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V. & L. CICIONE, INC. v. C. SCHMIDT & SONS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


October 31, 1975

V. & L. Cicione, Inc., et al.
v.
C. Schmidt & Sons, Inc. and Wm. H. Pflaumer & Sons, Inc.

Broderick, D.J.

The opinion of the court was delivered by: BRODERICK

Memorandum and Order

BRODERICK, D.J.

 This is an antitrust action alleging violations of the Sherman Act brought by the plaintiff, a beer distributor, whose dealership was terminated by the defendant brewery. It comes before the Court on the motion of defendant C. Schmidt & Sons, Inc. for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. This motion for summary judgment is submitted upon the pleadings, depositions, affidavits, exhibits and answers to interrogatories. For the reasons expressed hereinafter, this Court has concluded that even when all the issues of fact are resolved in favor of plaintiff Cicione, defendant Schmidt is entitled to judgment; accordingly, its motion for summary judgment is granted.

 The following facts have been stipulated by the parties. *fn1" Plaintiff V. & L. Cicione, Inc. ("Cicione"), Defendant C. Schmidt & Sons, Inc. ("Schmidt") and Wm. H. Pflaumer & Sons, Inc. ("Pflaumer") *fn2" are all Pennsylvania corporations with their principal places of business in Philadelphia, Pennsylvania. During the period in question in this case, both Cicione and Pflaumer were distributors of beer for Schmidt, a regional brewer.

 The sale of beer in Pennsylvania is extensively regulated by law. All those who participate, whether as brewers, distributors, or retailers, must be licensed by the State. There are two classes of licensed distributors: "D" and "ID" distributors. Both classes of distributors can resell to taverns and the public. However, under the law a "D" distributor cannot resell to another distributor, whereas an "ID" distributor can do so. Consequently, if a brewer wishes to have a distributor who can "wholesale" to other distributors, he must appoint an "ID" distributor. For this reason, "ID" distributors are usually larger distributors who resell to other distributors, taverns and the public, while "D" distributors are usually smaller and resell only to taverns and the public.

 Under the Pennsylvania Liquor Code, when a brewer designates a distributor as a "primary or original supplier" of the brewer's beer (as Schmidt did with its distributors in 1969), the brewer is required by law to also designate a territory within which the distributor can resell the beer; the distributor is prohibited by law from reselling outside that territory. In 1969, and until 1971, Schmidt's distributors operated under "territorial letters" giving them the right to resell throughout the entire City of Philadelphia. Beginning in 1971, the distributors operated under limited "territorial letters" which gave each distributor a specific limited territory within the City. Since 1971, Cicione's area, in general, has been South Philadelphia and Pflaumer's, Northeast Philadelphia. However, in August, 1973, Cicione's franchise was terminated *fn3" by Schmidt.

 There appear to be several genuine issues of material fact which must be decided if this case goes to trial. In its pre-trial order, Cicione has set out the contested facts that it intends to prove at trial with some specificity. It is Schmidt's position as to its motion that even if Cicione were able to prove all of the contested facts, Schmidt would nevertheless be entitled to summary judgment. For the purpose of this discussion, we shall proceed on the assumption that Cicione will be able to produce evidence supporting all of its allegations. Therefore, in the recitation of facts as hereinafter set forth, whenever the parties are in disagreement the facts have been resolved and all inferences drawn in Cicione's favor. It is on this basis that we summarize the facts in this case as follows:

 During the period of time in which Cicione was a Schmidt "ID" distributor, 1959-1973, Cicione alleges that Schmidt continually made certain demands upon Cicione. They included demands that Cicione increase inventory, hire additional personnel, make substantial investments in plant and equipment, and take on bookkeeping systems which were not suited to Cicione's business. In addition to these requirements, Schmidt allegedly fixed both the price that it charged Cicione, as well as the resale price at which Cicione could sell to distributor and tavern accounts. Schmidt constantly threatened to terminate Cicione if its dictates were not followed. In March of 1971 Schmidt allocated territories among the Philadelphia distributors and in July of 1972 cut 15% of Cicione's territory for its alleged failure to comply with Schmidt's dictates.

