Document: 465 U.S. 752 104 S.Ct. 1464 79 L.Ed.2d 775 MONSANTO COMPANY, Petitionerv.SPRAY-RITE SERVICE CORPORATION. No. 82-914. Argued Dec. 5, 1983. Decided March 20, 1984. Syllabus From 1957 to 1968, respondent, a wholesale distributor of agricultural chemicals that engaged in discount operation, sold herbicides manufactured by petitioner. In petitioner refused renew respondent's 1-year distributorship term, and thereafter respondent was unable purchase from other distributors as much petitioner's products it desired or early the season needed them. Respondent ultimately brought suit Federal District Court under § 1 Sherman Act, alleging some its conspired fix resale prices had terminated furtherance conspiracy. Petitioner denied allegations conspiracy, asserted been because failure hire trained salesmen promote sales dealers adequately. The instructed jury conduct per se unlawful if price-fixing answers special interrogatories, found, inter alia, termination pursuant conspiracy between one more distributors. Appeals affirmed, holding there sufficient evidence satisfy burden proving set prices. It noted numerous complaints competing about price-cutting practices. substance, court held an antitrust plaintiff can survive motion for directed verdict shows manufacturer response following Held: 1. applied incorrect standard proof this case. A basic distinction any distributor-termination case is concerted action distributors, which proscribed independent manufacturer, not proscribed. United States v. Colgate & Co., 250 300, 39 465, 63 L.Ed. 992. second important such cases prices, illegal, on nonprice restrictions, judged rule reason. See Continental T.V., Inc. GTE Sylvania Inc., 433 36, 97 2549, 53 568. Permitting agreement be inferred existence even fact came "in to" complaints, could deter penalize perfectly legitimate conduct. Thus, something than needed. correct must tends exclude possibility nonterminated were acting independently. That is, direct circumstantial reasonably prove others conscious commitment common scheme designed achieve objective. Pp. 760-764. 2. Under proper proof, created issue whether Accordingly, Appeals' judgment affirmed. 765-768. (a) There have concluded parties "agreement" "conspiracy" maintain terminate price-cutters. 765-766. (b) also would reasonable find part agreement, since necessary contemplating compliance with suggested know those who do comply will terminated. Moreover, link. 767-768. 684 F.2d 1226 (1982), Fred H. Bartlit, Jr., Chicago, Ill., William F. Baxter, Washington, D.C., amicus curiae, leave Court. Edward L. Foote, respondent. [Amicus Curiae Information pages 754-756 intentionally omitted] Justice POWELL delivered opinion This presents question required vertical violation Section Act. 2 * Monsanto Company manufactures chemical products, including herbicides. By late 1960's, time at case, accounted approximately 15% corn herbicide market 3% soybean market. market, leader commanded 70% share. two competitors each 30% 40% Spray-Rite Service Corporation distribution 1955 1972. essentially family business, whose owner president, Donald Yapp, sole salaried salesman. buying large quantities selling low margin. 3 authorized 1968. October 1967, announced appoint one-year terms, distributorships according several new criteria. Among criteria were: (i) distributor's primary activity soliciting retail dealers; (ii) employed capable educating customers technical aspects Monsanto's herbicides; (iii) expected "to exploit fully" geographical area responsibility. Shortly thereafter, introduced number incentive programs, making cash payments sent training classes, providing free deliveries within responsibility.1 4 declined Spray-Rite's distributorship. At time, tenth largest out 100 herbicide. Ninety percent volume devoted sales, 16% products. After termination, continued dealer until able but 1969. 1972, share increased 28%. Its grown 19%. 5 15 U.S.C. alleged complaint further distributorship, adopted compensation programs shipping policies, encouraged boycott 6 tried jury. found areas responsibility, and/or policies limit access after 1968.2 awarded $3.5 million damages, trebled $10.5 million. Only first jury's findings before us today.3 7 Seventh Circuit (1982). stated "proof competitor support inference action." Id., 1238.4 Canvassing testimony exhibits jury, official said price complaints. 