Albrecht After ARCO: Maximum Resale Price Fixing Moves Toward the Rule of Reason

For some time, both economic and legal commentators have recognized the economic irrationality of the Supreme Court's ruling in Albrecht v. Herald Co. which prohibited the imposition of maximum resale prices by a supplier on its resellers. Ordinarily, unwise decisions receive critical reviews and eventually lose their force as they are over-ruled explicitly or by implication in subsequent decisions. In order for this evolution to occur, however, the Court must be presented with an opportunity to alter its earlier rulings. Recently, the Supreme Court had just such an opportunity to revisit the Albrecht rule in Atlantic Richfield Co. v. USA Petroleum (ARCO).

Although the Court's reasoning in ARCO severely restricts some private suits, the Court refused to overturn Albrecht directly and left standing the shell of the per se doctrine.' This is unfortunate because the Albrecht precedent remains on the books even though it is at odds with the promotion of consumer welfare. Two undesirable consequences follow. First, businesses avoid some procompetitive business arrangements for fear of antitrust liability. Given that the purpose of the antitrust laws is to promote competition, this is particularly perverse.

Second, the lower courts are forced to rely on standing rules as a means of rejecting claims presented by undeserving plaintiffs. In this Article we assess the implications of ARCO for the future vitality of Albrecht. In Part II we review the development and economic consequences of the Albrecht rule. In Part III we examine the judicial hostility that has developed in the lower courts toward the anticompetitive nature of the Albrecht rule.

In Part IV we analyze the ARCO decision with respect to substantive antitrust policy and antitrust injury."