## Facts

- Renfield Importers, Ltd. (Renfield) sold wine and liquor products through wholesale distributors, including popular brands such as Gordon’s and Martini & Rossi.
- Valley Liquors, Inc. (Valley) was one of several Renfield wholesale distributors in northern Illinois and was Renfield’s largest wholesaler in McHenry and DuPage Counties, accounting for about 50% of Renfield’s sales there.
- Valley generally sold Renfield products at prices about five percent below those charged by Valley’s local wholesale competitors.
- Renfield’s Illinois sales were not growing as quickly as its sales elsewhere, and Renfield decided to change from using several wholesalers per county to a “restricted distribution” plan using one, or at most two, wholesalers per county.
- Effective November 1, 1981, Renfield implemented the new plan in McHenry and DuPage Counties by terminating Valley and other distributors in those counties while keeping two competitors, Continental and Romano, as the remaining distributors (the case also involved a portion of a third county).
- Valley’s termination followed discussions between Renfield and Continental and between Renfield and Romano in which Continental and Romano expressed dissatisfaction about being terminated in other areas during Renfield’s statewide realignment.
- Apart from Renfield’s stated business reason—responding to disappointing Illinois sales—there was little evidence about Renfield’s motivation for the restricted distribution plan and the related territory changes.
- Valley sued Renfield and sought a preliminary injunction, arguing the restructuring was unlawful in two ways: (1) a horizontal conspiracy among Renfield, Continental, and Romano to eliminate Valley’s low-price competition and raise wholesale prices; and (2) an unlawful vertical restraint arising from Renfield’s termination and restricted distribution plan.
- The district court denied the preliminary injunction for failure to show a sufficient likelihood of success on the merits, and Valley took an interlocutory appeal.

## Issues

1. Whether Valley showed a sufficient likelihood of proving a Sherman Act § 1 agreement (including a horizontal conspiracy) based mainly on competitor complaints followed by Renfield’s termination of Valley.
2. Whether Valley showed a sufficient likelihood of proving that Renfield’s restricted distribution plan and territory realignment constituted an unreasonable vertical restraint under § 1.
3. Whether Valley met the requirements for a preliminary injunction under § 16 of the Clayton Act, including a sufficient showing of likely success and threatened antitrust injury warranting immediate equitable relief.

## Decision

- The Seventh Circuit affirmed the district court’s order denying Valley’s request for a preliminary injunction.
- Valley did not make a strong enough showing that it was likely to prove an actionable § 1 agreement; evidence that competitors complained and that Renfield then terminated a price-cutting distributor was not enough, without additional proof of an agreement to restrain trade.
- Valley also failed to make a sufficient showing that Renfield’s restricted distribution plan was an unreasonable vertical restraint under the rule of reason at the preliminary-injunction stage.
- Valley’s showing primarily reflected harm to Valley as a terminated dealer rather than a clear threatened harm to competition in the relevant market that would justify the extraordinary remedy of preliminary injunctive relief.

## Legal Principles

- A preliminary injunction under § 16 of the Clayton Act requires a substantial showing on the merits and a showing of threatened loss or damage of the type the antitrust laws address; the remedy is extraordinary and is not granted on a thin record.
- Section 1 of the Sherman Act requires proof of a “contract, combination, or conspiracy”; unilateral business decisions are not enough, and circumstantial evidence must reasonably support an inference of agreement.
- Complaints by rival dealers to a supplier, followed by the supplier’s termination of another dealer (even a price-cutting dealer), do not by themselves establish a horizontal agreement or other unlawful concerted action.
- Changes in a manufacturer’s distribution system, including restricted distribution and territorial realignment, are generally evaluated under the rule of reason; the plaintiff must show a likely unreasonable restraint of trade, not merely a redistribution of sales among dealers.
- Antitrust law focuses on harm to competition rather than the business injury suffered by a single competitor; the loss of a distributorship, standing alone, does not demonstrate threatened anticompetitive effects.

## Conclusion

The Seventh Circuit held that Valley’s proof—its lower prices plus evidence that remaining distributors complained about other terminations—did not show a sufficient likelihood of establishing an unlawful § 1 agreement or an unreasonable vertical restraint, and it therefore affirmed the denial of preliminary injunctive relief allowing Renfield to proceed with its restricted distribution plan pending further proceedings.


Valley Liquors, Inc. v. Renfield Importers, Ltd., 678 F.2d 742 (1982)