gi myer yee BM +» oar

pirsapeien gs Sy cg args ry. , 433 US, at 55. In

this context, the free-riding dealer has lower costs because

he does not pay for these promotions and consequently

he can cut the price of the product below that charged by

the servicing dealer. Without territorial protection, deal-

ers will not invest in services such as total market cover-

age, product returns, cooperative advertising, etc.

For differentiated consumer products, nonprice vertical

agreements unconstrained by maximum RPM create an

opportunity for similar free-riding opportunism. That is,

a dealer benefiting from a supplier’s brand and product,

protected from intrabrand competition by non-price re-

straints such as exclusive territories, may increase the

retail prices of the product or service above the usual

(competitive) mark-up. In doing so, the dealer benefits

from the brand name and its reputation for quality but, as

in Albrecht, denies the supplier part of the benefit of that

brand by increasing price and reducing sales.° In the in-

stant case, the dealer was not selling its own distinctive

gasoline, but “Union 76” gasoline, a brand product with

a separate identity and customer loyalty developed in part

by competitive prices and services. Cf. Simpson v. Union

Oil Co., 377 U.S. 13 (1964).

The same is true of the beer market where brewers ad-

vertise their brands nationally to create a strong product

identification and following. Such national promotions

often include specials with substantial price breaks. Beer

wholesalers participate because the brewer funds a por-

tion of the price reduction and because it is in their inter-

est to maintain demand. But an occasional beer whole-

saler may take a short-run view and decline to participate

in the promotional price. In doing so, that nonparticipat-

ing wholesaler injures the other wholesalers as well as

® The Court in Albrecht particularly erred in failing to take

account of the newspaper’s legitimate interest in protecting its cir-

culation base against the opportunism of newspaper carriers.

Circulation is critical to publishers because it determines advertis-

ing rates which are the largest source of newspaper revenues. See

H. ee cor ae eae eee

69 Iowa L. Rev. 451, 455-56 (1984).

ae. oe

9

their brewer; that wholesaler is free riding on the national

uct or Service

In other words, exclusive territories joined with maxi-

mum RPM are often the most efficient of vertical

integration. The. Albrecht rule denies and deal-

discourage

pendent business enterprises. Beer wholesalers, for ex-

ample, are small businesses which add $52 billion of value

avoided by other mechanisms (e.g., rebates, profit-pass-

overs, minimum inventory levels and purchase require-

ments),"* many of the same benefits can be achieved. But

reliance on such semi-covert techniques is less efficient, in-

Seren IDA S08 Se Bt Guat 0 senting bees

ution.

20 See Steve L. Barsby & Assocs., Inc., ECONOMIC CONTRIBUTIONS

OF THE BEER INDUSTRY, 1995 (1996). The three-tier system of dis-

tribution of beer mandated in almost every state, see note 2, supra,

was adopted under the 21st Amendment for public policy reasons

426 & 428 (1990). That system is also highly effective for the

distribution of perishable products. And a rule permitting maxi-

mum RPM justified on efficiency grounds is fully consistent with

this state-mandated regulatory regime.

"1 See pp. 18-14, infra.

10

Il. ALBRECHT IS BASED ON THE OVERRULED

HOLDING IN SCHWINN AND IS WHOLLY INCON-

SISTENT WITH THE RULING IN SYLVANIA

Decided a year after United States v. Arnold, Schwinn

& Co., 388 U.S. 365 (1967), Albrecht’s condemnation of

maximum RPM is grounded in Schwinn’s per se prohibi-

tion of vertical restraints and its assumption that exclusive

territorial agreements are undesirable and anticompetitive.

See Albrecht, 390 U.S. at 154. Schwinn, however, was ex-

pressly overturned by this Court’s decision in Sylvania, 433

U.S. at 57. Thus, Albrecht’s basic premise, that exclusive

territorial agreements are rare and dealer opportunism

unlikely, is no longer valid.

A. Albrecht Is the Stepchild of the Discredited

Schwinn Doctrine

In holding that maximum vertical price fixing was per

se illegal, the Court, in Albrecht, specifically rejected the

reasoning of the lower court that “a price ceiling was nec-

essary to protect the public from price gouging by dealers”

who had exclusive rights in their own territories. 390 U.S.

at 153. It explained that the court below had assumed,

erroneously, “that the exclusive rights granted by [Schwinn]

were valid under § 1 of the Sherman Act.” Id. at 153-54

(citing Schwinn, 388 U.S. at 373 & 379). The Albrecht

Court therefore concluded:

dl ecient ain sane Gavemee akaee ne

fall under § 1 of the Sherman Act.

