Russell Stover Candies, Inc., sells and ships its box chocolates and candies to more than 18,000 retailers throughout the country. Most of the retailers are department, drug, card, and gift stores. Russell Stover designates resale prices for all of its products and communicates those prices to retailers by price lists, invoices, order forms, and preticketing of all of its products. Russell Stover also announces to each prospective retailer the circumstances under which it will refuse to sell; i.e., whenever Russell Stover reasonably believes that a prospective retailer will resell Stover products at less than designated prices and whenever an existing retailer has actually sold Stover products at less than designated prices. Russell Stover does not request or accept express assurances from existing or prospective retailers regarding resale prices, however. Russell Stover has, in the past, refused to sell to prospective retailers or has terminated existing retailers based on these policies. As a result, 97.4 percent of Stover products are sold at or above the designated resale price.
The FTC determined that Russell Stover had violated Section 1 of the Sherman Act by illegally combining with the retail dealers to fix retail prices.
Russell Stover has appealed the FTC’s decision to the Court of Appeals. How should the appellate court rule on this issue?