Posner on Vertical Restraints

Abstract

This Essay, part of a symposium honoring Richard Posner’s thirty-six years on the bench, considers the influence of Judge Posner’s opinions about antitrust law. I focus on vertical restraints on distribution, an area of doctrine that was transformed over thirty years from a flat (per se) prohibition to a more lenient evaluation under the rule of reason. I identify several strategies that Judge Posner employed in support of this transformation. Some were drawn from his academic work, including a sustained effort to harmonize the legal treatment of restraints whose economic effects suggest they should be treated alike.

A further, less appreciated tactic was to focus attention upon the question of antitrust injury — whether a plaintiff has suffered an injury of the type the antitrust laws are intended to prevent. One of Posner’s first antitrust opinions, Jack Walters & Sons Corp. v. Morton Building, Inc., considered an allegation of unlawful maximum resale price maintenance, which at the time was subject to per se liability. In concluding that plaintiffs had suffered no antitrust injury, Posner opened up a new avenue for criticizing per se liability on economic grounds and a new form of inconsistency between the scope of recovery (narrow) and the scope of liability (broad). Jack Walters paved the way for the eventual demise of per se liability and the use of similar tactics elsewhere in the law.

Keywords: antitrust injury, maximum resale price maintenance, State Oil v. Khan

JEL Classification: D21, K21, L10, L13, L22, L40, L42