White Motor Company v. United States

PETITIONER: White Motor Company
RESPONDENT: United States
LOCATION: Beaumont Mills

DOCKET NO.: 54
DECIDED BY: Warren Court (1962-1965)
LOWER COURT:

CITATION: 372 US 253 (1963)
ARGUED: Jan 14, 1963 / Jan 15, 1963
DECIDED: Mar 04, 1963

Facts of the case

Question

Media for White Motor Company v. United States

Audio Transcription for Oral Argument - January 14, 1963 in White Motor Company v. United States

Audio Transcription for Oral Argument - January 15, 1963 in White Motor Company v. United States

Earl Warren:

-- versus United States.

Mr. Solicitor General, you may continue your argument.

Archibald Cox:

May it please the Court.

When the Court rose yesterday, I was in the middle of discussing our principle proposition here, which is that this case has so many of the characteristics common to the other restraints in trade that have been held unlawful per se, that it should be placed in the same category.

In the course of that discussion, I pointed out that in many of those other cases the Court had refused to inquire into the alleged justification that it made the restraint brief, because apparently, in each of those cases, the alleged justification was something which instead of being the main point of the transaction, flowed exclusively from the restraint of competition.

So that an effort was being made to argue that in this instance, competition is a bad thing or this is bad competition as opposed to good competition.

I want to make it plain that our case does not depend on asserting as an absolute generalization that the Court will never -- that no case can exist in which the Court will hear the justification, that competition is a bad thing.

I know of no such case, but I'm not prepared to assert that none can possibly arise.

The thrust of our argument here is simply by analogy that this case is so linked the other per se restraint, especially resale price fixing and territorial, horizontal territorial allocation, that it should be placed in the same category without attempting to espouse any broader generalization.

Now, let us look a little more closely at the characterizing of these territorial restrictions that White imposes on its dealers and see whether they are not the same in principle and in those respects, as the other per se restraints.

First, it is clear that these territorial restrictions do eliminate competition and not merely price competition, but all competition in the sale of White trucks.

That is a, plainly a restraint of trade, it serves no independent business purpose other than that of restraining trade and it imposes a very important kind of restraint.

We know ever since the writings of Professor Edward Chamberlin on Monopolistic Competition that one of the tendencies in an economy increasingly dominated by a few large manufacturers has been for each to try to differentiate its product, so that it obtains at least at the manufacturers, at the distributor level, some of the characteristics of the monopolistic market.

Now, if we go on and eliminate all competition in the sale of a brand on down to the public, a very important form of competition, which has effects on the price structure and everything else, is being eliminated.

So there could be no doubt here that these White contracts, territorial restriction do eliminate competition in an important form.

The only justifications which appellant asserts to these contracts come under the heading competition among our dealers, it is a bad thing for them, and a bad thing for us and we ask the Court to conclude that it's bad thing therefore for the public.

In order to demonstrate that, that is true, I would like to be sure to depart from the argument and take White's own brief.

Dealing with this point, White says first on page 11, “in some instances it is competitively effective for a manufacturer to make certain that only one dealer is selling its good to residents of a particular area.”

Then we go on and the reasons appear over on pages 12 and 13.

The first reason toward the bottom of page 12, “White on the strength of this kind of contract has built up substantial goodwill in its organization of independent dealers and distributors because the contracts assure that White dealers will have resources to scour their territories, but hard to get sale since they will have the security of getting the easier large volume White customers in their area.”

Well this it seems to me is simply an argument our dealers feel is goodwill, because we've assured them that they won't have to compete with each other.

One could make the same argument that any price fixing, any resale price fixing, any horizontal allocation of territory, it's simply they don't like to compete and they love us because we don't make them compete or because we free them from competition.

Then going on, one finds next, I'm up at end of the paragraph on page 13 -- beginning on page 13, that appellant criticizes the White dealer who jumps territorial boundaries at a strategic moment and snatches away the pre-sold customers, skipping on why is that subject to criticism?

Individual dealers need the cream, that is easy to get sales, that they wouldn't get if there was another White dealer competing with them, and for two reasons, not only in order to be able to sell less lucrative accounts, but also in order to have the financial strength to maintain adequate service facilities.

And at another point it is said that if the dealers don't compete with each other for the more lucrative accounts, then they will be able to compete more vigorously with General Motors and Ford.

I think it's fair to say that the argument is that the dealers by making more money through the elimination of competition in the sale of White trucks with other White dealers, will appellant says be able to do two things, first to compete more vigorously with other truck manufacturers and second to be able to spend more money on their service department.

Now this is the kind of decision which the Sherman Act intends to be made by a free market.

It's not for the appellant or with deference for a court, to say that it is better for the economy to have less money go into competition in the sale of White trucks and to have more money go into building up service departments.

The whole theory of our economy and the whole theory of the Sherman Act is that the consumer shall make the choice.

He may go and try and get the best price or he may go to someone who charges a little higher price and therefore get better service on his truck in later years after he buys it, and similarly the theory is that it is -- should be left to the free play of the economy to determine whether we will have inter-brand competition or intra-brand competition or what combination of the two, rather than the private persons White agreements that are serving no other purpose should come in and say no we won't have intra-brand competition, we will concentrate on inter-brand competition.