Id. at 154,

However, as the Court has recognized, the conclusion in

Albrecht no longer follows once the premise of Schwinn

11

was overturned. See ARCO, 495 U.S. at 343 n.13 (“The

procompetitive potential of a vertical maximum price re-

straint is more evident now than it was when Albrecht was

decided, because exclusive territorial arrangements and

other nonprice restrictions were unlawful per se in 1968.”).

Albrecht assumed, in light of the Schwinn prohibition, that

few if any dealers would be freed of intrabrand competi-

152, quoting Kiefer-Stewart Co. v. Joseph E. Seagrem &

Sons, Inc., 340 U.S. 211, 213 (1951)); (2) such re-

at 153). See also Arizona v. Maricopa County Medical

Soc’y, 457 U.S. 332, 348 (1982).

a

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uta

™ Jack Walters & Sons Corp. v. Morton Building, Inc., 737 F.2d

698, 706 (7th Cir.), cert. denied, 469 U.S. 1018 (1984) (presump-

™ R. Bork, supra note 14, at 285.

16 See note 4, supra.

tion that action in supplier’s self-interest is unilateral).

i

2

Ath

isi ais

if

™ Economists: see F. Scherer & D. Koes, INDUSTRIAL MARKET

STRUCTURE AND ECONOMIC PERFORMANCE 558 (8d ed. 1990) (“Quite

2255g%

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dealer through maximum RPM not challengeable where

plaintiff could not show antitrust injury) ; Jack Walters, 787 F.2d

at 709.

1” See Slowiak v. Land O'Lakes, Inc., 987 F.2d 1298 (7th Cir.

1998) (termination of dealer).

2

:

:

;

more important that basic rules which have a substantial

Hi

3

Hn

J.

Retaw

Rand

specify

2&3 See, e.g., Acquaire v. Canada Dry Bottling Co. of N.Y., Inc.,

24 F.3d 401 (2d Cir. 1994) (verification that promotional discount

received by retailer); AAA Liquors, Inc. v. Joseph BE. Seagram &

21 See Wisconsin Music Network, Inc. v. Muzak Ltd Partnership,

5 F.3d 218 (7th Cir. 1998) (price restraints in natioual franchise

contract judged under rule of reason).

™ See Jack Walters, 787 F.2d at 706 (threat of direct sales to

public if advertised prices not followed).

= See A. Shephard, Contractual Form,

Characteristics in Gasoline Retuiling,

(1998) (gasoline franchise contracts

umes of gasoline to be purchased) .

Sons, Inc., 706 F.2d 1208 (10th Cir. 1982), cert. denied, 461 U.S.

919 (1988).

Het

16

upon in Sylvania to overturn Schwinn, applies with equal

force to justify reversal of Albrecht here.

Similarly, in Copperweld Corp. v. Independence Tube

Corp., 467 U.S. 752, 777 (1984), this Court expressly

“di and overruled” the malign intra-enterprise

conspiracy doctrine of United States v. Yellow Cab Co.,

332 U.S. 218 (1947), and Kiefer-Stewart Co. v. Joseph

E. Seagram & Sons, Inc., 340 U.S. 211 (1951). Again,

this doctrine had “long been criticized” because the rule

looked to “the form of an enterprise’s structure

ignore[d] the reality” and because it interfered with

cient forms and

encouraged

sidiaries. Jd. at 766 n.12

ai

gE88

2, 772 & 773.

pointedly noted that “it ha{d] never explored

in detail the justifications for (the

spiracy doctrine]” (467 U.S. at 766)

it found that the rule had irrationally “obli

[Sherman] Act’s distinction between unilateral

certed conduct” (id. at 776). As a consequence,

Court reversed itself and adopted a new rule recognizing

the parent-subsidiary corporate relationship as one eco-

get

BE

ai

a

ee

strictures—apply to the Albrecht rule here.

B. Contrary to the Situation in Toolson and Flood,

Reversal of Albrecht Would Not Interfere With an

Industry’s Reasonable Expectations or Eliminate a

Rule That Had Been Implicitly Approved by

Congress

This Court has twice refused to overturn the aberra-

tional and anomalous rule in Federal Baseball Club of

Baltimore, Inc. v. National League of Professional Base-

ball Clubs, 259 U.S. 200, 209 (1922)—that baseball is

not so involved in interstate commerce as to be covered

”

legislation.” Toolson v. New York Yankees, Inc., 346

U.S. 356, 357 (1953) (per curiam). Accord Flood v.

Kuhn, 407 U.S. 258 (1972). The

The Court should expressly overrule the per se standard

of Albrecht and hold that maximum vertical price agree-

ments henceforth are tested by the rule of reason standard

set forth in Sylvania.

Respectfully submitted,

ERNEST GELLHORN

(Counsel of Record)

Suite 100

2907 Normanstone Lane, N.W.

Washington, D.C. 20008-2725

{202) 319-7104

Counsel for Amicus Curiae

The National Beer Wholesalers

Association, Inc.