Cengage Advantage Books: Foundations of the Legal Environment of Business 3rd Edition by Marianne Jennings

تمرين 16

State Oil v. Khan 522 U.S. 3 (1997)
Fill It Up, but Only at My Price
Facts
Barkat U. Khan and his corporation (respondents) entered into an agreement with State Oil (petitioner) to lease and operate a gas station and convenience store owned by State Oil. The agreement provided that Mr. Khan would obtain the gasoline supply for the station from State Oil at a suggested retail price set by State Oil, less a margin of 3.25 cents per gallon. Mr. Khan could charge any price he wanted, but if he charged more than State Oil's suggested retail price, the excess was rebated to State Oil. Mr. Khan could sell the gasoline for less than State Oil's suggested retail price, but the difference came out of his allowed margin.
After a year, Mr. Khan fell behind on his lease payments, and State Oil began proceedings for eviction. The court had Mr. Khan removed and appointed a receiver to operate the station. The receiver operated the gas station without the price constraints and received an overall profit margin above the 3.25 cents imposed on Mr. Khan.
Mr. Khan filed suit, alleging that the State Oil agreement was a violation of Section 1 of the Sherman Act because State Oil was controlling prices. The district court held that there was no per se violation and that Mr. Khan had failed to demonstrate antitrust injury. The Court of Appeals reversed, and State Oil appealed.
Judicial Opinion
O'CONNOR, Justice
Although the Sherman Act, by its terms, prohibits every agreement "in restraint of trade," this Court has long recognized that Congress intended to outlaw only unreasonable restraints.
As a consequence, most antitrust claims are analyzed under a "rule of reason," according to which the finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint's history, nature, and effect.
Some types of restraints, however, have such predictable and pernicious anticompetitive effect, and such limited potential for procompetitive benefit, that they are deemed unlawful per se. …
"Low prices," we have explained, "benefit consumers regardless of how those prices are set, and so long as they are above predatory levels, they do not threaten competition." Our interpretation of the Sherman Act also incorporates the notion that condemnation of practices resulting in lower prices to consumers is "especially costly" because "cutting prices in order to increase business often is the very essence of competition."
[ Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 594, 106 S.Ct. 1348, 1360, 89 L.Ed.2d 538 (1986).]
So informed, we find it difficult to maintain that vertically imposed maximum prices could harm consumers or competition to the extent necessary to justify their per se invalidation.
Further, although vertical maximum price fixing might limit the viability of inefficient dealers, that consequence is not necessarily harmful to competition and consumers.
[W]e of course do not hold that all vertical maximum price fixing is per se lawful. Instead, vertical maximum price fixing, like the majority of commercial arrangements subject to the antitrust laws, should be evaluated under the rule of reason. In our view, rule-ofreason analysis will effectively identify those situations in which vertical maximum price fixing amounts to anticompetitive conduct. …
We therefore vacate the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.
Remanded.
Case Questions
1. What were the terms of Mr. Khan's lease?
2. What happened when a receiver operated the station without the State Oil lease constraints? Why is this information important for the case?
3. Is vertical price fixing a per se violation? Why or why not?