Document: 384 U.S. 127 86 S.Ct. 1321 16 L.Ed.2d 415 UNITED STATES, Appellant,v.GENERAL MOTORS CORPORATION et al. No. 46. Argued Dec. 9, 1965. Decided April 28, 1966. Daniel M. Friedman, Washington, D.C., for appellant. Homer I. Mitchell and Victor R. Hansen, Los Angeles, Cal., appellees. Mr. Justice FORTAS delivered the opinion of Court. 1 This is a civil action brought by United States to enjoin appellees from participating in an alleged conspiracy restrain trade violation § Sherman Act.1 The District Court Southern California concluded that proof failed establish violation, entered judgment defendants. case here on direct appeal under 2 Expediting Act, 32 Stat. 823, 15 U.S.C. 29 (1964 ed.). We reverse. are General Motors Corporation, which manufactures, among other things, Chevrolet line cars trucks, three associations dealers around California.2 All area belong one or more appellee associations. 3 Chevrolets ordinarily distributed operating franchise Motors. purchase manufacturer, then retail them public. relationship between manufacturer dealer incorporated comprehensive uniform Dealer Selling agreement. agreement does not restrict define those whom may sell. Nor there limitations as territory within Compare White Motor Co. v. States, 372 253, 83 696, 9 738. does, however, contain clause (hereinafter referred 'location clause') prohibits moving establishing 'a new different location, branch sales office, service station, place business including any used car lot location without prior written approval Chevrolet.' 4 Beginning late 1950's, 'discount houses' engaged retailing consumer goods Angeles 'referral services'3 began offering sell public at allegedly bargain prices. Their sources supply were franchised dealers. By 1960 number individual dealers, authorization Motors, had developed working relationships with these establishments. A customer would enter establishments examine literature price lists automobiles produced several manufacturers. In some instances, floor models available inspection. Some negotiated trade-in his old car, provided financing new-car purchase. 5 took various forms. One arrangement was discounter refer dealer. be offered him previously agreed upon discounter. 1960, typical referral concerning exceed $250 over dealer's invoiced cost. For its part supplying received $50 per sale. 6 Another common itself negotiate sale, role being furnish transfer title direction furnished such arrangement, charging $85 cost, getting best it could customer. 7 These principal forms trading involved this case, although each variations,4 schemes fit neither pattern.5 methods reached considerable dimensions. Of 100,000 sold year, 2,000 represented discount house sales. attributed much 25% annual participation arrangements, while another accounted 400 525 single year. 8 Approximately dozen 85 furnishing discounters 1960. As volume grew, nonparticipating located near outlets6 feel pinch. Dealers lost because potential customers received, thought they receive,7 attractive deal who obtained distant vigorously advertised alluring statements savings. also all obligated honor warranty provide free services contemplated therein; indeed require cars, wherever purchased, pursuant Accordingly, increasingly called service, compensation, purchased through discounters. Perhaps what grated most demand 'precondition' so purchased—make hopefully minor adjustments do body paint work necessary render factory-fresh both customer- road-worthy. On June regular meeting Losor Association, member discussed problem resolved bring attention Division's zone manager, Robert O'Connor. Shortly thereafter, delegation association O'Connor, presented evidence doing discounters, asked assistance. O'Connor promised he speak offending When no help forthcoming, Owen Keown, director Losor, matters into own hands. First, spoke Warren Biggs Wilbur Newman, substantial According Keown's testimony, Newman told continue practice 'until * by' Chevrolet, 'when Division it, knew wouldn't let carry it.'8 10 Keown reported foregoing events association's Honolulu November 10, present immediately flood letters telegrams asking help. Salesmen, too, write.9 11 Hundreds wires descended Detroit—with telling effect. Within week Chevrolet's directed superiors Detroit detailed report operations well we Zone taking curb sales.'10 12 mid-December formulated response. December 15, James Roche, executive vice president wrote complaining He noted practices objecting 'in instances represent establishment second unauthorized outlet contrary provisions Agreements.' (Emphasis supplied.) Recipients letter advised personnel proposed discuss matter dealers.11 apprised letter's content instructed personal discussions therein. With respect Roy Cash, regional manager Division. Cash been briefed subject 14. 