Albrecht v. Herald Co., 390 U.S. 145 (1968), was a decision by the United States Supreme Court, which reaffirmed the law (as it then was) that fixing a maximum price was illegal per se.

Albrecht drew heavy criticism by economists who asserted that maximum price fixing actually increases consumer welfare, which they considered to be a primary goal of antitrust.

[1][2] Lester J. Albrecht, an independent newspaper carrier, bought from Herald Publishing Company at wholesale and sold at retail copies of Herald's morning newspaper, the St. Louis Globe-Democrat, under an exclusive territory arrangement terminable if a carrier exceeded the maximum retail price advertised by Albrecht.

Herald Co. told Albrecht that he could have his customers back if he adhered to the suggested price.

Albrecht's appointment as carrier was terminated and Herald required sale of his route.

Albrecht made the sale at a price found to be lower than it would have been but for the conduct of Herald Co.

The jury found for Herald Co. Albrecht moved for a judgment notwithstanding the verdict, asserting that, under United States v. Parke, Davis & Co.,[3] and like cases, the undisputed facts showed a combination to fix resale prices, which was per se illegal under § 1 of the Sherman Act.

In Parke Davis the "combination with retailers arose because their acquiescence in the suggested prices was secured by threats of termination; the combination with wholesalers arose because they cooperated in terminating price-cutting retailers."

By the same token, "there can be no doubt that a combination arose between respondent, Milne, and Kroner to force petitioner to conform to the advertised retail price."

Milne's purpose was undoubtedly to earn its fee, but it was aware that the aim of the solicitation campaign was to force petitioner to lower his price.

Kroner knew that respondent was giving him the customer list as part of a program to get petitioner to conform to the advertised price, and he knew that he might have to return the customers if petitioner ultimately complied with respondent's demands.

He undertook to deliver papers at the suggested price, and materially aided in the accomplishment of respondent's plan.

[6]Justice White pointed out other possible combinations that Albrecht might properly have argued existed.

[7] Price-fixing agreements and combinations are illegal per se, including ones to fix maximum prices.

In Kiefer-Stewart Co. v. Seagram & Sons,[8] the Court pointed out, liquor distributors combined to set maximum resale prices.

The Court said that it agreed with the Kiefer-Stewart decision: Maximum and minimum price-fixing may have different consequences in many situations.

Maximum price-fixing may channel distribution through a few large or specifically advantaged dealers who otherwise would be subject to significant non-price competition.

It is our view, therefore, that the combination formed by the respondent in this case to force petitioner to maintain a specified price for the resale of the newspapers which he had purchased from respondent constituted, without more, an illegal restraint of trade under § 1 of the Sherman Act.

[9]Justice Douglas agreed that the court of appeals erred, but considered that "this is a 'rule of reason' case.

"[10] Justice Harlan considered maximum price-fixing beneficial to the public: Other things being equal, a manufacturer would like to restrict those distributing his product to the lowest feasible profit margin, for, in this way, he achieves the lowest overall price to the public and the largest volume.

When a manufacturer dictates a minimum resale price, he is responding to the interest of his [retailer] customers, who may treat his product better if they have a secure high margin of profits.

When the same manufacturer dictates a price ceiling, however, he is acting directly in his own interest, and there is no room for the inference that he is merely a mechanism for accomplishing anticompetitive purposes of his customers.

[11]Justice Harlan also disagreed that one who merely acquiesces engages in concerted action within the meaning of § 1 of the Sherman Act.

[12] Justice Stewart considered that Herald was justified in fixing maximum prices to its ultimate customers, the consuming public, because that was a necessary defensive measure in the face of the territorial monopoly granted the distributors.

"[13] The Supreme Court held that Herald Co. acted unlawfully by requiring retailers to sell newspapers at a particular price.

captures the feedback effect of lower copy prices inducing more advertising and vice versa.