The Next Step in the Antitrust Treatment of Restricted Distribution: Per Se Legality

Abstract

By restricted I mean a marketing system in which the manufacturer places restrictions on competition among the distributors or dealers that provide its goods either to lower links in the chain of distribution or to the ultimate consumer. Such restrictions take many forms. One is resale price maintenance, whereby price competition (or sometimes price gouging) is forbidden. Another is the assignment of exclusive sales territories, which forbid the distributor or dealer to sell outside of a specified territory on pain of having its relationship with the manufacturer terminated or, perhaps, of having to pay a profit passover or some other charge to the distributor or dealer whose territory it invaded. In addition, there are outlet restrictions, which might forbid a distributor to sell to any dealer not approved by the manufacturer, or forbid one dealer to sell (bootleg) to another dealer, and location clauses, which forbid a dealer to sell the manufacturer's product at any location other than that specified in the dealership agreement. Sometimes a manufacturer will reserve certain large customers to itself, thus eliminating the competition that might otherwise exist between itself and its dealers. Or it may agree to an exclusive distributorship or dealership, and thereby lose its freedom to author-