High court setback for discounters - price fixing case against Atlantic Richfield Co

High Court Setback for Discounters

WASHINGTON - The most recent indication of the Supreme Court's disdain for off-price retailers surfaced late last month in a ruling upholding the right of Atlantic Richfield (ARCO) to engage in pricing conspiracies with its gasoline dealers.

That ARCO decision, in turn, comes at a time when the discount chains are prodding Congress to approve legislation shoring up the federal antitrust barriers to resale price maintenance. Those barriers had been severely weakened by a pair of recent Supreme Court rulings tightening the rules of evidence in RPM cases.

In the ARCO case, an independent retail gasoline dealer (USA Petroleum) suffered lost business as a result of successful efforts by ARCO to "encourage" its brand-name service stations to cut the retail price of ARCO gasoline to the level charged by independent "unbranded" gasoline dealers such as USA.

According to USA, participation in the price-cutting scheme by ARCO dealers was anything but voluntary. Indeed, the company said ARCO "used threats, intimidation and coercion" to secure participation in the conspiracy which ultimately "drove many independent gasoline dealers in California out of business."

In asking the court to award damages, USA has charged that "ARCO and its co-conspirators have organized a resale price maintenance scheme, as a direct result of which competition. . . has been eliminated by agreement and, the retail price of ARCO-branded gasoline has been fixed, stabilized and maintained."

Unlike RPM conspiracies targeted at discounters, the alleged price fixing in this case involved ARCO's effort to secure lower prices for its product at retail. But even so, the appeals court held that it doesn't matter whether you conspire to fix high prices or low prices - price fixing is illegal.

The Supreme Court reversed that ruling, however, and denied USA's right to seek price fixing damages from ARCO. By preventing an injured competitor from recovering damages from RPM conspirators, the high court effectively weakened the per se illegal ban on RPM.

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