State Oil Co. v. Khan

Summary

Justice O’Connor, writing for a unanimous Court, held that vertical maximum price fixing must be evaluated under the Sherman Act’s rule of reason rather than condemned as unlawful per se, overruling Albrecht v. Herald Co. The Court explained that maximum resale prices can promote competition and protect consumers against dealer monopoly power, while the rule of reason can identify anticompetitive applications. Stare decisis did not require retaining a rule whose economic and doctrinal foundations had eroded. The Court vacated the Seventh Circuit’s judgment and remanded for that court to consider respondents’ entitlement to damages under the proper standard. There were no separate opinions.