United States v. Topco Associates

Topco Associates, Inc. (Topco) (defendant) was a cooperative of roughly 25 regional supermarket chains that jointly purchased and distributed over 1,000 popular, profitable Topco-brand products. New members needed board approval and a 75% (or, for applicants within 100 miles of an existing member, 85%) vote of existing members to join, effectively letting incumbent members veto nearby competitors. The government (plaintiff) alleged this arrangement unlawfully divided the market for Topco products into exclusive member territories and used the membership vote to exclude competition. Topco argued its members needed these territorial divisions to compete against larger national chains. The district court applied a rule-of-reason analysis and ruled for Topco; the government appealed, arguing the per se rule should have applied instead.