 Pflaumer, who was also a Schmidt "ID" distributor, made several attempts to purchase Cicione's business and the businesses of other "ID" distributors in Philadelphia. Cicione avers that Schmidt fostered Pflaumer's acquisitions and aided and abetted its growth in order to implement Schmidt's marketing plan of establishing and maintaining Pflaumer as its largest distributor. Even though Cicione's sales performance allegedly was as good as, if not better than, other "ID" distributors, as evidenced by an award that it received from Schmidt for good performance, Schmidt terminated Cicione's franchise in 1973. Contemporaneously with the termination, Schmidt arranged for Pflaumer to purchase Cicione's business allegedly as part of Schmidt's overall plan to make Pflaumer its sole distributor in Philadelphia. Cicione claims that Schmidt intended to eliminate not only the "ID" distributors but also the smaller "Mom and Pop" type of distributors; and planned to charge Pflaumer a higher price than it had been charging other distributors, while keeping distribution costs to a minimum. Cicione alleges that this was possible because Pflaumer was able to operate on a small margin of profit.

 Schmidt never treated Cicione as an independent business, avers Cicione. Cicione claims it was an economic captive of Schmidt's scheme to establish and maintain prices, and to monopolize distribution of Schmidt's beer in the City of Philadelphia in one distributor. Subsequent to its termination, Cicione instituted this suit in August, 1973. The first amended complaint *fn4" alleges the following violations in two counts: *fn5"

 (a) Count I alleges violations of Section I of the Sherman Act, charging that, with respect to Cicione, Schmidt illegally dictated business practices, maintained territorial restrictions and imposed resale prices;

 (b) Count III charges violations of Sections I and II of the Sherman Act, alleging that Schmidt's termination of Cicione's dealership constituted a concerted refusal to deal with plaintiff; that Schmidt and Pflaumer conspired to force Cicione to surrender his distributorship; and that their conduct was an unlawful attempt to monopolize, or a conspiracy to monopolize, the distribution of Schmidt's beer and the distribution of all beer in Philadelphia.

 In response to Schmidt's motion for summary judgment, Cicione argues that even though pre-trial discovery has been substantially completed, material issues of fact remain. In a motion for summary judgment, all doubt as to the existence of a genuine issue of material fact must be resolved against the moving party. First Pa. B. & T. Co. v. United States Life Ins. Co., 421 F.2d 959, 962 (3d Cir. 1969), reh. denied December 10, 1969. As stated in Moore's Federal Practice, para. 56.15[3] at 2335-36:

 

The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to judgment as a matter of law.

 

The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact.

 Although a summary judgment procedure should be used sparingly in complex antitrust cases where motive and intent play leading roles, Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962), under Rule 56, once a properly supported summary judgment motion is made, an adverse party may not rest upon the mere allegations of his pleading. His response, by affidavits or otherwise, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if otherwise appropriate, shall be entered against him. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-290, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1966); Chapman v. Rudd Paint & Varnish Company, 409 F.2d 635, 643-4 (9th Cir. 1969). It is not necessary, however, for the Court to consider whether genuine issues of fact exist for trial because, as we have heretofore pointed out, the Court has accepted Cicione's version of all the factual issues for the purpose of this summary judgment motion.

 I. Termination of Distributorship.

 A. The Section I Claim -- Restraint of Trade.

 In its complaint, Cicione makes sweeping allegations which boil down to the contention that the termination of its distributorship violates both Section I and Section II of the Sherman Act. Cicione appears to predicate its Section I claim on the theory enunciated by the Supreme Court in United States v. Parke, Davis & Co., 362 U.S. 29, 80 S. Ct. 503, 4 L. Ed. 2d 505 (1960), that under certain circumstances, refusal of a manufacturer to deal with a distributor can constitute a "combination" in restraint of trade within the purview of the Sherman Act, *fn6" , *fn7" see also, United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 722, 64 S. Ct. 805, 88 L. Ed. 1024 (1944); Federal Trade Commission v. Beech-Nut Packing Co., 257 U.S. 441, 42 S. Ct. 150, 66 L. Ed. 307 (1922). However, in its complaint and pre-trial order, the only allegation made to support its contention that the termination violates Section I of the Sherman Act is the claim that Schmidt desired to make Pflaumer its sole distributor. Furthermore, a review of the pleadings, depositions, affidavits, answers to interrogatories and pre-trial order reveals no factual basis which would bring this case within the Parke Davis exception or any other exception to the well-settled law that the termination of a distributorship, without more, is not an antitrust violation.

