They are worth recalling as a unique Schwinn production strategy and a sidebar in the evolution of the bicycle industry. It upholds the legality of the Schwinn Plan, which is the heart of Schwinn’s marketing system, now accounting for 75% of the distribution of Schwinn’s products. It also upholds the legality of Schwinn’s agency and consignment arrangements. I agree with the Court’s basic determination that Schwinn’s marketing system is, under the rule of reason, entirely consonant with the antitrust laws.
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The trial court that competition made necessary the challenged program; that it was justified by, and went no further than required by, competitive pressures, and that its net effect is to preserve, and not to damage, competition in the bicycle market. Application of the rule of reason here cannot be confined to intrabrand competition. When we look to the product market as a whole, we cannot conclude that Schwinn’s franchise system with respect to products as to which it retains ownership and risk constitutes an unreasonable restraint of trade. This does not, of course, excuse or condone the per se violations which, in substance, consist of the control over the resale of Schwinn’s products after Schwinn has parted with ownership thereof. As a result, Schwinns became increasingly dated in both styling and technology.
The Government does not contend that a per se violation of the Sherman Act is presented by the practices which are involved in this appeal . Accordingly, we are remitted to an appraisal of the market impact of these practices. “well over half of the bicycles sold by Schwinn have been sold direct to the retail dealer mongoose bmx bike by means of Schwinn Plan sales and consignment and agency sales.” The United States did not appeal from the District Court’s rejection of its price-fixing charge. The appellees did not appeal from the findings and order invalidating restraints on resale by distributors who purchase products from Schwinn.
For more than a century, the name Schwinn has represented a leader in the bicycle industry. The company began in 1895 when partners Ignaz Schwinn and Adolph Arnold founded their corporation Arnold, Schwinn & Company. Eventually, the market for adult bicycles grew smaller as mongoose bmx bike cars became more affordable. Arnold sold his share of the company to Schwinn, who realized the importance of manufacturing and marketing bicycles for children. With lower prices possible due to advances in manufacturing, the market for children’s bicycles began to grow.