Antitrust Decision Could Hit Purses of Bargain-Hunters

WASHINGTON — The Supreme Court, in an antitrust ruling that could make bargain-hunting more difficult, said today that manufacturers do not always act illegally when they agree with retailers to stop supplying discount stores.

By a 6-2 vote, the court said such action by a manufacturer becomes illegal only when “it includes some agreement on price or price levels.”

The ruling makes it easier for manufacturers to avoid antitrust liability when, acting on requests from competing retailers, they stop doing business with stores that cut prices.

“At the margin, this can make life harder for discounters,” said Diane P. Wood, an antitrust professor at the University of Chicago Law School.

The decision is a victory for Sharp Electronics Corp. and a setback for a former Houston retailer of Sharp calculators.

Business Electronics Corp., owned and operated by Kelton Ehrensberger, was the exclusive retailer of Sharp calculators in Houston from 1968 to 1972.

During that period, Sharp said it became unhappy with BEC’s failure to meet sales quotas. But a federal jury found that Sharp was dissatisfied with BEC’s policy of selling calculators at prices lower than those suggested by Sharp.

2nd Retailer’s Threat

Sharp in 1972 appointed Hartwell’s Office World as a second retailer of its calculators in Houston, and in 1973 terminated BEC’s dealership. Hartwell had told Sharp that it would quit distributing its products unless Sharp ended its relationship with BEC.

BEC then sued Sharp, and a federal jury awarded BEC $600,000 in damages. Under federal antitrust law, that amount was tripled to $1.8 million.

The U.S. 5th Circuit Court of Appeals, however, threw out the jury verdict and sent the case back for a new trial.

Today’s Supreme Court decision upheld the appeals court ruling.

Trial Judge Erred

Writing for the high court, Justice Antonin Scalia said the trial judge erred in telling the jury it could rule against Sharp if it found that BEC was terminated to reduce price competition in the Houston retail market.

“There has been no showing here that an agreement between a manufacturer and a dealer to terminate a ‘price cutter,’ without a further agreement on the price or price levels to be charged by the remaining dealer, almost always tends to restrict competition and reduce output,” Scalia said.

He added that juries must apply a “rule of reason” approach in deciding whether such agreements between a manufacturer and retailer amount to illegal price-fixing.

Scalia was joined by Chief Justice William H. Rehnquist and Justices William J. Brennan, Thurgood Marshall, Harry A. Blackmun and Sandra Day O’Connor. Justices John Paul Stevens and Byron R. White dissented.

Contempt Case Botched

In other action, the court:

--Ruled that federal lawyers procedurally botched a contempt-of-court case against a Rhode Island newspaper that published FBI information about a Mafia boss.

By a 6-2 vote, the justices said the procedural flaw must result in dismissing the government’s appeal from a ruling that the Providence Journal was justified in defying a judge’s order barring publication of the material.

--Ordered further lower court hearings to determine whether 71-year-old Juozas Kungys, a New Jersey man accused of helping Nazis kill more than 2,000 Jews in Lithuania, should be stripped of his U.S. citizenship.