Opinion ID: 344263
Heading Depth: 1
Heading Rank: 2

Heading: vertical division of territories

Text: 80 In United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967), the Court held that a vertically mandated territorial restriction is unreasonable per se when imposed upon buyers, but that the restriction is subject to the rule of reason when imposed upon dealers functioning as agents or consignees who assume neither title, dominion, nor risk of loss over the goods sold. I agree with the district court that the fact that Bravman guaranteed payment on certain accounts did not alter the basic arrangement as one in which the manufacturer retained title, dominion and risk of loss over the products which Bravman sold to retailers. It is clear, therefore, that the vertically imposed territorial restriction which Bravman challenges is not illegal per se. 81 In Schwinn, the retail dealers selling under the Schwinn plan, received shipments directly from Schwinn and were invoiced by and made payments to Schwinn. Schwinn established the price at which the retailer would purchase and remitted a standard commission to the sales representative in whose territory the order originated. 237 F.Supp. 323, 340 (N.D.Ill.1965). Thus, in Schwinn, as in this case, there was no intrabrand price competition at the wholesale level, not by virtue of the territorial restriction, but simply because the manufacturer established the wholesale price. In Schwinn, however, the territorial restriction was an integral part of a system through which Schwinn confined sales to franchised retail outlets the result of which was to restrain intrabrand competition at the retail level. The Court recognized that this diminution of intrabrand competition could violate § 1, but, on the facts of that case, found it not unreasonable in light of the marketing system's overall procompetitive effect on interbrand competition. 82 Unlike Schwinn, Bassett does not franchise or otherwise limit retail outlets. Thus, Bassett's system cannot conceivably affect intrabrand competition at the retail level, and, as we have seen, cannot affect intrabrand price competition at the wholesale level. Theoretically, the territorial restriction could affect intrabrand nonprice competition at the wholesale level, but there has been no evidence or argument that nonprice competition among sales representatives is an important factor in the industry. Indeed, I have searched the record and briefs in vain to find even a single reference to a real or imagined anticompetitive effect attributable to the territorial restriction. Under these circumstances there is no need to examine procompetitive aspects, for plaintiff's case has not progressed beyond the pleadings.