Continental Television v. GTE Sylvania

Continental Television v. GTE Sylvania, 433 U.S. 36 (1977), was a landmark antitrust decision of the Supreme Court of the United States. Facing declining sales, GTE Sylvania attempted to reduce the number of competing Sylvania retailers by "limit[ing] the number of franchises granted for any given area [of the country] and requir[ing] each franchisee to sell his Sylvania products only from the location or locations at which he was franchised." 433 U.S., at 38. When Continental was denied such a franchise, they filed a lawsuit alleging violation of the Sherman Act.

Continental's chances looked good, because the Supreme Court had held such restrictions to be subject to a per se rule in United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967). But the court instead overruled Schwinn—which had itself been a change in course from White Motor Co. v. United States, 372 U.S. 253 (1963), where the court had refused to adopt such a rule, 433 U.S., at 47—and held that such business practices must be analyzed under the rule of reason. Noting that "per se rules of illegality are appropriate only when they relate to conduct that is manifestly anticompetitive," 433 U.S., at 49-50, the court concluded that GTE's behavior transgressed the Sherman Act only if it was an unreasonable restraint of trade that would diminish competition and promote inefficiency.

The Sylvania case became the first shot in the court's march back to economics as the touchstone of antitrust, a program generally attributed to the influence of Robert Bork's work, summed up in The Antitrust Paradox. The case staked out the ground for cases like Broadcast Music v. Columbia Broadcasting System, State Oil Co. v. Khan, Verizon v. Trinko, and Leegin v. PSKS.