Continental T.V., Inc. v. GTE Sylvania, Inc.

U.S. Supreme Court

Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977)Continental T.V., Inc. v. GTE Sylvania, Inc.No. 76-15Argued February 28, 1977Decided June 23, 1977433 U.S. 36CERTIORARI TO THE UNITED STATES COURT OF APPEALSFOR THE NINTH CIRCUITSyllabusIn an attempt to improve its market position by attracting more aggressive and competent retailers, respondent manufacturer of television sets limited the number of retail franchises granted for any given area and required each franchisee to sell respondent’s products only from the location or locations at which it was franchised. Petitioner Continental, one of respondent’s franchised retailers, claimed that respondent had violated § 1 of the Sherman Act by entering into and enforcing franchise agreements that prohibited the sale of respondent’s products other than from specified locations. The District Court rejected respondent’s requested jury instruction that the location restriction was illegal only if it unreasonably restrained or suppressed competition. Instead, relying on United States v. Arnold, Schwinn & Co.,388 U. S. 365, the District Court instructed the jury that it was a per se violation of § 1 if respondent entered into a contract, combination, or conspiracy with one or more of its retailers, pursuant to which it attempted to restrict the locations from which the retailers resold the merchandise they had purchased from respondent. The jury found that the location restriction violated § 1, and treble damages were assessed against respondent. Concluding that Schwinn was distinguishable, the Court of Appeals reversed, holding that respondent’s location restriction had less potential for competitive harm than the restrictions invalidated in Schwinn, and thus should be judged under the “rule of reason.”