Law School Case Brief
Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co. - 472 U.S. 284, 105 S. Ct. 2613 (1985)
The decision to apply the per se rule turns on whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output or instead one designed to increase economic efficiency and render markets more, rather than less, competitive. Per se rules are invoked when surrounding circumstances make the likelihood of anticompetitive conduct so great as to render unjustified further examination of the challenged conduct.
Northwest Wholesale Stationers, Inc. (Northwest) is a wholesale purchasing cooperative whose membership consists of office supply retailers in the Pacific Northwest States. Nonmember retailers can purchase supplies from Northwest at the same price as members, but since Northwest annually distributes its profits to members in the form of a percentage rebate, members effectively purchase supplies at a lower price than do nonmembers. Northwest expelled Pacific Stationery & Printing Co. (Pacific) from membership without any explanation, notice, or hearing. Thereafter, Pacific brought suit in Federal District Court, alleging that the expulsion without procedural protections was a group boycott that limited its ability to compete and should be considered per se violative of § 1 of the Sherman Act. On cross-motions for summary judgment, the District Court rejected application of the per se rule and held instead that rule-of-reason analysis should govern the case. Finding no anticompetitive effect on the basis of the record, the court granted summary judgment for Northwest. The Court of Appeals reversed, holding that although § 4 of the Robinson-Patman Act expressly approves price discrimination occasioned by such an expulsion as the one in question and thus provides a mandate for self-regulation, nevertheless, because Northwest had not provided any procedural safeguards, the expulsion of Pacific was not shielded by § 4 and therefore, constituted a per se group boycott in violation of § 1 of the Sherman Act.
Was the lack of procedural safeguards a dispositive of whether the expulsion constituted a per se violation?
The Court held that lack of procedural safeguards was not dispositive of whether the expulsion constituted a per se violation. To establish a per se violation, Pacific was required to show a group boycott or concerted refusal to deal. The Court further held that when a party challenged expulsion from a joint buying cooperative, some showing must be made that the cooperative possessed market power or unique access to a business element necessary for effective competition.
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