## Facts

- Pace Electronics, Inc., a New Jersey wholesale distributor, entered a nonexclusive dealer agreement with Canon Computer Systems, Inc. in April 1996 to buy Canon ink-jet printers and accessories at dealer prices, subject to minimum purchase commitments.
- Canon terminated the agreement on July 1, 1997, citing Pace’s failure to meet the minimum purchase requirements.
- Pace alleged Canon and Laguna Corporation (a competing Canon dealer) agreed on a vertical minimum resale price-fixing arrangement for Canon printers and accessories.
- Pace alleged Canon pressured it to avoid selling to certain customers and to refrain from pricing below Laguna, and that Pace refused.
- Pace alleged Canon then refused to fill Pace’s purchase orders and terminated the dealership to enforce the alleged minimum resale prices, making it impossible for Pace to satisfy the contract’s minimum purchase terms.
- Pace claimed lost profits from termination and asserted that removing a discounting dealer reduced price competition for Canon-brand products.
- Pace sued under Sherman Act § 1 and sought damages under Clayton Act § 4.

## Issues

1. Whether a wholesale dealer terminated for refusing to comply with an alleged vertical minimum resale price-fixing arrangement pleads “antitrust injury” for Clayton Act § 4 damages without alleging specific actual adverse effects on a relevant market.

## Decision

- The Third Circuit reversed the Rule 12(b)(6) dismissal and remanded.
- The court held that a dealer terminated for refusing to participate in an alleged vertical minimum resale price-fixing scheme sufficiently alleges antitrust injury.
- At the pleading stage for an alleged per se unlawful restraint (as treated at the time), the plaintiff need not plead detailed actual adverse market effects to establish antitrust injury.

## Legal Principles

- Private damages under Clayton Act § 4 require “antitrust injury”: injury of the type the antitrust laws were intended to prevent and that flows from what makes the conduct unlawful.
- When the challenged conduct is treated as per se unlawful under Sherman Act § 1, the complaint need not allege specific market-wide harm to competition to show antitrust injury at the motion-to-dismiss stage.
- Terminating a discounting dealer to enforce minimum resale prices can be a direct mechanism of a resale price maintenance scheme; resulting lost profits and exclusion from dealing may constitute antitrust injury because they flow from the alleged restraint on price competition.

## Conclusion

The court held that a terminated dealer who alleges it was cut off for discounting in defiance of a vertical minimum resale price-fixing arrangement states antitrust injury for Clayton Act damages without pleading detailed market effects, so dismissal at the pleading stage was improper.


Pace Elecs., Inc. v. Canon Comput. Sys., Inc., 213 F.3d 118 (3d Cir. 2000)