United States v. Topco Associates, Inc.
Citation: 405 U.S. 596 (Supreme Court, 1972)
Facts
Topco was a cooperative association of small and medium-sized regional supermarket chains that jointly developed and distributed a private-label brand. The association allocated exclusive territories to each member — no member could sell Topco-brand products outside its designated territory and no other member could sell into that territory. The government challenged the territorial restrictions as a horizontal market allocation.
Issue
Whether a horizontal agreement among competitors to divide geographic markets is a per se violation of Sherman Act § 1, even when the restraint is ancillary to an otherwise legitimate joint venture.
Holding
Yes. The Supreme Court held that horizontal territorial divisions among competitors are per se illegal under § 1, regardless of whether the arrangement is part of a cooperative venture with procompetitive purposes.
Rule
Horizontal market allocation — dividing territories or customers among competitors — is a per se violation of Sherman Act § 1. The per se rule applies even if the arrangement is part of an otherwise beneficial joint venture, because courts will not permit defendants to use ancillary-restraint arguments to escape per se condemnation of naked horizontal divisions of markets.
Significance
Topco is the leading case for horizontal market allocation as a per se offense and is often paired with Addyston Pipe for the historical roots of the ancillary restraint doctrine. The case is also notable for the dissent by Chief Justice Burger, who argued the majority was too rigid and that the territorial restrictions enabled small chains to compete against national brands — an argument that foreshadowed later erosion of the per se category. Topco and Socony-Vacuum together define the core of per se § 1 doctrine.