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Summer 2003-13 Price-fixing claim needs proof of agreement

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Number 52
Summer 2003

Price-fixing claim needs proof of agreement

A manufacturer's termination of a discounting distributor, in response to complaints from other distributors, is insufficient by itself to prove an illegal price-fixing conspiracy. Euromodas, Inc. v. Zanella, LTD., 2003 U.S. Dist. Lexis 5431 (DPR).

Euromodas brought suit against Zanella, LTD under the Sherman Antitrust Act, 15, U.S.C. § 1. It alleged that Zanellas terminated Euromodas as one of its retailer as a result of a price-fixing conspiracy with Clubman, Inc., a competing retailer.

Men's clothing

Both Clubman and Euromodas sold fine men's clothing manufactured by Zanellas. Euromodas sold the products at lower prices than Clubman, condition that dissatisfied Clubman, and that Clubman brought to the attention of the manufacturer. Because Zanellas did not remedy what to Clubman affected its image as a fine men's clothing boutique, Clubman cancelled its orders. Zanellas continued to sell to Euromodas.

A year later Zanellas informed Euromodas of its decision to stop selling to it, without stating a reason. Zanellas began to sell to Clubman again.

Price cutting

The U.S. District Court for the District of Puerto Rico ruled that the unilateral decision of a manufacturer to terminate a retailer because it is a price cutter is insufficient to establish an antitrust violation. "The violation only exists when the manufacturer and [a] dealer agree on the resale price that the dealer is to charge its customers."

According to the court, the evidence showed that Clubman utilized its position in the market to pressure Zanella. Zanella first decided not to succumb to Clubman's demands, and continued selling to Euromodas. "The mere fact that discounting or price considerations could have had a bearing on Zanella's unilateral decision to sell only to Clubman is immaterial," the court concluded. n


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