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6258 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesas long as the dealer is free to discountto an even greater extent than the passthrough amount. Similarly, both thecourts and the Commission have judgedcooperative advertising cases under therule of reason, as long as thearrangements do not limit the dealer’sright: (1) To discount below theadvertised price, and (2) to advertise atany price when the dealer itself pays forthe advertisement. Unlike thoseprograms, American Cyanamid’s rebateprogram controlled the actual pricescharged and was structured to preventdealers from pricing below the floortransfer price.Concurring Statement of CommissionerMary L. Azcuenaga in AmericanCyanamid Co., File No. 951–0106I concur in the decision to accept theconsent agreement for public commentbut decline to join the separatestatement of the majority. The consentagreement, which includes the consentorder and the complaint on which it isbased, constitutes the decisionaldocument of the Commission. Mysubstantive views on this matter arecontained entirely within the fourcorners of the decisional document. Ifthe majority wants to revise or expandits decision, the proper course is torevise the decisional document. SeeDissenting Statement of CommissionerMary L. Azcuenaga in Dell ComputerCorp. at 21–23 (Docket No. 3658, May20, 1996).Dissenting Statement of CommissionerRoscoe B. Starek III, in the Matter ofAmerican Cyanamid Company, File No.951–0106I respectfully dissent from theCommission’s decision to accept aconsent agreement with the AmericanCyanamid Company (‘‘AmCy’’), aproducer of agricultural chemicals. Theproposed complaint claims that certainaspects of AmCy’s compensationarrangement with its dealers constituteper se illegal resale price maintenance(‘‘RPM’’), in violation of Section 5 of theFederal Trade Commission Act, 15U.S.C. 45. I do not agree that AmCy’sdealer rebate policies constitute thefunctional and legal equivalent of RPMagreements. Consequently, I concludethat the decision to challenge AmCy’sdistribution policies would expandsubstantially the range of activitiescondemned by the Commission asIllegal per se. This policy is ill-advisedand runs contrary to twenty years ofcase law in which the scope of verticalarrangements subject to per secondemnation has been steadilynarrowed. This case is an especiallypoor vehicle for expanding the scope ofthe per se rule, for it would be difficultto find conduct that better exemplifiesthe economic deficiencies of thatstandard.Condemning certain conduct as illegalper se normally is rationalized by thebelief that the conduct in question is sofrequently pernicious that one cannotjustify the cost of attempting to identifythe few instances in which it is not.Whether RPM warrants characterizationas per se illegal conduct hasincreasingly been called into questionby antitrust scholars; 1 indeed, it wouldbe difficult to find an antitrusteconomist who would defend thisenforcement standard. 2 RPM remainsillegal per se, however, and, consistentwith this standard, I have voted tosupport enforcement actions againstRPM agreements when I have beenconvinced that (1) the conduct inquestion plainly constituted an illegalagreement on price (as construed bycontemporary case law), and (2) therelief was appropriately tailored to deterfuture illegal conduct.Notwithstanding the continued per setreatment of RPM—and my willingnessto support RPM cases in the limitedcircumstances identified above—Icannot ignore the persistentaccumulation of economic evidencedemonstrating the potentiallyprocompetitive (or, or worst,1 There is a substantial body of economicliterature demonstrating that RPM frequently can besocially beneficial. See, e.g., Michael L. Katz,‘‘Vertical Contractual Relations,’’ in RichardSchmalensee and Robert D. Willig, 1 Handbook ofIndustrial Organization 655 (1989). The existingempirical literature fails to find evidencesupporting an anticompetitive characterization ofRPM. See e.g., Pauline M. Ippolito & Thomas R.Overstreet, Jr., ‘‘Resale Price Maintenance: AnEconomic Assessment of the Federal TradeCommission’s Case Against the Corning GlassWorks,’’ 39 J.L. & Econ. 285 (1996) (evidenceconvincingly rejects anticompetitive theories andsuggests instead that RPM increase sales ofCorning’s products); Pauline M. Ippolito, ‘‘ResalePrice Maintenance: Empirical Evidence fromLitigation,’’ 34 J.L. & Econ. 263 (1991) (empiricalevidence cannot support a collusive explanation forthe use of RPM).2 I also emphasize that in none of the RPM actionsbrought by the Commission during my tenure couldone have plausibly characterized the condemnedconduct as having an anticompetitive effect(indeed, in several instances, procompetitiverationales for the restrictions were plainly evident).In only one instance, Nintendo of America Inc., 114F.T.C. 702 (1991), could one have plausiblyascribed market power to the manufacturer that wasparty to the agreement. Without manufacturermarket power, RPM agreements between a singlemanufacturer and its dealers cannot harmconsumers. Of course, it cannot be overemphasizedthat market power is only a necessary, but not asufficient, condition for vertical restraints to reduceconsumer welfare; by itself, market power does notestablish that the conduct is anticompetitive. Evenwhen a manufacturer possesses substantial marketpower, all of the procompetitive rationales forvertical restraints remain potentially valid.economically neutral) nature of RPMagreements. At minimum, this evidencecounsels against expanding theboundaries of per se illegal conduct toenvelop activities that (at best) onlyweakly satisfy the legal criteria forfinding the existence of an ‘‘agreement’’and, more important, appear to beprocompetitive in both purpose andeffect. Under these evaluative criteria,the present matter is a poor candidatefor an enforcement action.The Supreme Court set forth the legalstandard for finding an illegal RPM‘‘agreement’’ in Monsanto Co. v. Spray-Rite Service Corporation: 3The correct standard is that there must beevidence that tends to exclude the possibilityof independent action by the manufacturerand distributor. That is, there must be director circumstantial evidence that reasonablytends to provide that the manufacturer andothers had a conscious commitment to acommon scheme designed to achieve anunlawful objective.Monsanto, 465 U.S. at 768. The Courtstated further that the ‘‘concept of ‘ameeting of the minds’ or ‘a commonscheme’ * * * includes more than ashowing that the distributor conformedto the suggested price. It means as wellthat evidence must be presented boththat the distributor communicated itsacquiescence or agreement, and that thiswas sought by the manufacturer.’’ Id. at764 n. 9 (emphasis added).While it is true that AmCy enteredinto contracts with its distributorsproviding for compensation for sales ator above the wholesale purchase price,it is clear that there was no ‘‘meeting ofthe minds’’ or ‘‘common scheme,’’ andthus no illegal agreement, to maintainresale prices. At no time did AmCy tellits distributors that they must sellagricultural chemicals at specific pricesor risk losing supplies; AmCy did notattempt to coerce or intimidate itsdistributors into selling at specific pricelevels; distributors did not communicatean agreement to sell at specific prices;no distributors were ever terminated forselling at prices below the wholesaleprice; and distributors remained free(explicitly provided by contract) toresell products at any price of choosing.That distributors sometimes sold atprices below the wholesale levelwithout loss of supply or termination istestament to the unilateral nature of thedistributors’ pricing decisions and to theabsence of any agreement to maintainresale prices. 4 In this instance, all of the3 465 U.S. 752 (1984).4 Evidence suggests that distributors in fact soldspecific products covered by the AmCy program atretail prices both above and below the wholesaletransfer price. Wide variation in distributor resaleprices runs contrary to usual evidence of a