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Antitrust Keyed to Gavil, 5th Ed.
Continental T.V., Inc. v. GTE Sylvania Inc.
Citation:
433 U.S. 36, 97 S. Ct. 2549, 53 L. Ed. 2D 568 (1977)Facts
In 1962, Sylvania, facing a decline in market share to 1-2% of national television sales, adopted a new franchise plan to improve its competitive position. Under this plan, Sylvania sold directly to a smaller, more select group of franchised retailers, limiting the number of franchises in any area and requiring each franchisee to sell Sylvania products only from authorized locations. By 1965, Sylvania’s market share had increased to approximately 5%. Continental, one of Sylvania’s most successful franchisees, objected when Sylvania franchised a competitor near Continental’s San Francisco store. When Continental subsequently opened an unauthorized store in Sacramento, Sylvania terminated Continental’s franchise. Continental then sued Sylvania, claiming its location restriction violated Section 1 of the Sherman Act. The District Court instructed the jury that Sylvania’s location restriction was per se illegal under Schwinn, and the jury found for Continental. The Ninth Circuit reversed, distinguishing Schwinn, and the Supreme Court granted certiorari to resolve the issue.
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