Historical Development The first major court case that the Supreme Court examined with respect to RPM occurred in 1911. In Dr. Miles Medical Co. v. John D. Park & Sons Co., Dr. Miles, a drug manufacturer, had entered into a written agreement with its customers that they would only sell “to the said Retail and Wholesale Agents of [Dr. Miles], as per list furnished, at not less than [a set minimum] price.” One retailer, John D. Park & Sons Co., refused to enter into the agreement and Dr. Miles sued them for “persuading and inducing, directly and indirectly” the other wholesalers and retailers to violate their contracts. The defendant was also charged for selling below the set minimum prices at discounted rates. After months of investigation,
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Colgate & Co., was brought to the Supreme Court. In this case, Colgate was sued because they refused to deal with retailers that sold below their suggested retail price. The Supreme Court ruled in favor of Colgate & Co. stating that the Sherman Act “does not restrict…[a] trader or manufacturer…to exercise his own independent discretion as to parties with whom he will deal, and, of course, he may announce in advance the circumstances under which he will refuse to sell.” A similar case in 1922, FTC v. Beech-Nut Packing Co., the Supreme Court expounded on the same idea but added that the manufacturer cannot obstruct any natural forms of trade through a contract or combination. Over the next few years, the Supreme Court saw other cases, but resale price maintenance remained a per se illegal …show more content…
In Continental T.V. v. GTE Sylvania, Inc., Continental professed that Sylvania had violated Section 1 of the Sherman Act by entering into agreements that prohibited the sale of its products except in specified locations. Originally, the District Court ruled in favor of Continental T.V.; however, the decision was reversed by the Court of Appeals. When the case was finally brought to the Supreme Court, the court stated “the facts of this case do not present a situation justifying a per se rule. Accordingly, the per se rule…is overruled.” Although it only changed certain aspects of vertical price fixing to be deemed rule of reason, it was a groundbreaking case that laid the foundation for future vertical restraint
Colgate & Co., was brought to the Supreme Court. In this case, Colgate was sued because they refused to deal with retailers that sold below their suggested retail price. The Supreme Court ruled in favor of Colgate & Co. stating that the Sherman Act “does not restrict…[a] trader or manufacturer…to exercise his own independent discretion as to parties with whom he will deal, and, of course, he may announce in advance the circumstances under which he will refuse to sell.” A similar case in 1922, FTC v. Beech-Nut Packing Co., the Supreme Court expounded on the same idea but added that the manufacturer cannot obstruct any natural forms of trade through a contract or combination. Over the next few years, the Supreme Court saw other cases, but resale price maintenance remained a per se illegal …show more content…
In Continental T.V. v. GTE Sylvania, Inc., Continental professed that Sylvania had violated Section 1 of the Sherman Act by entering into agreements that prohibited the sale of its products except in specified locations. Originally, the District Court ruled in favor of Continental T.V.; however, the decision was reversed by the Court of Appeals. When the case was finally brought to the Supreme Court, the court stated “the facts of this case do not present a situation justifying a per se rule. Accordingly, the per se rule…is overruled.” Although it only changed certain aspects of vertical price fixing to be deemed rule of reason, it was a groundbreaking case that laid the foundation for future vertical restraint