13 proceeded telephone identify associated advise nonparticipants lists. offenders treated unprecedented confrontations manager. brief meetings wholly successful obtaining abandon question. capitulated during course four- five-minute meeting, thereafter.12 dealer, met but city put off decision 'to make sure them, stopped their dealings houses.'13 14 There unanimity reference ultimate power testimony related story, relevance him, handling children, 'I can tell stop something. If don't I knock teeth down throats.' mid-January elicited promise But agreements policing—a fact anticipated. earlier initiated contacts firms capable performing function. plan, unilaterally police agreements, displaced, favor joint effort associations, representatives appointed committee study situation keep touch O'Connor.14 Early 1961, jointly finance 'shopping' assure continued cars. Each contributed $5,000, professional investigator hired. try proscribed outlets, tape-record transactions, if any, gather documentary evidence—which lay 'at doorstep associational activities preceded supplemented similar Association. 17 collaborated policing activities. subordinate, Jere Faust, actively solicited uncovering violations. Armed information violations members staff ask come talk. confronted 'shopper,' documents cases tape recording transaction. every instance, embarrassed repurchased sometimes loss, At checks made payable attorney acting defendant 18 testified occasion did 'force' repurchase; merely opportunity available. when assistant talk about sales, 'he specified sum money me came saw him. kept appointment cashier's check. going repurchase automobile *.' only bought back (without questioning correctness exacted) fired employee responsible transaction—although commended few weeks 'number fleet salesman' 11-state Pacific region. 19 spring campaign eliminate commerce success. Sales outlets seem have halt. Not until federal grand jury commenced inquiry sketched appear resumed II. 20 basic facts, Government first criminally. returned indictment. After trial, defendants found guilty. action, filed shortly after return indictment, trial. 21 Both urge importance, purposes decision, clause' Agreement contend contractual provision lawful, justifies actions. They argue acted lawfully prevent violating clause,' described arrangements constitute additional clause, dealers—and interest compliance agreement, sought vindicate. 22 invites us join assumption, encompasses medium urges hold that, construed, unlawful unreasonable restraint Act.15 23 need reach questions meaning, effect, validity Agreement, not. decide whether construed prohibit party selling unilateral enforce construed. classic trade: joint, collaborative class competitors terminating minority deprive freedom choose. Against combination, avail. Whatever might done Agreements borders defines, beside point. And, taken constitutes combination conspiracy, consider legitimate securing others lawfulness individually take vindicate interest. 24 decided otherwise. It add up violative antitrust laws. conclusion cannot squared specific findings fact. include essentials Act: That summer 'through dealer-members,' complained (Finding 34); embark letter-writing enlisting aid 35); January 39); created investigating 40); undertook Motors; supplied use bringing wayward line, (Findings 41 42); result effort, induced abjure future 42). 25 trial judge compel proved.16 error court lies failure apply correct established standard ascertaining existence Act. See Parke, Davis & Co., 362 29, 44—45, 80 503, 511—512. attempted justify following reasoning: co-conspirator promote selfinterest; members, has lawful thus protecting system distributing automobiles—business deemed proper; seeking interests co-conspirators 'agreements' themselves, 'parallel action.' 