Colgate doctrine

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Colgate doctrine is a conservative principle in antitrust law that allows a company to decide, on its own, with whom to do business. Any company may unilaterally terminate business with any other company without triggering a violation of the antitrust laws.

The Colgate doctrine is a key right of businesses in a free market economy. This important doctrine was established by the U.S. Supreme Court decision in United States v. Colgate Co., 250 U.S. 300 (1919).

The Model Jury Instruction on this issue is as follows (ABA 2005):

A supplier may go beyond announcing its suggested resale prices. It may announce that it will stop dealing with any distributors that do not follow its suggestions. Announcing such a policy, and then terminating distributors that do not follow the suggested prices, does not by itself constitute a resale price-fixing agreement. This is so because simply announcing and enforcing such a policy does not constitute an agreement between the supplier and anyone else.

This is so even if distributors follow the suggested resale prices because they fear they will be terminated if they do not follow the suggestions. ... To establish [unlawful] resale price-fixing in such a situation, the plaintiff must show that the distributor reached an agreement on price with the supplier, rather than merely followed the supplier's suggestion.

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