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SHUMAN v. BERNIE'S DRUG CONCESSIONS. (01/21/63)

January 21, 1963

SHUMAN, APPELLANT,
v.
BERNIE'S DRUG CONCESSIONS.



Appeal, No. 325, Jan. T., 1962, from decree of Court of Common Pleas No. 5 of Philadelphia County, March T., 1961, No. 1205, in case of Morris Shuman, individually and trading as Shuman Pharmacy, David Gever, individually and trading as Gever's Pharmacy, Thomas Shuster, individually and trading as Tremont Pharmacy, et al. v. Bernie's Drug Concessions, Inc., trading as Bernie's Cut Rate. Decree affirmed.

COUNSEL

S. Walter Foulkrod, Jr., for appellants.

William T., Coleman, Jr., with him Harold E. Kohn, Aaron M. Fine, Bruce W. Kauffman, Leonard M. Sagot, and Dilworth, Paxson, Kalish, Kohn & Dilks, for appellee.

Milton W. Lamproplos, I. Leonard Greenwald, and Eckert, Seamans & Cherin, for interested persons.

Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Keim, JJ.

Author: Cohen

[ 409 Pa. Page 541]

OPINION BY MR. JUSTICE COHEN

Appellants, five retail drug store owners, filed a complaint in equity against appellee, Bernie's Cut Rate Store, praying for an injunction to restrain appellee from selling drug and cosmetic products below the minimum retail prices established by manufacturers in accordance with the provisions of the Pennsylvania Fair Trade Act, as amended.*fn1

All the merchants involved in this controversy do business in the same competitive trade area. When appellee opened his cut rate store and began underselling appellants, the latter decided to take some corrective action. After mutual consultation,*fn2 appellants agreed to solicit fair trade contracts with the hope of thereby causing the manufacturers to enforce minimum resale prices. Pursuant to this agreement, each drug store owner solicited and entered into separate fair trade contracts with five previously selected manufacturers. All of these contracts were obtained at or about the same time. Shortly thereafter, appellants notified the manufacturers of appellee's violations. When it became obvious that no effort was being made by the manufacturers to enforce fair trade, appellants joined in bringing this suit.

One of the findings of fact of the court below, which is amply supported by the record, is that the purpose of appellants' concerted action was to protect their businesses from appellee's discount sales by maintaining the price level on the product line of the five manufacturers. The lower court also emphasized that no

[ 409 Pa. Page 542]

    evidence was introduced to establish that the purpose of the concerted action was to protect the good will of the manufacturers or to protect the public against predatory practices.

Because of the inherently pernicious nature of price-fixing agreements, they have been declared invalid both at common law*fn3 and illegal per se under the federal antitrust laws. Gulf Oil Corporation v. Mays, 401 Pa. 413, 164 A.2d 656 (1960); Schwegmann Brothers v. Calvert Distillers Corporation, 341 U.S. 384 (1951); Dr. Miles Medical Company v. John D. Park & Sons Company, 220 U.S. 373 (1911). As Mr. Chief Justice WARREN stated in United States v. McKesson & Robbins, Inc., 351 U.S. 305, 309-10 (1956): "It has been held too often to require elaboration now that price fixing is contrary to the policy of competition underlying the Sherman Act and that its illegality does not depend on a showing of its unreasonableness, since it is conclusively presumed to be unreasonable. It makes no difference whether the motives of the participants are good or evil; whether the price fixing is accomplished by express ...


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