United States v. Topco Associates, Inc.

PETITIONER: United States
RESPONDENT: Topco Associates, Inc.
LOCATION: Bay Marchand Area

DOCKET NO.: 70-82
DECIDED BY: Burger Court (1972-1975)
LOWER COURT:

CITATION: 405 US 596 (1972)
ARGUED: Nov 16, 1971
DECIDED: Mar 29, 1972

ADVOCATES:
Howard E. Shapiro - for appellant
Victor E. Grimm - for appellee

Facts of the case

Question

Media for United States v. Topco Associates, Inc.

Audio Transcription for Oral Argument - November 16, 1971 in United States v. Topco Associates, Inc.

Warren E. Burger:

Number 82, United States against Topco Associates.

Mr. Shapiro, you may proceed whenever you are ready.

Howard E. Shapiro:

Mr. Chief Justice and may it please the Court.

This is an appeal by the United States from a decision of the District Court for the Northern District of Illinois in a civil antitrust case.

The appellee, defendant in the District Court is Topco Associates Inc. Topco is a cooperative corporation, which procures grocery and related nonfood products for 23 supermarket chains and two wholesalers.

These chains and wholesalers are owner members of the corporation and they control it.

The restriction challenged by the government is an agreement among the member chains through Topco that they will not retail Topco branded products outside of specified territories and that they will not sell Topco supply products at wholesale.

The government contended in the District Court that the arrangement was a horizontal territorial allocation scheme, which was illegal per se under Section 1 of the Sherman Act.

After a trial on the merits, the District Court held that the Act had not been violated and entered judgment for the defendant.

In its opinion which is at page 545 of the record and its findings of fact, which are at page 553; it concluded that the division of territories among Topco supermarket chains and the accompanying wholesale restrictions were not illegal per se.

Rather the Court ruled they were reasonable restrictions ancillary to the cooperative private label program, Topco furnishes its owner members.

I would like briefly to describe the Topco organization.

Potter Stewart:

This was after a full trial before Judge Hubert Will, was it?

Howard E. Shapiro:

That is correct Your Honor.

The Topco organization, as I said procures food and related and nonfood grocery items.

About 55% of these are furnished to the members under brand names which are owned by Topco.

These brand names are not nationally advertised.

They are such names as Food Club which is the top line for canned goods; Elna which is a second line, Gallo which I think covers carbonated beverages, Top Frost and so on.

They include the primarily strategic grocery items.

There are canned goods, frozen foods, carbonated beverages, cookies and crackers.

They are sold outright to the members so that the member grocery chains had absolute title to them.

Now, Topco’s member grocery chains are independent business entities.

They have simply joined together through Topco for the purpose of procuring these products.

Topco has managed much in the same way that the Sealy Corporation was managed in United States against Sealy.

Voting stock is held equally by each member chain and the business of the corporation is conducted by 14-man Board of Directors, made up of officials who are selected from among the chief executive officers of the member chains.

Warren E. Burger:

Are the members of Topco in any way inhibited from acquiring other brands in the open market?

Howard E. Shapiro:

No, Your Honor, they are not.

Warren E. Burger:

Their membership does not restrict their activities?

Howard E. Shapiro:

No, Your Honor, it does not.

The Topco member chains are, as I said, independent organizations and that their combined retail sales in 1967 were $2.3 billion, so that the 25 Topco organizations are fourth in retail sales after A&P, Safeway and Kroger.