 The contention that a manufacturer's cancellation of a dealership relationship constitutes an antitrust violation is not a new one. In numerous cases in this Circuit and elsewhere, the following principle has been repeatedly affirmed: "A single manufacturer or seller can ordinarily stop doing business with A and transfer his business to B and . . . such a transfer is valid even though B may have violated the transfer and even though the seller and B may have agreed prior to the seller's termination of A." Ark Dental Supply Company v. Cavitron Corporation, 461 F.2d 1093, 1094 (3d Cir. 1972); Ricchetti v. Meister Brau, Inc., 431 F.2d 1211, 1214 (9th Cir. 1970); cert. denied, 401 U.S. 939, 91 S. Ct. 935, 28 L. Ed. 2d 219 (1971); Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71, 78 (9th Cir. 1969), cert. denied, 396 U.S. 1062, 90 S. Ct. 752, 24 L. Ed. 2d 755 reh. denied, 397 U.S. 1003, 90 S. Ct. 113, 25 L. Ed. 2d 415; Mogul v. Levin, C.A. 71-2195 (E.D. Pa. 1975); Marder v. Conwed Corporation, 378 F. Supp. 109, 111 (E.D. Pa. 1974); Peerless Dental Supply Co., Inc. v. Weber Dental Manufacturing Company, 283 F. Supp. 288, 290 (E.D. Pa. 1968). See also, Champion Oil Service v. Sinclair Refining Co., 502 F.2d 709 (6th Cir. 1974), cert. denied, 420 U.S. 930, 95 S. Ct. 1131, 43 L. Ed. 2d 401 (1975); Colorado Pump & Supply Co. v. Febco, Inc., 472 F.2d 637 (10th Cir. 1973), cert. denied 411 U.S. 987 , 93 S. Ct. 2274, 36 L. Ed. 2d 965 (1973); Alpha Distributing Co. of Cal., Inc. v. Jack Daniel Distillery, 454 F.2d 442 (9th Cir. 1972), cert. denied, 419 U.S. 842, 95 S. Ct. 74, 42 L. Ed. 2d 70 (1974); Beckman v. Walter Kidde & Co., 451 F.2d 593 (2d Cir. 1971), affirming, 316 F. Supp. 1321 (E.D.N.Y. 1970), cert. denied, 408 U.S. 922, 92 S. Ct. 2488, 33 L. Ed. 2d 333 (1972); Beverage Distributors, Inc. v. Olympia Brewing Co., 440 F.2d 21 (9th Cir.), cert. denied 403 U.S. 906, 91 S. Ct. 2209, 29 L. Ed. 2d 682 (1971); Daily Press, Inc. v. United Press International, 412 F.2d 126 (6th Cir.), cert. denied, 396 U.S. 990 (1969); Scanlan v. Anheuser-Busch, Inc., 388 F.2d 918, 921 (9th Cir. 1968); Timken Roller Bearing Co. v. Federal Trade Commission, 299 F.2d 839 (6th Cir. 1962), cert. denied, 371 U.S. 861 (1962); Varney v. Coleman Company, Inc., 385 F. Supp. 1337 (D.N.H. 1974); Bay City-Abrahams Bros., Inc., v. Estee Lauder Co., 375 F. Supp. 1206 (S.D.N.Y. 1974).

 As my learned colleague, Judge Luongo, pointed out in Marder, supra, 378 F. Supp. at 111, the reason that a manufacturer's decision to replace his distributor or representative is not violative of the antitrust law is explained in Ace Beer Distributors, Inc. v. Kohn, Inc., 318 F.2d 283, 286-87 (6th Cir. 1963), cert. denied, 375 U.S. 922, 84 S. Ct. 267, 11 L. Ed. 2d 166 (1963):

 

A refusal to deal becomes illegal under the Act only when it produces an unreasonable restraint of trade, such as price fixing, elimination of competition or the creation of a monopoly. The fact that a refusal to deal with a particular buyer without more, may have an adverse effect upon the buyer's business does not make the refusal to deal a violation of the Sherman Act. Damages alone does not constitute liability under the Act.

