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market. Competition, even in a single product, is not cast in a single mold. Maximum prices may be fixed too low for the dealer to furnish services essential to the value which goods have for the consumer or to furnish services and conveniences which consumers desire and for which they are willing to pay. Maximum price-fixing may channel distribution through a few large or specifically advantaged dealers who otherwise would be subject to significant non-price competition. Moreover, if the actual price charged under a maximum price scheme is nearly always the fixed maximum price, which is increasingly likely as the maximum price approaches the actual cost of the dealer, the scheme tends to acquire all the attributes of an arrangement fixing minimum prices. It is our view, therefore, that the combination formed by the respondent in this case to force petitioner to maintain a specified price for the resale of the newspapers which he had purchased from respondent constituted, without more, an illegal restraint of trade under § 1 of the
Sherman Act.
420:
its fee, but it was aware that the aim of the solicitation campaign was to force petitioner to lower his price. Kroner knew that respondent was giving him the customer list as part of a program to get petitioner to conform to the advertised price, and he knew that he might have to return the customers if petitioner ultimately complied with respondent's demands. He undertook to deliver papers at the suggested price, and materially aided in the accomplishment of respondent's plan. Given the uncontradicted facts recited by the Court of
Appeals, there was a combination within the meaning of § 1 between respondent, Milne, and Kroner, and the Court of Appeals erred in holding to the contrary.
31:
328:, under an exclusive territory arrangement terminable if a carrier exceeded the maximum retail price advertised by Albrecht. When Albrecht exceeded that price, Herald Co. protested to him and then informed Albrecht's subscribers that it would itself deliver the paper at the lower price. Herald Co. engaged an agency (Milne) to solicit petitioner's customers. About 300 of Albrecht's 1200 subscribers switched to direct delivery by Herald.
501:
441:, the Court pointed out, liquor distributors combined to set maximum resale prices. The court of appeals perceived no restraint of trade, but the Supreme Court reversed. It held "that agreements to fix maximum prices 'no less than those to fix minimum prices, cripple the freedom of traders, and thereby restrain their ability to sell in accordance with their own judgment.'" The Court said that it agreed with the
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the interest of his customers, who may treat his product better if they have a secure high margin of profits. When the same manufacturer dictates a price ceiling, however, he is acting directly in his own interest, and there is no room for the inference that he is merely a mechanism for accomplishing anticompetitive purposes of his customers.
331:
Herald Co. later turned these customers over, without cost, to another carrier (Kroner), who was aware of Herald's purpose and knew that he might have to return the route if
Albrecht discontinued his pricing practice. Herald Co. told Albrecht that he could have his customers back if he adhered to the
484:
Justice
Stewart considered that Herald was justified in fixing maximum prices to its ultimate customers, the consuming public, because that was a necessary defensive measure in the face of the territorial monopoly granted the distributors. By not permitting this—" The Court today stands the Sherman
449:
Maximum and minimum price-fixing may have different consequences in many situations. But schemes to fix maximum prices, by substituting the perhaps erroneous judgment of a seller for the forces of the competitive market, may severely intrude upon the ability of buyers to compete and survive in that
424:
Justice White pointed out other possible combinations that
Albrecht might properly have argued existed. First, he could have claimed a combination between Herald and himself, at least "as of the day he unwillingly complied" with Herald's advertised price. Second, "he might successfully have claimed
471:
Other things being equal, a manufacturer would like to restrict those distributing his product to the lowest feasible profit margin, for, in this way, he achieves the lowest overall price to the public and the largest volume. When a manufacturer dictates a minimum resale price, he is responding to
419:
hired Milne to solicit customers away from petitioner in order to get petitioner to reduce his price. It was through the efforts of Milne, as well as because of respondent's letter to petitioner's customers, that about 300 customers were obtained for Kroner. Milne's purpose was undoubtedly to earn
414:
the "combination with retailers arose because their acquiescence in the suggested prices was secured by threats of termination; the combination with wholesalers arose because they cooperated in terminating price-cutting retailers." By the same token, "there can be no doubt that a combination arose
357:
The court of appeals affirmed. It held that there could be no violation of § 1 of the
Sherman Act, which requires concerted action, because Herald's action was unilateral. Herald was entitled to refuse to deal with Albrecht because he violated his contract requiring him to observe Herald's
805:
336:, among Herald, Albrecht's customers, Milne, and Kroner. Albrecht's appointment as carrier was terminated and Herald required sale of his route. Albrecht made the sale at a price found to be lower than it would have been but for the conduct of Herald Co.
