Antitrust Law – Suggested Resale Price Policy – Limitations of Use of the Colgate Doctrine
The United States Government brought a civil action charging that Parke, Davis & Co., a large pharmaceutical manufacturer, violated sections 1 and 3 of the Sherman Act by combining and conspiring with wholesalers and/or retailers to maintain the resale price of its products. Parke Davis, in marketing its products through both wholesale and retail channels of distribution, announced in its catalogues a suggested policy of resale prices at the wholesale and retail levels. In an effort to promote adherence to this policy, Parke Davis representatives visited wholesalers and retailers separately in non-fair trade areas. The wholesalers were informed that Parke Davis would refuse them further sales if they, in turn, resold to retailers who cut prices or if they themselves cut prices. Emphasizing the same policy to retailers the representatives indicated that other Parke Davis retailers had been contacted. Despite these visits, some retailers continued to advertise and sell Parke Davis products below the suggested prices. As a result Parke Davis and the wholesalers refused to sell to these retailers. But advertising below the suggested prices continued. Additional visits were made to retailers in an attempt to control their pricing activities. These further visits having failed, Parke Davis abandoned all methods of promoting adherence to its policy. The district court dismissed the complaint after the government submitted its evidence. On appeal, held, reversed and remanded, one justice concurring, three justices dissenting: Parke Davis’ suggested resale price policy created a combination or conspiracy in two different ways: first, through discussions with retailers to promote adherence to its announced policy, and second, by announcing a policy which involved the use of wholesalers to aid Parke Davis in the implementation of its policy applicable to retailers. United States v. Parke, Davis & Co., 362 U.S. 29 (1960).