Vertical Distribution Restraints After Sylvania: A Postscript and Comment

The Supreme Court’s decision last term in Continental T. V., Inc. v. GTE Sylvania Inc. demonstrates once again the difficult antitrust problem posed by vertical distribution restraints and the Court’s continuing inability to resolve it satisfactorily. Vertical distribution restraints consist of terms imposed by a manufacturer on its distributors limiting their freedom to redistribute goods. Such restraints vary widely in their details, but the basic forms involve restraints on the prices at which goods are distributed, the customers to whom they can be distributed, and the locations from which or territories in which they can be distributed. These restraints assist a manufacturer, especially a new entrant, in establishing and maintaining an. effective distribution system. Unfortunately, they do so by suppressing intrabrand competition among the manufacturer’s dealers and distributors.