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that respondent had combined with other carriers because the firmly enforced price policy applied to all carriers, most of whom acquiesced in it." A third possible combination was between Herald and
Albrecht's customers.
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1106:, which captures the marginal advertising profit from selling additional advertising due to increased circulation. The newspaper monopolist's optimal price is therefore
672:. In other words: the higher the circulation, the higher the demand for advertising space. The profit-maxizing newspaper monopolist therefore sets his copy price as:
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Lester J. Albrecht, an independent newspaper carrier, bought from Herald
Publishing Company at wholesale and sold at retail copies of Herald's morning newspaper, the
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The Court decided two principal points, one of which was later overruled. First, the conduct was not unilateral but rather was concerted. Second, later overruled by
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suggested price. Albrecht filed a treble-damage complaint which, as later amended, charged a combination in restraint of trade in violation of section 1 of the
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maximum price. Herald was entitled to engage in competition with
Albrecht because he was not entitled to exclusivity after violating the contract.
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800:{\displaystyle P_{n}={\frac {C_{n}-{\frac {\partial A}{\partial n}}(P_{a}-{\frac {\partial C}{\partial a}})}{1-{\frac {\delta }{\epsilon _{n}}}}}}
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Justice Harlan also disagreed that one who merely acquiesces engages in concerted action within the meaning of § 1 of the
Sherman Act.
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it sells. Like in every circulation industry, circulation depends upon the price of a copy, as well as the amount of advertising:
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The Supreme Court held that Herald Co. acted unlawfully by requiring retailers to sell newspapers at a particular price.
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captures the feedback effect of lower copy prices inducing more advertising and vice versa. Most important is the term
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Justice Douglas agreed that the court of appeals erred, but considered that "this is a 'rule of reason' case."
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The jury found for Herald Co. Albrecht moved for a judgment notwithstanding the verdict, asserting that, under
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between respondent, Milne, and Kroner to force petitioner to conform to the advertised retail price." Herald:
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Wholesalers cannot require franchisees and retailers of their products to sell items at a certain price.
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Blair, Roger D.; Romano, Richard E. (1993). "Pricing Decisions of the Newspaper Monopolist".
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345:, and like cases, the undisputed facts showed a combination to fix resale prices, which was
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1020:{\displaystyle \delta =1-{\frac {\partial N}{\partial a}}{\frac {\partial A}{\partial n}}}
1099:{\displaystyle -{\frac {\partial A}{\partial n}}(P_{a}-{\frac {\partial C}{\partial a}})}
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Blair, Roger; Fesmire, James (1986). "Maximum Price Fixing and the Goals of Antitrust".
292:, and should therefore be evaluated for legality under the rule of reason rather than a
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947:{\displaystyle \epsilon _{n}=-{\frac {\partial N}{\partial P_{n}}}{\frac {P_{n}}{n}}}
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illegal under § 1 of the Sherman Act. The district court denied the motion.
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Roszkowski, Mark E. (1991). "Vertical Maximum Price Fixing: In Defense of
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Justice Harlan considered maximum price-fixing beneficial to the public:
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Certiorari to the United States Court of Appeals for the Eighth Circuit
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Lester J. Albrecht v. Herald Co., DBA Globe-Democrat Publishing Co.
1370:: Maximum Resale Price Fixing Moves toward the Rule of Reason".
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than for traditional monopolists in non-circulation industries.
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case, there was a combination that Herald put together. In
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White, joined by Warren, Black, Brennan, Fortas, Marshall
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A newspaper's profits are determined by its circulation
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Price-fixing agreements and combinations are illegal
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1343:Blair, Roger D.; Kaserman, David L. (1981). "The
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1525:Overruled United States Supreme Court decisions
1121:Kiefer-Stewart Co. v. Seagram & Sons, Inc.
274:, 390 U.S. 145 (1968), was a decision by the
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1362:Blair, Roger D.; Lang, Gordon L. (1991). "
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18:1968 United States Supreme Court case
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1350:University of Florida Law Review
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1145:(1981). "Maximum Price Fixing".