 Section I of the Sherman Act prohibits contracts or combinations which restrain trade. Therefore, the termination of a distributor violates Section I only if, in fact, it constitutes a restraint of trade or was motivated by an anti-competitive intent. Bushie v. Stenocord Corp., 460 F.2d 116 (9th Cir. 1972). *fn8" In this case, even if there had been an agreement between Schmidt and Pflaumer to terminate Cicione and replace it with Pflaumer, Cicione could not sustain its antitrust claim absent proof of Schmidt's anti-competitive purpose or a resulting restraint of trade.

 Although Cicione has failed to pinpoint the specific evidence on which it relies as a basis for the alleged Sherman I violation, we will give Cicione the benefit of all doubts by discussing all of the evidence from which it might be inferred that Schmidt's actions restrained trade or were motivated by an anti-competitive intent. *fn9"

 Cicione states that Pflaumer's takeover of its business reduced the number of distributors of Schmidt's beer in Philadelphia. In substance, this argument appears to be that Cicione's elimination from competition restrained trade in the market for Schmidt's beer. However, such argument is unavailing, for it is well recognized that a manufacturer may discontinue dealing with a particular distributor for business reasons which are sufficient to the manufacturer.

 

. . . If he is engaged in a private business, he is free to . . . [sell] his product directly to the ultimate consumer or through one or more distributors or dealers, as he may deem most profitable to him. If he chooses the latter method, he may exercise his own independent discretion as to the parties with whom he will deal. This is a common law right which the antitrust laws have not destroyed. Schwing Motor Company v. Hudson Sales Corporation, 138 F. Supp. 899, 902-03 (D. Md. 1956), aff'd per curiam, 239 F.2d 176 (4th Cir. 1956).

 The resulting reduction in the number of Schmidt's distributors does not, standing alone, restrain trade nor decrease competition.

 Nor does Cicione's claim that its performance was as good as, if not better than, other "ID" distributors *fn10" tend to show that Schmidt cancelled its dealership with an intent to restrain trade. "[The] most [Cicione's] evidence suggests is that [Schmidt] may have been mistaken in judging the quality of plaintiff's performance." Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., supra, 416 F.2d at 78. It does not mean that a finder of fact could draw from it the further inference that some "sinister anticompetitive intent" existed. Id.; Bushie v. Stenocord Corporation, supra, 460 F.2d at 120.

 As was made clear by the Supreme Court in First National Bank v. Cities Service, Inc., supra, allegations of unreasonable restraint of trade must be supported by "significant probative evidence" in order to overcome a motion for summary judgment. Accepting Cicione's version of the facts as true, the Court finds that Cicione's allegations do not support a restraint of claim contention.

 I. Termination of Distributorship.

 B. The Section II Claim -- Monopolization.

 Section II of the Sherman Act prohibits all monopolies and every attempt or conspiracy to monopolize commerce. In this part of its complaint, Cicione repeats the allegations it made to support its Section I claim, charging that its termination was a violation of Section II insofar as it represented a "culmination of a course of conduct designed to establish Pflaumer in a monopoly position as the sole distributor of Schmidt's beer in Philadelphia." (First Amended Complaint, pgs. 15-16). The basis for this assertion is Pflaumer's purchase of the businesses of other wholesalers, which reduced the total number of Schmidt distributors in Philadelphia to three (including Pflaumer). Schmidt wished to establish Pflaumer as its only distributor in Philadelphia, reasons Cicione, so that it could charge Pflaumer a higher price than it was charging other "ID" distributors. Cicione claims that this was possible because Pflaumer was able to remain profitable while operating on a small margin of profit. In the Section II claim, Cicione also alleges that Schmidt and Pflaumer were conspiring to obtain a monopoly for Pflaumer in the distribution of all beer in Philadelphia.

 The first contention (that Schmidt and Pflaumer conspired to give Pflaumer a monopoly in the sale of Schmidt's beer), is untenable as a matter of law. Every manufacturer has a natural monopoly in the sale and distribution of his own product, especially when the products are sold under a trademark such as Schmidt uses in marketing its beer. United States v. E. I. DuPont DeNemours & Co., 351 U.S. 377, 393, 76 S. Ct. 994, 100 L. Ed. 1264 (1956); Industrial Building Materials, Inc. v. Interchemical Corp., 437 F.2d 1336, 1344 (9th Cir. 1970); A-1 Business Machine Company v. Underwood Corporation, 216 F. Supp. 36, 37 (E.D. Pa. 1963). Unless the manufacturer makes use of his natural monopoly to gain control of the relevant market in which his product competes, there is no antitrust violation. Bushie v. Stenocord Corp., supra, 460 F.2d at 120 (1972). There is no evidence in this case that suggests that Schmidt had market dominance, i.e., "some power to control price and to exclude competition," United States v. Loew's, Incorporated, 371 U.S. 38, 45, 83 S. Ct. 97, 9 L. Ed. 2d 11 (1962). The stipulated facts, which show that Schmidt's percentage of the relevant market dropped from 28% in 1967 to 20% in 1975, are not sufficient to support that conclusion.