26 factors reached. consequence, determining consequence purpose economically desirable. And regard clearly erroneous irreconcilable court's conclusory 'finding' 'agreement' co-conspirators, long settled explicit Act conspiracy—certainly where, here, pervasive initiation, execution, fulfillment plan. supra, 43, 511; Bausch Lomb Optical 321 707, 722-723, 64 805, 813, 88 L.Ed. 1024; Federal Trade Comm'n Beech-Nut Packing 257 441, 455, 42 150, 155, 66 307. 27 Neither nor independently separately. collaborated, otherwise, themselves enlist dealers' promises forsake explicitly venture assist promises, proffer accepted utilized 28 confine boundaries 39), time announced terminate discounters.17 indicates intention fashion.18 contrary, overriding corporate policy proper relations19 dissuaded engaging sort conduct, laws assumed, decided, Parke Davis, supra. done, elicit substantially interrelated interdependent, none hammered out nonconforming officials Motors' Division, conversations acknowledged beginning essential forthcoming. once secured, employed assistance coconspirators helping them. What resulted fabric interwoven many strands market, inhibit choice select multilateral surveillance enforcement. process achieving enforcing desired objective stretch imagination 'unilateral' 'parallel.' 46, 512; 453, 154; 722—723, 813; Interstate Circuit, Inc. 306 208, 226, 59 467, 474, 610; Masonite Corp., 316 265, 275, 62 1070, 1076, 1461; Turner, Definition Under Conscious Parallelism Refusals Deal, 75 Harv.L.Rev. 655 (1962).20 30 doubt effect meaning Elimination, access market se 31 Klor's, Broadway-Hale Stores, Inc., 359 207, 79 705, 741, question group powerful businessmen act concert merchant, like Klor, needs compete effectively.' U.S., 210, S.Ct., 708. allegation manufacturers distributors electrical appliances conspired major retailer, Broadway-Hale, 'either Klor's (Broadway-Hale's next-door neighbor competitor) discriminatory prices highly unfavorable terms.' 209, boycott even trader violated statute21 reasonableness conduct circumstances. Group boycotts trader, said Court, 'classes restraints 'nature character' unduly restrictive 211, 709. doctrine, recognized 'there certain pernicious competition lack redeeming virtue conclusively presumed therefore illegal elaborate precise harm caused excuse use,' character. Northern Pac. 356 1, 5, 78 514, 518, 545. Fashion Originators' Guild America, Comm'n, 312 457, 61 703, 949, Eastern Retail Lumber Dealers' Assn. 234 600, 613—614, 34 951, 954—955, 58 1490, price-fixing. principle where actions order merchandise latter wish public, inquire economic motivation underlying conduct. Barber, To Deal Antitrust Laws, 103 U.Pa.L.Rev. 847, 872—885 (1955). Exclusion traders means inconsistent free-market principles embodied saved preserving collaborators' profit margins automobiles, than tortious against directed—as 468, 33 note, moreover, inherent success competition—a goal effected conspiracy. E.g., 47, 513; Socony-Vacuum Oil 310 223, 60 811, 844, 84 1129. rule applies indirect. Simpson Union 377 13, 16—22, 1051, 1057, 98; record ample behind concerted protect real apparent competition. n. 7, purchasers believed lower Ibid. Certainly, complaints prominent salesmen bombarded 1960.22 38.) unconcerned general levels.23 35 protection conspiratorial object special solicitude closing our eyes removal traders. propose construe conspiracies fix sell, allow combinations entirely. 36 reverse remand fashion appropriate equitable relief. 47—48, 513—514. ordered. 37 Reversed remanded. 38 HARLAN, concurring result. 39 Although represents basically unsound see my dissenting opinion, 49, escape controls case. held maintain resale refusing follow suggested refusal attended customers, though himself. Colgate 250 300, 465, 63 992. price-fixing, unable discern tenable reason differentiating involving, boycotting. governs unavoidable, given undisputed clause. precluded find nothing Court's contrary. 