8 view into conflict Courts Appeals.5 We granted certiorari resolve conflict. --- ----, 103 1249, 75 479 (1983). reject statement submit litigation, affirm we announce today.6 II 9 has drawn distinctions are center First, action—a always clearly courts. Act requires "contract, combination . conspiracy" order establish violation. Independent course generally right deal, refuse whomever likes, long does so 307, 468, 992 (1919); cf. Parke, Davis 362 29, 80 503, 505 (1960). Colgate, advance deal fail comply. And acquiesce manufacturer's demand avoid termination. 10 restrictions. former illegal years national enforcement. Dr. Miles Medical Co. John D. Park Sons 220 373, 404-409, 31 376, 383-385, 55 502 (1911). latter reason, weighing relevant circumstances decide restrictive practice constitutes unreasonable restraint competition. 568 (1977).7 11 While these theory clear, often they difficult apply practice. emphasized legality arguably anticompetitive should primarily "market impact." See, e.g., id., 51, S.Ct., 2558. But economic effect all described above—unilateral price-setting, agreements restrictions—is many, all, similar identical. Davis, supra, U.S., 43, 511; note supra. distance, various situations indistinguishable. For example, constant communication marketing strategy alone show pricing decisions. reasons exchange information reception their precisely attempts particular means costly restrictions most interest distributors' want ensure earn profit pay hiring additional demonstrating features product, see "free-riders" interfere. Sylvania, 55, 2560. strongly felt concern necessarily mean done doctrine allows. 12 Nevertheless, considerable importance distinguished agreements, present law subject treatment treble damages. On claim price-fixing, carry agreement. If may highly ambiguous evidence, danger doctrines enunciated seriously eroded. 13 flaw evidentiary disregards danger. merely As points out, price-cutters "are natural—and perspective, unavoidable—reactions activities rivals." Such particularly where imposed "arise normal business indicate Roesch, Star Cooler Corp., 671 1168, 1172 (CA8 1982), rehearing en banc, 712 1235 1983) (affirming equally divided court). source manufacturers. assure efficient system, manufacturers constantly coordinate product reach consumer persuasively efficiently. To bar solely upon acts originated create irrational dislocation Warren-Boulton, Vertical Control Markets 13, 164 (1978). sum, "[t]o permit basis receiving thus expose defendant damage liability both inhibit management's exercise emasculate terms statute." J. Sweeney Sons, Texaco, 637 105, 111, n. (CA3 1980), cert. denied, 451 911, 101 1981, 68 300 (1981).8 14 Judge Aldisert written, "had objective." 111; accord H.L. Moore Drug Exchange Eli Lilly 662 935, 941 (CA2 1981) 459 880, 176, 74 144 (1982); American Tobacco States, 328 781, 810, 66 1125, 1139, 90 1575 (1946) (Circumstances reveal "a unity purpose design understanding, meeting minds arrangement").9 III A. Applying facts believe substantial district manager, least occasions 1969, five months terminated, approached advised did price, receive adequate supplies Tr. 1929-1934. When assent, referred regional office, complained parent company. subsidiary comply, informed charge price. 1933-1934. Evidence kind plainly persuasive minds.10 16 An example newsletter his dealer-customers. dated 1, just four weeks written author officials, 2564, 2571-2573, discusses efforts "get[ ] 'market place order.' " App. 65. reviews then states addition "every effort made minimum level." 66. relates follows: 17 "In words, assured company-owned outlets less trade whole. Furthermore, level likely deviate downward anyone idea implied doing possibly discolor outlook continuity approved during future upcoming seasons. So, none interested retention arrangement risk being deleted customer service opportunity. Also, far accounts concerned, sure recognize desirability retaining favor continuing respecting wisdom participating program manner assuring "playground" throughout entire country. elementary harmony only come rules game dispute, decision umpire final." 66-67. 