 Even assuming, therefore, that Cicione could prove a conspiracy between Schmidt and Pflaumer, Schmidt could not have violated Section II by conspiring with Pflaumer to give Pflaumer a monopoly position with respect to the distribution of Schmidt's beer. Because Schmidt possessed a natural monopoly with respect to its beer, it could choose to market it in any way that it desired.

 

. . . Unless the manufacturer dominates the market, he has a right to give a dealer an actual monopoly, let alone a ' 'virtual' monopoly', in the sale of his particular make or brand in a particular territory." Schwing Motor Company v. Hudson Sales Corporation, supra, 138 F. Supp. at 906.

 Cicione's second monopolization charge, which alleges a conspiracy between Schmidt and Pflaumer to obtain a monopoly position in the distribution of all kinds of beer for Pflaumer, is likewise deficient. Although the basis for this allegation is vague and illusive it appears that Cicione's claim in this regard is based upon its allegation that Pflaumer would use its alleged monopoly position as Schmidt's sole distributor to obtain a monopoly in the distribution of all beer and thus force retailers eventually to buy only Schmidt's beer.

 While the completed offense of monopolization under Section II of the Sherman Act demands only a general intent to do the act, a specific intent to destroy competition or build a monopoly is essential to guilt for the conspiracy to monopolize charged herein Times Picayune Pub. Co. v. United States, 345 U.S. 594, 626, 73 S. Ct. 872, 97 L. Ed. 1277 (1956); Loraine Journal Co. v. United States, 342 U.S. 143, 153, 72 S. Ct. 181, 96 L. Ed. 162 (1951); American Tobacco Co. v. United States, 328 U.S. 781, 785, 66 S. Ct. 1125, 90 L. Ed. 1575 (1946); Swift & Co. v. United States, 196 U.S. 375, 396, 25 S. Ct. 276, 49 L. Ed. 518 (1903). In addition, proof of a dangerous probability of success of the monopoly in a relevant market is essential to prove either an attempt or a conspiracy to monopolize; *fn11" American Tobacco Co. v. United States, 328 U.S. 781, 784-786, 66 S. Ct. 1125, 90 L. Ed. 1575 (1946); Rea v. Ford Motor Company, 497 F.2d 577, 590, n. 28 (3d Cir. 1974); Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203, 207 (5th Cir. 1969); Bernard Food Industries, Inc. v. Dietene Co., 415 F.2d 1279, 1284, (7th Cir. 1969), cert. denied 397 U.S. 912, 90 S. Ct. 911, 25 L. Ed. 2d 92 (1970); Hiland Dairy, Inc. v. Kroger Co., 402 F.2d 968, 971 (9th Cir. 1968), cert. denied, 395 U.S. 961, 89 S. Ct. 2096, 23 L. Ed. 2d 748.

 This Court has searched the record in order to find evidence bearing on these two requisites -- specific intent to monopolize and a dangerous probability of success -- and can find no reference to any evidence which would support either of them. The only evidence on which Cicione seems to rely is the list of Schmidt's distributors who sold their businesses to Pflaumer. However, it is impossible for this Court to ascertain how this would support an allegation of an intent to monopolize the entire Philadelphia beer market. Pflaumer may well become the only distributor for Schmidt's beer in Philadelphia. Yet an intention to reach that goal is a far cry from a specific intent to monopolize the sale of all kinds of beer in Philadelphia. In order for such a monopolization scheme to succeed, other manufacturers who sell beer in Philadelphia, such as Budweiser, Schaefer, Miller, Schlitz, Piels, Ortlieb, Rheingold and Ballantine, would have to drop their current distributors and give those franchises to Pflaumer. As far as we can ascertain from the record in this case, there is no evidence that would even tend to suggest that this could occur. Not only is the record devoid of evidence to support a dangerous probability that monopoly would occur, but it does not show even a faint possibility of success. Based on the evidence that Cicione plans to produce at trial, a jury could not find either a specific intent or a dangerous probability of success. Therefore, even when Cicione's version of the disputed facts surrounding its termination are given credence, no monopoly violation is made out.

