This assignment is just to summary the case listed and provide your opinion wither you agree or not and why with the court decision, a tablet is provided. The summary has to be clear to the point and give all important info about the case. Starts with wh

United States v. General Motors Corporation [384 U.S. 127 (1966)]

1. The antitrust law applied: Section 1 of the Sherman Act.

2. What happened? In this case the appellee is the General Motors Corporation, or more specific, its Chevrolet line. Chevrolets were distributed by dealers operating under a franchise from General Motors. The franchise contract did not restrict or define those to whom the dealer may sell. Nor were there limitations as to the territory within which the dealer may sell. There was a clause in the contract however which prevented dealers from moving or establishing a new/ different location, branch sales office, or branch service station without the prior written approval of Chevrolet. The stumbling block was when a number of individual Los Angeles Chevrolet dealers started collaborating with “discount houses” without GM’s permission, in 1960. These establishments sold Chevrolet Cars and got supplied by the dealers, where they got some kind of fee from the dealers. By 1960, 2% of new Chevrolets were sold through discount houses in the LA area. One dealer made up to 25% of his income with these establishments. Dealers who did not participate felt the pinch, when they were responsible for warranty and service of the car, the discount houses had sold. The LA Chevy division asked GM for help and the latter forced the dealers, not to collaborate with the discount houses anymore until the sales had dropped zero. GM was accused of restraining trade and commerce by forbidding collaboration between dealers and discount houses.

3. The court’s decision: The Supreme Court reversed the decision of the District Court and found GM’s restrictions unlawful under the Sherman Act.

4. The punch line: GM’s elimination, by joint collaborative action, of discounters from access to the market is a per se violation of the Act!

5. The economic concept addressed: The Boundary of a Firm – Franchising.

6. New antitrust concepts introduced: The Court considered price competition in this case in relation with franchise agreements. It also stated that exclusion of traders from the market was inconsistent with the free market principle, embodied in the Sherman Act. Territorial restrictions was another used principle.

7. Do you agree with the decision? Why and why not? I agree with the decision of the Supreme Court. The market restriction of GM is one aspect of anticompetitive behavior. Thus it violates the law. I guess GM simply wanted to avoid price competition to uphold its revenues. On the other I can understand the dealers which did not collaborate with the discount houses and their concerns about their income, by selling fewer cars and having to do the warranty and service for cars, they have not even sold.