40 basis concur statute reads relevant part: 'Every contract, form trust foreign nations, declared illegal. *' Named '(t)he officers, directors, (the association), officers employees area, plaintiff unknown Since consistently distinguish services,' based either variety nature shall hereinafter term 'discounter' embrace example, paid one-third gross $75, fixed sale place. same flat fee $17.50 referral, consummated. least actually cooperative resold customers. situation, 'bootlegging,' receive warranty. disapproving practice, assert violates clause.' efforts, passed directly customer, must distinguished ubiquitous using 'bird dogs'—informal steer occasional toward particular relatively small fees often bottle liquor. violate corporation's endorsement desirable device. found, 70% local five miles outlets. undercut able to, chose compete. Two Chevrolets, 'sale,' 'shopped' lower. inability meet discounters' price. Moreover, auto loans rates G.M.A.C., subsidiary. just preferred thereby avoided haggling seems inevitable facet purchasing orthodox way. Others apparently bothering confirm comparison shopping, 'discount' stores offer assumption fed advertising 'the lowest anywhere' 'savings hundreds dollars.' sentiments day before, O'Connor's presence, challenged wrote: 'We reluctant discard account good rather concrete assurance picked dealer.' later, forwarded Biggs' Detroit. words, higher echelon end Chevrolets.' report, dated 22, recounted 'zone management' talked attempt desist,' '(o)ur Associations formed call persuade discontinue practice.' Supported copy letter, 8, predicted 'many will cease type relinquishment.' Roche John Gordon, virtually identical went throughout Nation, signature managers respective divisions. abruptly terminated maintained two houses, despite connections owed $20,000 $28,000. preceding four reduced indebtedness $52,000 reasonably expected erase completely weeks. anticipated cancellation accounts debts become uncollectible. His fears justified. terminated. remained unpaid. Francis Bruder, since 1957, 'Cash felt dealing houses well. left impression soon quit.' precisely intended implant. explained inter-office memorandum '(All to) know discussion should elect cooperation house, discourage starting characterized pertaining However, noted, earlier, already non-conforming enable resolve factual conflict, resolution important. version, together mode intrabrand Government's complaint contains concedes tried theory, injecting issue way defense. Trial counsel advert validity, sense here. Transcript, pp. 17—18. light disposition argument properly before us. note 511—512, 505, judge, defendants' shielded 'clearly erroneous' test Rule 52(a) Rules Civil Procedure. provides: 'Findings set aside unless erroneous, due credibility witnesses.' 'fact,' consists legal required applied facts Singer Mfg. 374 174, 194, 1773, 1783; 823; Mississippi Valley Generating 364 520, 526, 81 294, 297, 268, cited. customary evaluate demeanor witnesses, rationale (see Oregon State Med. Soc., 343 326, 331—332, 72 690, 694—695, 96 978), plays restricted essentially 'paper case.' unfold 'live' witnesses. witnesses gave appeared person. submitted affidavit, deposition, agreed-upon narrative criminal proceeding judge. vast introduced, bear decision. event, resort contradict fact, 'findings,' supplement support '(i)n instances' Agreement. No told, person, warned continuance termination franchise. instructions authorizing go far, view (to dealers) didn't suggest thing.' considering action. testified, 'It (General Motors') threaten franchise.' Good locations, said, hard by. dealerships, invested funds. Therefore, 'we want people wave event agree, following—after reading change practice. Instead handled sound, calm, sensible business-like approach.' statutory inhibitions right franchises. Aug. 1956, c. 1038, 2, 70 1125, 1222 ed.); Kessler Stern, Competition, Contract, Vertical Integration, 69 Yale L.J. 103—114 (1959). Klein American Luggage Works, 323 F.2d 787 (C.A.3d Cir. 1963), Graham Triangle Publications, 233 F.Supp. 825 (D.C.E.D.Pa. 1964), aff'd curiam, 344 775 1965), Fulda, Individual Deal: Does Single-Firm Conduct Become Restraint? Law Contemp.Prob. 590, 592-597 (1965). charged 1. charge provides person monopolize, combine conspire persons, monopolize guilty misdemeanor Evidence admitted solely showing state mind, prove actual price-cutting mind significance memorandum, circulated formulation vis-a -vis stated hazards condoning operation discounted freely quoted large portion public.' purchases rate 1/2%, subsidiary Corporation. Finally, conceded intensely concerned adequate 'profit opportunity' Finding 17), concern necessarily involves consideration realized

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