Court Opinion

ID: 9428928
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:25:10.083808+00
Date Added: 2024-06-11T17:23:16.221676
License: Public Domain

Justice Stevens,
with whom Justice White joins,
concurring in the judgment.
Under the California designation statute, each distiller is empowered to decide whether to regulate its product distribution within California by designating those importers that may sell its product. The statute contemplates a private market decision but provides a nonmarket mechanism for enforcing the decision. Hybrid restraints of this character require analysis that is different from a public regulatory scheme on the one hand, see, e. g., Exxon Corp. v. Governor of Maryland, 437 U. S. 117; Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U. S. 35,1 and a purely private restraint on *666the other, see, e. g., Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36; Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373. We have twice held that hybrid price-fixing restraints are prohibited by the Sherman Act. Schwegmann Bros. v. Calvert Distillers Corp., 341 U. S. 384; California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U. S. 97. In both cases the private decision to fix prices was unsupervised by the State but made effective by state law.
The facts of Schwegmann, involving the Louisiana marketing practices of two out-of-state distributors of gin and whiskey, are particularly instructive. The distributors sought to control the retail prices of their products by obtaining from individual retailers a written agreement that they would comply with the minimum retail price schedules established by the distributors. These resale price maintenance agreements, which otherwise violated the Sherman Act, were rendered lawful by the Miller-Tydings Act and a Louisiana fair trade law. But a New Orleans retailer refused to sign such an agreement and sold the distributors’ products at cutrate prices. The distributors responded by seeking to enjoin the retailer from selling the products at less than the minimum prices fixed by their schedules. The basis for their complaint was a Louisiana statute that condemned as unfair competition a sale at less than the price stipulated in a fair trade contract, even though the particular retailer was not a party to that contract. This Court held that the Sherman Act, as amended by the Miller-Tydings Act, precluded enforcement of the nonsigner provision.
Even though the private agreements to fix resale prices were not unlawful, Schwegmann held that the distributor could not place the same restraint on the market by using the *667state statute as a “club.” 341 U. S., at 395 (emphasis in original). The Court’s holding teaches that a state statute that facilitates the manufacturer’s decision to impose a vertical restriction is not lawful simply because the Sherman Act permits the manufacturer, if it has sufficient power in the private market, to impose that same restriction without the aid of the statute. In other words, a statute that gives distributors additional power over the wholesale or retail market to impose an otherwise permissible restraint might not pass muster under the Sherman Act.2
The inquiry in these cases therefore cannot simply be whether the Sherman Act would have been violated had the distillers obtained the control over their California distribution systems without the aid of the designation statute. For the distillers’ power to impose resale restrictions on California importers has been drastically affected first by the Oklahoma “open wholesaling” and “free export” provisions and second by the California designation statute enacted as a response to the Oklahoma laws. It may be that the amount of distiller control over California importers under the two statutes is not significantly greater than the amount that would exist if neither State intervened in the private market. Contrary to the Court’s perception, ante, at 662,3 however, the character of control is different. For the designation statute *668gives the distillers direct authority over California importers,4 whereas in the private market the distillers must persuade Oklahoma wholesalers not to resell to California importers. It is possible that, absent the state laws, the distillers would have insufficient market power to obtain and enforce such agreements. The designation statute therefore may give the distillers more power over California importers than was taken away by the Oklahoma laws.
The validity of the designation statute obviously presents a more difficult question than was presented in Schwegmann and Midcal.5 For in both cases the Court had the benefit of a conclusive presumption that resale price maintenance is anticompetitive. This case, however, not only involves a species of vertical nonprice restriction with respect to which there are no sure rules relating to effect on competition; it also involves a nonmarket enforcement mechanism that, according to Schwegmann, can make the difference between legality and illegality. The statute conceivably could create such an unacceptable and unnecessary risk of anticompetitive effect as to result in its invalidation. The removal of the Oklahoma legal obstacle to the purely private imposition of vertical restrictions in the California liquor market significantly enhances this possibility.
*669I agree with the Court that our price-fixing cases do not require the invalidation of the designation statute. The question on remand should be whether the statute’s provision to distillers of an additional club over California importers affords distillers an unreasonable degree of unsupervised power to regulate their distribution practices that they would not otherwise enjoy under a free market. Because that question cannot be determined without a more sophisticated inquiry, I concur in the Court’s judgment.

 The Court states that Seagram & Sons is “much like” these cases. Ante, at 662. Except for the fact that Seagram & Sons also involved a facial challenge against a state statute, the two cases are quite different. The New York statute involved in Seagram & Sons imposed a degree of *666public regulation of the market; it did not grant liquor distributors a degree of private regulatory power. The restraint on the market was, therefore, not of the hybrid character that distinguishes these cases from most antitrust cases.

 Whereas Schwegmann best illustrates the different treatment accorded purely private restraints and hybrid restraints, perhaps Midcal best illustrates the different treatment accorded hybrid restraints and public regulation of the market. In Midcal a California statute required distributors of wine to file either fair trade contracts or price schedules with the State. All California retailers were required to sell wine at the price the distributors fixed. Relying upon Schwegmann, the Court invalidated the statute. Even though the State presumably could regulate the wine market by fixing retail prices itself, it could not empower private parties to undertake such regulation.

 “Thus, California’s designation statute merely restored what Oklahoma had taken away: the distiller’s ability to determine which wholesalers may import its products into California.”

 Unless an importer is expressly designated, it may not lawfully sell the distiller’s products within California.

 Under the Sherman Act, a manufacturer may choose the wholesalers with whom it will do business. It may also place certain reasonable restrictions on each wholesaler as a condition of doing business. Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36. Subject to the exception recognized in United States v. Colgate & Co., 250 U. S. 300, it may not, however, dictate the price at which the wholesaler must sell the product to retailers or to ultimate consumers. Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373. From these different rules governing the purely private decisions of manufacturers, it follows that a state statute that facilitates resale price maintenance and a state statute that facilitates other vertical restrictions are also subject to different antitrust analyses.