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306:who asserted that maximum
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353:Ruling of Eighth Circuit
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362:Ruling of Supreme Court
43:Argued November 9, 1967
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1393:State Oil Co. v. Khan
1373:Vanderbilt Law Review
1247:340 U. S. 211 (1951).
1143:Easterbrook, Frank H.
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334:Sherman Antitrust Act
285:State Oil Co. v. Khan
260:State Oil Co. v. Khan
237:Sherman Antitrust Act
225:Clayton Antitrust Act
45:Decided March 4, 1968
1238:390 U.S. at 150 n.6.
1202:362 U. S. 29 (1960).
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1292:390 U.S. at 169-70.
1283:390 U.S. at 160-62.
1274:390 U.S. at 157-58.
1256:390 U.S. at 152-53.
1185:Syracuse Law Review
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511:. You can help by
485:Act on its head."
455:Concurring opinion
138:William O. Douglas
126:Associate Justices
78:88 S. Ct. 869; 19
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48:
41:
37:
27:
22:
16:
1444:
1409:
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1392:
1377:
1371:
1367:
1363:
1354:
1348:
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1270:
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1234:
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1207:
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1189:
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1119:
1107:
808:
674:
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513:adding to it
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308:price fixing
299:
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258:
252:Overruled by
219:Laws applied
169:
157:
145:
133:
88:Case history
71:
53:
15:
1192:(1): 43–77.
412:Parke Davis
408:Parke Davis
382:dissented.
374:concurred.
195:Concurrence
162:Byron White
122:Earl Warren
1499:Categories
1129:References
520:April 2013
445:decision:
318:Background
304:economists
166:Abe Fortas
130:Hugo Black
1418:0024-7081
1386:1942-9886
1085:∂
1077:∂
1071:−
1049:∂
1041:∂
1035:−
1009:∂
1001:∂
989:∂
981:∂
975:−
966:δ
912:∂
904:∂
898:−
886:ϵ
855:∂
847:∂
784:ϵ
780:δ
775:−
758:∂
750:∂
744:−
722:∂
714:∂
708:−
233:§ 15
80:L. Ed. 2d
60:Citations
1443:Text of
1402:Albrecht
1380:: 1007.
1364:Albrecht
1345:Albrecht
1114:See also
489:Judgment
300:Albrecht
245:§ 1
187:Majority
1412:: 209.
1395:(1997).
1326:1059734
1169:1599297
873:is the
380:Stewart
211:Dissent
203:Dissent
198:Douglas
101:Holding
1490:
1484:
1481:
1475:
1472:
1469:Justia
1466:
1463:
1457:
1416:
1384:
1366:after
1324:
1167:
1124:(1951)
958:, and
809:where
435:per se
396:per se
347:per se
296:rule.
294:per se
280:per se
263:(1997)
243:
231:
206:Harlan
172:
170:·
168:
160:
158:·
156:
148:
146:·
144:
136:
134:·
132:
1451:
1322:JSTOR
1165:JSTOR
1108:lower
93:Prior
1453:U.S.
1414:ISSN
1382:ISSN
1368:Arco
392:Khan
378:and
73:more
65:U.S.
63:390
1449:390
1404:".
1314:doi
1157:doi
515:.
82:998
68:145
1501::
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1408:.
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1376:.
1355:33
1353:.
1320:.
1310:59
1308:.
1190:37
1188:.
1163:.
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1151:.
398:.
239:,
235:;
227:,
1420:.
1388:.
1328:.
1316::
1171:.
1159::
1094:)
1088:a
1080:C
1066:a
1062:P
1058:(
1052:n
1044:A
1012:n
1004:A
992:a
984:N
972:1
969:=
940:n
935:n
931:P
920:n
916:P
907:N
895:=
890:n
858:a
850:C
822:n
818:C
788:n
772:1
767:)
761:a
753:C
739:a
735:P
731:(
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717:A
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699:C
692:=
687:n
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657:n
654:,
649:a
645:P
641:(
638:A
635:=
632:a
612:)
609:a
606:,
601:n
597:P
593:(
590:N
587:=
584:n
564:a
544:n
522:)
518:(
76:)
70:(
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