## Facts

- Beer retailers in the Fresno, California area bought beer from competing wholesalers.
- Before the alleged agreement, wholesalers commonly extended short-term, interest-free credit within state-law limits, and they competed on credit terms that varied across retailers.
- Beginning in early 1967, the wholesalers allegedly agreed in secret to eliminate competition on credit by requiring payment in advance or on delivery starting in December 1967.
- After the alleged agreement, wholesalers uniformly refused to extend any credit.
- Retailers sued, alleging a conspiracy in restraint of trade in violation of § 1 of the Sherman Act based on elimination of interest-free trade credit.

## Issues

1. Whether a horizontal agreement among competing wholesalers to eliminate short-term, interest-free trade credit and require cash payment constitutes per se unlawful price fixing under Sherman Act § 1.
2. Whether the alleged conduct instead requires analysis under the rule of reason.

## Decision

- The Supreme Court reversed the Ninth Circuit and remanded.
- The Court held the alleged agreement was per se unlawful price fixing under § 1 of the Sherman Act.
- The Court characterized credit terms as an inseparable part of price; eliminating interest-free credit was tantamount to eliminating discounts and thus a method of raising prices.
- Because the conduct fit within a traditional category of price fixing, the Court found no need for rule-of-reason examination.

## Legal Principles

- Credit terms offered in connection with a sale are part of the effective price for antitrust purposes.
- A horizontal agreement among competitors to eliminate discounts, including implicit discounts created by interest-free or early-payment credit terms, is a classic form of price fixing.
- Agreements that fix a component of price, even without setting a single posted price, fall within the per se prohibition on price fixing under Sherman Act § 1.

## Conclusion

The Court treated a cartel-like agreement to require cash payment and eliminate short-term, interest-free trade credit as an agreement to eliminate discounts and raise the effective price, making it per se unlawful price fixing under § 1 of the Sherman Act and requiring reversal and remand.


Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980)