# Continental TV v. GTE Sylvania (1977) **Argued:** February 28, 1977 · **Decided:** June 23, 1977 · **6–2, Justice Lewis Powell** · 433 U.S. 36 The doctrinal hinge of the [[Chicago School]] counterrevolution, and the first Supreme Court opinion to lean substantially on [[Robert Bork]]'s scholarship. Sylvania, holding about 1–2% of the television market, rebuilt its distribution around a small number of franchised dealers restricted to selling from specified locations. Continental TV, a San Francisco dealer denied permission to open in Sacramento, sued: under *United States v. Arnold, Schwinn & Co.* (1967), a manufacturer that restricted where a dealer could resell after title passed had committed a per se violation of §1. Powell overruled *Schwinn* outright: > "Accordingly, we conclude that the per se rule stated in Schwinn must be overruled." > "When anticompetitive effects are shown to result from particular vertical restrictions they can be adequately policed under the rule of reason, the standard traditionally applied for the majority of anticompetitive practices challenged under § 1 of the Act." ## The argument underneath The reasoning is pure [[Aaron Director]]: a manufacturer with 1% of a market has no interest in suppressing competition in its own product. Territorial restrictions more plausibly buy something valuable — dealers willing to invest in showrooms, service, and demonstration, protected from free-riding discounters who carry none of that cost. **Interbrand competition disciplines intrabrand restraint.** The opinion cites Bork's *Yale Law Journal* articles in three footnotes of the majority and more in Justice White's separate concurrence. That is the tell: an argument built in Chicago seminar rooms in the 1950s, published in law reviews in the 1960s, appears as controlling doctrine in 1977 — a year before *[[The Antitrust Paradox]]* was even published. ## What followed *Sylvania* began a migration that took thirty years to complete. Maximum resale price maintenance moved to the rule of reason in *State Oil v. Khan* (1997); minimum resale price maintenance followed in [[Leegin v. PSKS]] (2007), overruling a 96-year-old precedent. By 2007 no vertical restraint was per se illegal. The practical effect is the point. A per se rule is cheap to invoke; the [[Rule of Reason]] requires market definition, expert economics, and years of discovery. Moving a practice from one to the other does not legalize it — **it prices enforcement beyond the reach of most plaintiffs**, which for the plaintiff is the same outcome. See [[US Antitrust and Monopoly Timeline]].