Price fixing is a horizontal restraint in trade. It is when competitors team up and fix a price to either lock out competitors with lower prices. In another version, competitors hike up prices and benefit off consumers.
However, in this case, these gas companies were not necessarily competitors. Instead, they had committed themselves to a joint venture, essentially merging operations in the different regions of the United States. Thus, they were not engaged in price fixing in the traditional sense. In essence, they were just setting prices as a single entity would.
a) The issue was whether a per se rule of price fixing applied to vertical agreements.
b) The per se rule of price fixing in a horizontal agreement context means that when competitors agree to fix a price, it is inherently anti-competitive. It becomes a restraint on trade, which is violation of the Sherman Act, Section 1.
c) Here, the court found that the per se rule only applies when the court has determined the type of agreement at issue. They found that horizontal agreements are different than vertical agreements fixing a minimum resale price. In fact, unlike horizontal agreements, minimum resale prices can stimulate competition as well as restrict competition.
d) Because vertical agreements can stimulate competition and, thus, are not inherently anticompetitive, a per se rule cannot apply to vertical agreements in the same way it is applied to horizontal agreements to price fix. Therefore, the court found in favor of Leegin, the original defendant, and reversed the lower court's decision.
The court would want to measure the anticompetitive effects, including a decreased output, stimulation in interbrand competition, and the increase in options to consumers at different price levels. The court is really focusing on the actual economic effects and what would beneficial to stimulating the market.