## Facts

- Monsanto Company manufactured agricultural chemicals and sold through authorized distributors.
- Spray-Rite Service Corporation was an authorized Monsanto distributor from 1957 to 1968 and pursued a discount-oriented resale strategy.
- Competing distributors complained to Monsanto about Spray-Rite’s price cutting.
- In 1968, Monsanto declined to renew Spray-Rite’s one-year distributorship; Spray-Rite alleged this termination harmed its ability to obtain product in desired quantities and timing.
- Spray-Rite sued Monsanto, alleging a § 1 Sherman Act conspiracy between Monsanto and other distributors to fix resale prices and terminate Spray-Rite to enforce those prices.
- Monsanto denied any agreement and asserted the termination was based on nonprice reasons, including Spray-Rite’s alleged failure to provide adequate sales support and promotion.

## Issues

1. What evidentiary showing must a plaintiff make to prove a vertical resale price-fixing agreement under § 1 of the Sherman Act in a manufacturer–distributor termination case?
2. May a jury infer an unlawful price-fixing agreement solely from dealer complaints about a price-cutting distributor and the manufacturer’s subsequent termination of that distributor?

## Decision

- The Supreme Court rejected the court of appeals’ approach that effectively allowed a conspiracy inference from dealer complaints followed by termination, standing alone.
- The Court held that a plaintiff must present evidence that tends to exclude the possibility that the manufacturer and distributors acted independently and that reasonably supports a finding of a conscious commitment to a common scheme to achieve an unlawful objective.
- The Court reaffirmed that a manufacturer may unilaterally choose its customers and refuse to deal with distributors who do not follow suggested resale prices, absent an agreement.
- Applying the proper standard to the record, the Court concluded there was sufficient evidence for a jury to find an unlawful resale price-fixing agreement.
- The Court affirmed the judgment for Spray-Rite; Justice White did not participate, and Justice Brennan concurred.

## Legal Principles

- § 1 liability requires concerted action; independent, unilateral conduct by a manufacturer is not actionable without proof of agreement.
- Vertical agreements to fix resale prices are per se unlawful, while many nonprice vertical restraints are evaluated under the rule of reason.
- Dealer complaints and termination “in response to” complaints are common in distribution systems and, without additional evidence, do not permit an inference of a price-fixing agreement.
- To survive directed verdict or similar dispositive motions, the plaintiff must offer direct or circumstantial evidence that:
  - tends to exclude the possibility of independent action by the manufacturer and distributors; and
  - reasonably supports an inference of a conscious commitment to a common scheme to fix prices or otherwise achieve an unlawful objective.

## Conclusion

The Court tightened the proof required to infer a vertical resale price-fixing conspiracy from a distributor’s termination, holding that complaints plus termination alone are insufficient and that plaintiffs must present evidence excluding independent action, while affirming the plaintiff’s verdict because the record contained additional evidence supporting an agreement.


Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984)