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S P E C I A L : Supreme Court: 1997-1998 Session

Supreme Court to hear price-fixing appeal

Supreme Court graphic October 7, 1997
Web posted at: 9:16 a.m. EDT (1316 GMT)

WASHINGTON (CNN) -- The U.S. Supreme Court was to hear a case Tuesday that could loosen the rules on pricing practices between suppliers and retailers -- and thus affect federal antitrust laws.

The case was brought to the high court after an Illinois gas dealer challenged a contract by his oil company that set the price at which he could sell gas, and therefore limited his chance for higher profits.

The contract limited the gas station operator to a profit margin of 3 1/4 cents per gallon, which a spokesman for service station dealers described as extremely low.

In the Illinois case, the dealer wound up going out of business within a year.

Man pumping gas

Under an existing Supreme Court ruling, such supplier-dealer arrangements are considered illegal price fixing.

However, manufacturers of many goods want to limit the prices retailers can charge.

"They want to ensure that the retail end does not price their product so high that it ultimately limits their penetration in the market," Mark Davidson of the National Association of Manufacturers told CNN.

The American Automobile Manufacturers Association, the Newspaper Association of America and the National Beer Wholesalers all favor price-limiting contracts, and therefore hope the Supreme Court loosens the existing antitrust laws.

And where would that leave the consumer? Service station dealers argue that consumer protection already exists, and that motorists will go elsewhere if a service station's prices get too high.

Correspondent Charles Bierbauer contributed to this report.

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Supreme Court:
1997-1998 Session

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