 In summary, none of the antitrust allegations arising out of the termination establishes a claim cognizable under the Sherman Act. Whether viewed as a restraint of trade under Sherman I or an attempt to monopolize under Sherman II, there is no evidence alleged by Cicione which excepts this case from the well established law that the termination of a distributorship, without more, is not an antitrust violation. *fn12" The admonition of the Fifth Circuit in Burdett Sound, Inc. v. Altec Corporation, 515 F.2d 1245, 5th Circuit, 1975 is particularly apposite here.

 

Lest any other former distributors succumb to the temptation of treble damages, we reiterate that it is simply not an antitrust violation for a manufacturer to contract with a new distributor, and as a consequence, to terminate his relationship with a former distributor, even if the effect of the new contract is to seriously damage the former distributor's business.

  II. Coercive Tactics.

 In addition to the alleged Sherman Act violations arising out of the termination of Cicione's distributorship, which we have already ruled upon, Cicione makes three additional claims of Sherman Act violations not connected with its termination. The first of these additional claims is the alleged "coercive tactics" which Schmidt pursued with respect to Cicione. Cicione charges that Schmidt forced it to make substantial investments in plant and equipment for the sole benefit of Schmidt; imposed a quota system for sales; instituted inventory requirements; changed Cicione's territory; and dictated advertising and personnel assignments. *fn13" However, even accepting these charges as true, we find no law nor has the plaintiff referred us to any law which makes such practices violations of the Sherman Act.

 III. Territorial Restrictions.

 The second of Cicione's additional Sherman Act claims not connected with its termination is its contention that Schmidt's allocation and implementation of territorial restrictions violates Section I of the Sherman Act. Although both parties agree that pursuant to Pennsylvania law, Schmidt, in 1971, gave each of the six wholesalers a "territorial letter" defining an exclusive territory, Cicione claims that this was illegal under the teachings of United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S. Ct. 1856, 18 L. Ed. 2d 1249 (1967). There the Supreme Court said: ". . . where a manufacturer sells products to his distributor subject to territorial restrictions upon resale, a per se violation of the Sherman Act results." 388 U.S. at 379. Schmidt, however, argues that since the territorial arrangements were undertaken pursuant to the Pennsylvania Liquor Code, they were insulated from the antitrust statutes by virtue of the Twenty-first Amendment.

 Section 2 of the Twenty-first Amendment states: "The transportation or importation into any state, territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." It gives the states broad regulatory power over liquor use, distribution, or consumption within its borders. See, Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35, 86 S. Ct. 1254, 16 L. Ed. 2d 336 (1966); Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 84 S. Ct. 1293, 12 L. Ed. 2d 350 (1964). However, it is clear that the Sherman Act is applicable whenever its enforcement would not defeat the state's liquor policy. United States v. Frankfort Distillers, 324 U.S. 293, 65 S. Ct. 661, 89 L. Ed. 951 (1945). "Such a policy may be expressed either formally by legislation or by implied permission." 324 U.S. at 301. The problem, then, in cases like this is to determine whether the policy of the state sanctions the arrangement claimed to violate the Sherman Act. See United States v. Erie County Malt Distributors Association, 264 F.2d 731 (3d Cir. 1959); Fairfield County Beverage Distributors, Inc. v. Narragansett Brewing Company, 378 F. Supp. 376 (D. Conn. 1974); J.W.T. Inc. v. Kobrand Corp., CCH TRADE CASES, 1973-2 P 74,726 (N.D. Ill. 1973). At the very least, the Pennsylvania Liquor Code *fn14" must be considered "implied permission" for Schmidt's action in making territorial assignments to wholesalers. As a Pennsylvania manufacturer of brewed beverages who named its wholesalers as "primary or original [suppliers]" of its beer, *fn15" the Pennsylvania Liquor Code required Schmidt to designate the specific geographical area within which these "ID" distributors could resell beer. Because Schmidt's territorial restrictions were issued pursuant to the Pennsylvania Liquor Code, its actions are immune from the prohibitions of the Sherman Act. *fn16"

 However, Cicione's allegations go further than a claim that the allocation of territories was, in itself, illegal. Cicione also avers that the territorial designations were illegal insofar as Schmidt misused them. In this connection it complains that Schmidt's reduction of Cicione's territory in July of 1972 was undertaken to punish Cicione for its failure to adhere to Schmidt's unlawful demands. However, inasmuch as we have found that the business dictates were not illegal and since we hereafter find that its resale price policy was not illegal, there is no basis for the allegation that the territorial allocations were misused.

