Pace Electronics, Inc. v. Canon Computer Systems, Inc.

Pace Electronics, Inc. (Pace) (plaintiff) was an electronics dealer. Pace bought products from manufacturers and resold the products to retailers. In 1996, Pace entered a dealership agreement with Canon Computer Systems, Inc. (Canon) (defendant). Under the dealership agreement’s terms, Pace could purchase Canon products at dealer prices in exchange for a commitment to purchase a minimum amount of Canon products. At the time, Pace competed with another Canon dealer, Laguna Corporation (Laguna) (defendant). Canon asked Pace not to sell Canon products to Laguna’s customers or to price Canon products below Laguna’s prices. Pace refused. In 1997, Canon canceled Pace’s dealership. Canon claimed that Pace had not purchased the minimum amount necessary to maintain the dealership agreement. Pace sued Canon and Laguna, alleging that Canon and Laguna unlawfully conspired to set minimum prices for Canon products. Pace claimed that Canon canceled Pace’s dealership, because Pace refused to agree to participate in the vertical price-fixing conspiracy. Pace alleged injury in the form of lost profits, as well as harm to the wider market from reduced pricing competition. The United States District Court for the District of New Jersey dismissed Pace’s complaint. The district court held that Pace failed to allege valid antitrust injury in the form of actual competitive harm to the market. Pace appealed.