NCJ Number
47413
Journal
Virginia Law Review Volume: 63 Issue: 4 Dated: (MAY 1977) Pages: 639-668
Date Published
1977
Length
30 pages
Annotation
THE CONTAINER CORPORATION CASE IS AN IMPORTANT DECISION FOR LIMITING OLIGOPOLISTIC PRICING, WHICH HAS BEEN WEAKENED BY LOWER COURTS' MISINTERPRETATION AND MISAPPLICATION OF ITS BASIC ECONOMIC THEORY.
Abstract
BEFORE 1969, A SERIES OF COURT DECISIONS ATTACKED MONOPOLISTIC PRICE-FIXING BY TRADE ASSOCIATIONS, FORMAL EXCHANGES THROUGH NEWSLETTERS, AND FORMAL EXCHANGES AMONG LARGER MANUFACTURERS. HOWEVER, INFORMAL EXCHANGES WERE EXEMPT. IN UNITED STATES V. CONTAINER CORPORATION (1969), THE SUPREME COURT USED ECONOMIC THEORY TO DEPART FROM EXISTING DOCTRINE AND USED SECTION 1 OF THE SHERMAN ACT TO INVALIDATE AN EXCHANGE OF PRICE INFORMATION AMONG SELLERS IN AN OLIGOPOLISTIC MARKET. THIS CASE HELD THAT FORMAL EXCHANGE WAS UNNECESSARY. THE PRACTICE OF INFORMAL PHONE CALLS AMONG DEALERS AND DISTRIBUTORS WAS SUFFICIENT TO DENY FAIR COMPETITION WHEN A FEW MANUFACTURERS CONTROLLED THE MARKET. SUBSEQUENT CASES HAVE EXHIBITED CONFUSION ABOUT CONTAINER CORPORATION. ATTEMPTS TO FIT THE CONTAINER CASE INTO A PER SE RULE OF LIABILITY OR REASON HAVE IGNORED THE ECONOMIC THEORY WHICH WAS THE BASIS OF THE DECISION. AS A RESULT, AN IMPORTANT TOOL HAS BEEN IGNORED WHICH COULD NOT ONLY LIMIT OLIGOPOLISTIC PRICING, BUT ALSO COULD REVISE TRADE ASSOCIATION LAW TO ALLOW FOR GREATER EXCHANGES OF INFORMATION WHEN ECONOMIC EFFICIENCY IS ENHANCED IN COMPETITIVE MARKETS. IT IS SUGGESTED THAT COURTS BECOME MORE FAMILIAR WITH ECONOMIC THEORY. THEN, THE POTENTIAL OF THE CONTAINER CORPORATION CASE WILL BECOME APPARENT. NOTES ARE PROVIDED.