United States v. Parke, Davis & Company

PETITIONER: United States
RESPONDENT: Parke, Davis & Company
LOCATION: District Court for the District Court of Columbia

DOCKET NO.: 20
DECIDED BY: Warren Court (1958-1962)
LOWER COURT:

CITATION: 362 US 29 (1960)
ARGUED: Nov 10, 1959
DECIDED: Feb 29, 1960

Facts of the case

Question

Media for United States v. Parke, Davis & Company

Audio Transcription for Oral Argument - November 10, 1959 in United States v. Parke, Davis & Company

Earl Warren:

Number 20, United States of America, versus Parke, Davis and Company.

Mr. Friedman you may proceed.

Daniel M. Friedman:

Mr. Chief Justice and may it please the Court.

The principal issue in this case which is here on direct appeal to the District Court for the District of Columbia is whether certain actions taken by the appellee, one of the country's major pharmaceutical manufacturers in attempt to maintain resale prices in the District of Columbia and in Richmond, Virginia, amounted to an illegal conspiracy in restraint of trade in violation of the Sherman Act or whether as the District Court held in dismissing the case at the close of the Government's evidence, Parke Davis' actions did not amount to a conspiracy but constituted no more than the unilateral selection of its customers which is permissible under the doctrine of United States against Colgate & Co.

The Government's civil complaint in this case charged Parke Davis with violating Sections 1 and 3 of the Sherman Act and the District Court as I say dismissed it on the ground that no conspiracy had been established and alternatively, the Court concluded that even if violations had been established, there was no need for injunctive relief because he found there was no reasonable probability that these attempts to maintain resale prices might be repeated in the future.

Now, Parke Davis --

Felix Frankfurter:

He didn't -- didn't retain the bill?

Daniel M. Friedman:

Pardon me.

Felix Frankfurter:

He did not retain the bill?

Daniel M. Friedman:

No, Mr. Justice, he dismissed it.

Parke Davis has accused the Government in this case of bringing an antitrust case before this Court for a trial de novo.

They say that all the factual issues were determined adversely to the Government before the District Court and that should be the end of the matter.

Now, I want to emphatically deny that we are asking this Court to retry the factual issues in this case.

As I believe my brief statement of the facts will show, we don't think there's any real dispute into -- in this case as to what Parke Davis in fact did.

I don't think there's any denial of the actual operative facts in the case.

The critical issue is whether these actions taken by Parke Davis amounted to a conspiracy and that is the legal inferences to be drawn from the particular course of conduct.

Now, the case grew out of an attempt in 1956 by Parke Davis to stop price cutting by certain retailers in the District of Columbia and in the City of Richmond, Virginia.

At the time of this action, neither the District of Columbia nor Virginia was a fair trade area.

So that, at that time, had Parke Davis attempted to enter into resale price maintenance with these individuals, the contracts would have been illegal.

Parke Davis' distribution system entails selling directly to the retailers, primarily from its Baltimore area office, and also selling to certain selected wholesalers in the area and the wholesalers then in turn sell to the retailers.

However, since Parke Davis gives quantity discounts, which it does not permitted wholesaler to give, it is cheaper to the retailers to purchase directly from Parke Davis than to purchase through the wholesalers.

Now, the principal activities of Parke Davis in this case were taken against five retailers in this area.

Parke Davis emphasized that they are only five out of some 200 involved because the five retailers who were singled out were the leaders in this price cutting campaign and that's why Parke Davis took action against them.

The Parke Davis price policy towards the retail stores is set out in its price list and the Parke Davis price list policy states that in areas having Fair Trade Laws, these prices are to be followed and in areas which do not have Fair Trade Laws, these prices are suggested.

In June of 1956, the manager of the Parke Davis' Baltimore office attended a meeting of the company at the company's headquarters in Detroit and at that time he raised the question what they could do about this price cutting that is going on in the district, and he was he told by the president of the company that they had a policy that they would not sell to price-cutting retailers in non-fair trade areas.

When he returned from his meeting in Detroit, the branch manager called in his area manager for Washington and instructed this area manager to go and cut off these price cutting retailers if they refused to conform to Parke Davis' policy and at the same time also tell them to see to it that the wholesalers cut off any of the retailers who refused to go along with this policy.

In 19 -- early in July 1956, the Parke Davis representatives visited a number of these price cutting retailers.

They advised these price cutting retailers that Parke Davis had this policy of selling only to people who observed the state of resale prices and furthermore, warned them that if they didn't stop this practice of price cutting, Parke Davis would cut them off on its own direct sales and would also cut them off on the sales to wholesalers.

In several instances, when they spoke to the retailers, they also advised them that they were seeing other retailers in the areas.

Five of these people who were approached, refused to stop price cutting.