Vertical Restraints: De Facto Legality under the Rule of Reason
![handle is hein.journals/antil60 and id is 143 raw text is: VERTICAL RESTRAINTS: DE FACTO LEGALITY
UNDER THE RULE OF REASON
DOUGLAS H. GINSBURG*
I have been asked to discuss the effect of Continental T.V., Inc. v. GTE
Sylvania Inc.' upon antitrust jurisprudence. While that case has no doubt
had some very broad and general effects, my discussion concerns the
effect it has had specifically upon the subject to which it was immediately
addressed: the law governing vertical nonprice restraints on the distribu-
tion of products. These are restraints, such as territorial, locational, and
customer restrictions, and selective dealing arrangements, that a party at
one level in the chain of distribution imposes upon another at a lower
level with respect to a particular brand.
In this article, I report the results of an inquiry into how the federal
courts of appeals have applied the rule of reason to vertical nonprice
restraints under GTE Sylvania, and the results that they have generated.
From those results, I conclude that non-monopolists have been effectively
freed from antitrust regulation of vertical nonprice restraints.
I. BALANCING IN GTE SYLVANIA
In GTE Sylvania the Supreme Court established that vertical nonprice
restraints are to be treated as different in kind from similar restraints
imposed as the result of a horizontal agreement. The principal reason
given for the distinction is that a vertical restraint, acting upon only one
of multiple brands competing in a product market, does not pose the
same threat to consumer welfare as a restraint imposed by an agreement
among the manufacturers or retailers of the various competing brands.
[W]hen interbrand competition exists, said the Supreme Court, it
provides a significant check on the exploitation of intrabrand market
power.'2
*Judge, U.S. Court of Appeals for the District of Columbia Circuit. The author is
grateful to Erik S. Jaffe for his prodigious research effort.
'433 U.S. 36 (1977).
21d. at 52 n.19.](ViewImageLocal?handle=hein.journals/antil60&div=24&collection=&method=preview&ext=.png&size=3)
What Is HeinOnline?
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most
Vertical Restraints: De Facto Legality under the Rule of Reason
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most