The Parke Davis attorney advised that the company could legally "enforce an adopted policy arrived at unilaterally" to sell only to customers who observed the suggested minimum resale prices.

"[3] The Baltimore branch manager put into effect a program for promoting observance of the suggested minimum retail prices.

A Parke Davis representative visited Dart's president and he said that he might be willing to stop advertising, although continuing to sell at discount prices if shipments to him were resumed.

At this point, the Antitrust Division of the Department of Justice, on complaint of Dart Drug, began investigating Parke Davis for price fixing.

"[8] The district court held that the Government's proofs did not establish a violation of the Sherman Act because Parke Davis's actions "were properly unilateral, and sanctioned by law under the doctrine laid down in the case of United States v.

The Government contended, however, that "subsequent decisions of this Court compel the holding that what Parke Davis did here by entwining the wholesalers and retailers in a program to promote general compliance with its price maintenance policy went beyond mere customer selection, and created combinations or conspiracies to enforce resale price maintenance in violation of .

Citing Coke on Littleton, § 360 and Mitchel v Reynolds, the Court held the restrictive agreements that Miles sought to enforce were invalid at common law and under the Sherman Act as well.

Miles on the ground that the Colgate indictment did not charge that company with selling its products to dealers under agreements which obligated the latter not to resell except at prices fixed by the seller.

The Schrader's Son Court held that Colgate did not immunize the conduct, and explained that Colgate meant no more than that a manufacturer is not guilty of a combination or conspiracy if he merely "indicates his wishes concerning prices and declines further dealings with all who fail to observe them ..."; however, there is unlawful combination where a manufacturer "enters into agreements—whether express or implied from a course of dealing or other circumstances—with all customers .

Inc. v. Cudahy Packing Co.,[16] That was a treble damage suit alleging a conspiracy in violation of the Sherman Act between the manufacturer and jobbers to maintain resale prices.

In that case, the Court held improper a jury instruction that a Sherman Act violation (price-fixing agreement) could be found if the defendant repeatedly called to the attention of the wholesales and jobbers the minimum price provision of its sales plan and "the great majority of them not only [expressed] no dissent from such plan, but actually [cooperated] in carrying it out by themselves selling at the prices named."

However, because Beech-Nut's methods were as effective as agreements in producing the result that "all who would deal in the company's products are constrained to sell at the suggested prices," the Court held that the securing of the customers' adherence by such methods constituted the creation of an unlawful combination to suppress price competition among the retailers.

[18]The next case, United States v. Bausch & Lomb Optical Co.,[19] made it clear "that Beech-Nut narrowly limited Colgate and announced principles which subject to Sherman Act liability the producer who secures his customers' adherence to his resale prices by methods which go beyond the simple refusal to sell to customers who will not resell at stated prices."

In Bausch & Lomb, the Court found a violation of the Sherman Act where the distributor proffered a price-fixing plan and the wholesales joined in "by cooperating in prices, limitation of sales to and approval of retail licensees."

The scope of the Colgate doctrine may have been uncertain before Beech-Nut and Bausch & Lomb but those decisions "plainly fashioned its dimensions as meaning no more than that a simple refusal to sell to customers who will not resell at prices suggested by the seller is permissible under the Sherman Act."

A combination in violation of the Sherman Act is "organized if the producer secures adherence to his suggested prices by means which go beyond his mere declination to sell to a customer who will not observe his announced policy.

"[20] To sum this up, the Court said: The Bausch & Lomb and Beech-Nut decisions cannot be read as merely limited to particular fact complexes justifying the inference of an agreement in violation of the Sherman Act.

When the manufacturer's actions, as here, go beyond mere announcement of his policy and the simple refusal to deal, and he employs other means which effect adherence to his resale prices, this countervailing consideration is not present, and therefore he has put together a combination in violation of the Sherman Act.

A trial court's wide discretion in fashioning remedies is not to be exercised to deny relief altogether by lightly inferring an abandonment of the unlawful activities from a cessation which seems timed to anticipate suit.

"[25]) Justice Harlan protested: The Court's opinion reaches much further than at once may meet the eye, and justifies fuller discussion than otherwise might appear warranted.

Scrutiny of the opinion will reveal that the Court has done no less than send to its demise the Colgate doctrine, which has been a basic part of antitrust law concepts since it was first announced in 1919.

[26]He found the majority's limited Colgate doctrine vague and incomprehensible: The Court now says that the seller runs afoul of the Sherman Act when he goes beyond mere announcement of his policy and refusal to sell not because the bare announcement and refusal fall outside the statutory phrase, but because any additional step removes a "countervailing consideration" in favor of permitting a seller to choose his customers.

The Eighth Circuit reversed, however, pointing to the statement in Parke Davis that "a simple refusal to sell to customers who will not resell at prices suggested by the seller is permissible under the Sherman Act" although an unlawful "combination is also organized if the producer secures adherence to his suggested prices by means which go beyond his mere declination to sell to a customer who will not observe his announced policy"; the court added that Parke Davis had been found to have gone far "beyond the limits of the Colgate doctrine" by enlisting wholesalers and retailers to adhere to and participate in the price-fixing program.

"[33] Instead, the FTC attempted to find a violation by invoking § 1 of the Sherman Act, including specifically the requirement of a contract, combination, or conspiracy,[34] but it failed to establish that.

See, e.g., Trenton Potteries, 273 U.S., at 399-401; Bausch & Lomb, 321 U.S., at 721; United States v. Parke, Davis & Co., 362 U.S. 29, 45-47 (1960); Simpson v. Union Oil Co. of Cal., 377 U.S. 13, 16-17 (1964).

To the extent a vertical agreement setting minimum resale prices is entered upon to facilitate either type of cartel, it, too, would need to be held unlawful under the rule of reason.

"[46] Professor Robinson argues that "some surpassingly foolish Supreme Court decisions" have misinterpreted Parke Davis as making "coercion an effective substitute for agreement.

"[47] Although in Parke Davis, "the Court did not use the term 'coercion' to characterize the manufacturer's enforcement practices (describing them instead as creating a 'combination')," a few years later "the Court in Simpson v. Union Oil Co. interpreted Parke, Davis as holding that "a supplier may not use coercion on its retail outlets to achieve resale price maintenance.

Rather, the Parke Davis Court finds an illegal combination or conspiracy on the basis of "control of third party resales and, more arguably, individualized negotiations with dealers falling short of traditional agreement, and perhaps even exhortation meetings."

Although the Parke Davis case also involved "wholesalers reporting noncomplying dealers to the manufacturer as forming an 'information conspiracy' with the latter," he regards that as no longer surviving as a tenable theory under present law.