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Rambling Through Economic Theory: Topco's Closer Look

ANTITRUST STORIES, Eleanor Fox, Dan Crane, eds., Foundation Press, Forthcoming

Univ. of Wisconsin Legal Studies Research Paper No. 1041

39 Pages Posted: 30 Mar 2007  

Peter Carstensen

University of Wisconsin Law School

Harry First

New York University School of Law

Abstract

This paper, which will be published as a chapter in Foundation Press's forthcoming volume of antitrust stories, reviews United States v. Topco Associates, the Supreme Court's 1972 decision holding that horizontal territorial divisions are per se unlawful under Section 1 of the Sherman Act. Most commentators believe the decision was ill-considered - one of the most telling exemplars of Populist era jurisprudence, wrote one commentator; one of the most infamous antitrust cases ever, a case founded on judicial expediency, not economics and one now appropriately viewed as outside the antitrust mainstream, wrote another. We disagree.

Drawing on the transcript of the oral argument, Justice Department documents, the trial record, participant recollections, and the economic background of the supermarket industry, we show how Donald Turner successfully framed the case to solidify the per se rule. We also show that the case was correctly viewed as an attack on a cartel effort by medium-sized supermarket chains to exclude each other from their respective core geographic markets. We also argue that the Court was actually not indifferent to the factual issues the case presented and that at least some members were likely skeptical of Topco's purported justifications. The Court's decision was thus not made on a completely doctrinal basis. Indeed, its below-the-surface consideration of the facts was at least a closer look, even if not the deliberate one today's Supreme Court would require.

Clear rules have their rewards. Donald Turner was right to bring Topco and the Court was right to favor free entry over territorial treaties among competitors. There are complicated areas in antitrust, but the Topco agreement, on closer look, turns out not to be one of them.

Keywords: Topco, per se, rule of reason, horizontal, territorial, supreme court, supermarket

Suggested Citation

Carstensen, Peter and First, Harry, Rambling Through Economic Theory: Topco's Closer Look. ANTITRUST STORIES, Eleanor Fox, Dan Crane, eds., Foundation Press, Forthcoming; Univ. of Wisconsin Legal Studies Research Paper No. 1041. Available at SSRN: https://ssrn.com/abstract=976476

Peter Carstensen

University of Wisconsin Law School ( email )

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Madison, WI 53706
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Harry First (Contact Author)

New York University School of Law ( email )

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New York, NY 10012-1099
United States
212-998-6211 (Phone)
212-995-4760 (Fax)

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