## Facts

- Independent dealers operated “Midas Muffler Shops” under franchise/sales agreements with Midas, Inc., a subsidiary of International Parts Corp.
- The agreements imposed restraints including exclusive purchasing from Midas, territorial limits on sales, tying muffler sales to other Midas products, and fixed retail prices.
- Dealers sued for treble damages alleging violations of Sherman Act § 1 and Clayton Act provisions, including Robinson-Patman claims.
- The district court granted summary judgment for defendants on most claims, holding the dealers were barred by in pari delicto because they voluntarily participated and benefitted.
- The Seventh Circuit largely affirmed, also reasoning that Midas and its parent/subsidiaries could not “conspire” under § 1 because they were a single business entity.
- The Supreme Court granted review on whether in pari delicto and the single-entity theory barred the antitrust claims.

## Issues

1. Whether in pari delicto bars a private plaintiff from recovering treble damages under the federal antitrust laws when the plaintiff participated in the challenged arrangement.
2. Whether common ownership and control among related corporations precludes a “combination or conspiracy” under Sherman Act § 1.

## Decision

- The Supreme Court reversed and remanded.
- In pari delicto is not a general, complete defense to a private antitrust treble-damages action.
- The record did not establish that the dealers were active, equal participants in creating and maintaining the restrictive scheme.
- Common ownership does not exempt separate corporate entities from antitrust obligations, and a § 1 combination may be alleged through agreements between the franchisor and franchisees (and other acquiescing dealers).

## Legal Principles

- Private treble-damages actions are a statutory enforcement mechanism; courts should not broadly apply equitable bars that would substantially weaken antitrust enforcement.
- Absent congressional authorization in the antitrust statutes, in pari delicto cannot be used as a categorical defense to defeat private antitrust claims.
- Plaintiff “participation” does not automatically equal equal culpability; standardized, franchisor-imposed restraints and franchisee acquiescence do not alone justify barring suit.
- Separate incorporated entities remain subject to § 1 obligations despite common ownership; corporate affiliation does not, by itself, defeat allegations of a combination or conspiracy.

## Conclusion

The Court allowed franchisee-dealers to proceed with antitrust claims despite their participation in franchise agreements containing restrictive provisions, rejecting a broad in pari delicto bar and holding that common ownership does not foreclose § 1 combination allegations.


Perma Life Mufflers, Inc. v. Int'l Parts Corp., 392 U.S. 134 (1968)