Northwest was a trade association consisting of about 100 retailers in the Pacific Northwest. Essentially, they made up a trade cooperative. Pacific was a retailer and wholesaler of office supplies. Nonmembers of Northwest could buy supplies at the same price as members, but members received rebates at the end of the year. Members of Northwest voted to expel Pacific from the group.

At the district Court level, the Court refused to apply the per se rule and held that the rule of reason should prevail. The Court of Appeals reversed, stating that the boycott was a per se violation, because of the obvious harsh anticompetitive effects that the expulsion would have. The Court of Appeals was also of the opinion that portions of the Sherman Act had been impliedly repealed by the Robinson-Patman act, which allowed such price differentiation. The Court of Appeals also focused on the per se violation as to the lack of due process afforded Pacific when expelled from Northwest.

The United States Supreme Court reversed the Court of Appeals. Firstly, there was nothing contained in the Sherman Act about due process requirements. Even if Northwest’s decision to expel Pacific did amount to a per se violation, the Supreme Court said, no amount of due process would save the action. Secondly, the idea of the group boycott instituted by Northwest did not always merit the per se analysis.

The Supreme Court stated that "not every cooperative activity involving a restraint or exclusion will [have] the likelihood of predominantly anticompetitive consequences." Id. More specifically, the Court was of the opinion that a purchasing cooperative such as Northwest was not necessarily a concerted activity bound to result in anticompetitive effects. Therefore, the Court looked to the expulsion itself to see if there was a per se violation. The answer again was in the negative, but the Court also noted that there was insufficient evidence. It was necessary, the Court held, to show market power or exclusive access in order to fuel a finding of anticompetitive effect. Therefore, the conclusion usually derived from an expulsion (anticompetitiveness) is not always appropriate. The Supreme Court remanded to the Court of Appeals for evaluation of the district court’s rule of reason analysis.

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