 IV. Price Fixing.

 The third claim of Cicione which does not arise from its termination is its allegation that Schmidt violated Section I of the Sherman Act by dictating the price at which Cicione could resell the beer to distributor and tavern accounts. Accepting this allegation as true for the purposes of this motion, the question remains whether the resale maintenance was permissible under the Pennsylvania Fair Trade Law. This law, 73 P.S. § 7, provides, in part, as follows:

 

No contract relating to the sale or resale of a commodity which bears, or the label or content of which bears, or the vending equipment from which said commodity is sold to the consumer bears the trademark, brand, or the name of the producer or owner of such commodity, and which is in fair and open competition with commodities of the same general class produced by others, shall be deemed in violation of any law of the State of Pennsylvania by reason of any of the following provisions which may be contained in such contract:

 

(a) That the buyer will not resell such commodity, except at the price stipulated by the vendor.

 Thus, under Pennsylvania law, the vendor (Schmidt) and the buyer (Cicione) could agree to a resale price "stipulated" by the vendor (Schmidt). *fn17" Such contracts are valid and do not violate the Pennsylvania Constitution. Olin Mathieson Chemical Corporation v. Cohen, 234 F. Supp. 80 (E.D. Pa. 1964). They are likewise, under the Federal McGuire Act, 15 U.S.C. § 45(a)(3), an exception to, and do not violate, the Sherman Act. However, resale price-fixing which is not sanctioned by a state resale price statute, is a per se violation of Section I of the Sherman Act. Albrecht v. Herald Co., 390 U.S. 145, 88 S. Ct. 869, 19 L. Ed. 2d 998 (1968); United States v. McKesson & Robbins, Inc., 351 U.S. 305, 76 S. Ct. 937, 100 L. Ed. 1209 (1956); Kiefer-Stewart Co. v. Joseph F. Seagram & Sons, Inc., 340 U.S. 211, 71 S. Ct. 259, 95 L. Ed. 219 (1951). Similarly, a manufacturer who goes beyond entering into agreements with his distributors and enters into agreements with other manufacturers to utilize fair trade agreements to fix prices violates the Sherman Act. United States v. Frankfort Distillers, supra.

 Under a fair trade law, a seller may condition his sale on adherence to the stipulated resale price, and need not sell to those who do not agree. Vornado, Inc. v. Corning Glass Works, 255 F. Supp. 216, 227 (D.N.J. 1966), aff'd, 388 F.2d 117 (3d Cir. 1968); Catalina, Inc. v. Alexander's Department Store, Inc., 1966 TRADE CASES P 71,796 (S.D.N.Y. 1966). See also, United States v. Colgate & Co., 250 U.S. 300, 39 S. Ct. 465, 63 L. Ed. 992 (1919). Therefore, Cicione had the option of adhering to Schmidt's resale price policy or ceasing to purchase from Schmidt. By adhering to Schmidt's resale price policy, Cicione evinced its agreement *fn18" with Schmidt pursuant to Pennsylvania's Fair Trade Law. *fn19"

 Furthermore, Cicione stated in its deposition that its prices would have been the same without Schmidt's alleged price-fixing. *fn20" A plaintiff seeking to recover treble damages under the Clayton Act must prove an injury to his business resulting from the defendant's violation, and some indication of the amount of damage. Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 20 (5th Cir. 1974), cert. dismissed, 419 U.S. 987, 95 S. Ct. 246, 42 L. Ed. 2d 260; Hobart Bros. Co. v. Malcolm T. Gilliland, Inc., 471 F.2d 894, 901-02 (5th Cir. 1973), cert. denied, 412 U.S. 923, 93 S. Ct. 2736, 37 L. Ed. 2d 150. In light of Cicione's statement that its prices would have been the same even if Schmidt had not dictated its resale prices, there appears to be no basis for such a damage claim. *fn21"


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