18 interpret referring understanding retailers undercut below complying distributors; "the game."11 B 19 If, courts remaining was, Following president official. thing mentioned many received 774, 1295.12 addition, reliable never discussed prior action. F.2d, 1239. contrast, salesman testified representatives 1965-1966 Spray-Rite, distributors—including major influential one, 126, 135—and requested maintained. 109-110, 114. Later same year, testified, officials explicit threats unless raised 619, 711.13 IV 20 conclude distributor. standard, distributors.14 21 ordered. WHITE took no consideration 22 BRENNAN, concurring. 23 notes, Solicitor General filed brief curiae urging overrule Court's stood 73 years, Congress certainly aware time. Yet enacted legislation interpretation circumstances, I reason depart our longstanding Because adheres and, my view, properly applies join These responsibility exclusive territorial Approximately ten twenty assigned area, permitted sell outside area. three interrogatories "1. Was offer contract 1969 fix, stabilize herbicides? "2. Were policy "3. Did conspire combine plaintiff's 1968?" 1226, 1233 (CA7 1982). answered "Yes" interrogatories. 6, infra. later paragraph restated sufficiency "Proof raise 1239 (emphasis added). argued different quoted text showing minimal causal connection plaintiff, while textual "follow" other. explain infra, 763-764, difference significant analysis. recognized articulated 110-111 (1981). Other circuit rejected Circuit. Schwimmer Sony Corp. America, 677 946, 952-953 (CA2), 1007, 362, 398 Davis-Watkins Merchandise, 686 1190, 1199 (CA6 pending, 82-848; Bruce Drug, Hollister, 688 853, 856-857 (CA1 1982); Blankenship Herzfeld, 661 840, 845 (CA10 1981). Fourth Circuit's standard. Bostick Oil Michelin Tire 702 1207, 1213-1215 (CA4 1983). One panel Eighth Battle Lubrizol 673 984, 990-992 another appears issued day, positions. Compare (en banc), Watson, 1238, 1240 banc) McMillian, J., dissenting). challenges opinion. argues case—the rather 'only allegation [nonprice] prices.' Brief (quoting 1237). asserts mere them treatment. contends undermines (1977), what held, arguable think, however, misreads court's Read context, somewhat broad language fairly read say prove, well allege, notes "that otherwise lawful undertaken prices." 1237 cited White Motor 372 253, 260, 83 696, 700, 738 (1963), wrote practices ancillary restrained finding sufficiently linked. elsewhere here "created 1233. dispute proven instituted 23-27. Instead, insufficient failed make sufficiency-of-the-evidence argument respect finding, Defendant-Appellant 80-2232 (CA7), pp. 27-34, address point. therefore decline it. Adickes S.H. Kress 144, 147, 2, 1598, 1602, 26 142 (1970); Duignan 274 195, 200, 47 566, 568, 71 996 (1927). concession suffice treatment, applicable restriction challenged. 18, 2558, 18. Nothing today undercuts fact, need viability rejection evidence. 763. (by only) amici suggest take opportunity reconsider "contract[s], combination[s] conspirac[ies]" unlawful. They argue maintenance little 69-70, 2567-2568, (1977) (WHITE, concurring judgment) (citing sources); Baker, Interconnected Problems Doctrine Economics Labyrinth: Is Way Out?, 67 Va.L.Rev. 1457, 1465-1466 objections 18—such facilitates horizontal cartels—can met easily context rule-of-reason Certainly occasion consider merits argument. instructions Neither party nor point appeal. neither presses advanced amici. question, decided here. probative value remains introduce contract, combination, concept minds" scheme" includes conformed presented communicated acquiescence sought manufacturer. conform threat cut off supply "shipping season" when short supply. use lever force compliance. describing reaction unilateral pronouncements. itself construed flyer reporting understanding. Six letter him "correct immediately misconceptions policies." 98. disavowed intent enter documents surrounding left reference employees suggesting controls action, accession demands choice interpretations 1298 (identifying distributor). joint affirmed us, maintained, last, consistent reasons, ability act concert. contrary force, agree true fifteen permissible period 1968 post-termination Monsanto. hand, stable 1969-1970 earlier stint 1965-1966. 217. And, given active measures assent numbers, broke promises. event, cannot erred produced that—despite sharp evidence—the submitted

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