concurring in the judgment.
Although I agree with the majority that the location clause at issue in this case is not a per se violation of the Sherman Act and should be judged under the rule of reason, I cannot agree that this result requires the overruling of United States v. Arnold, Schwinn & Co., 388 U. S. 365 (1967). In my view this case is'distinguishable from Schwinn because there is less potential for restraint of intrabrand competition and more potential for stimulating interbrand competition. As to intrabrand competition, Sylvania, unlike Schwinn, did not restrict the customers to whom or the territories where its purchasers could sell. As to interbrand competition, Syl-vania, unlike Schwinn, had an insignificant market share at the time it adopted its challenged distribution practice and enjoyed no consumer preference that would allow its retailers to charge a premium over other brands. In two short paragraphs, the majority disposes of the view, adopted after careful analysis by the Ninth Circuit en banc below, that these differences provide a “principled basis for distinguishing Schwinn,” ante, at 46, despite holdings by three Courts of Appeals and the District Court on remand in Schwinn that *60the per se rule established in that case does not apply to location clauses such as Sylvania’s. To reach out to overrule one of this Court’s recent interpretations of the Sherman Act, after such a cursory examination of the necessity for doing so, is surely an affront to the principle that considerations of stare decisis are to be given particularly strong weight in the area of statutory construction. Illinois Brick Co. v. Illinois, 431 U. S. 720, 736-737 (1977); Runyon v. McCrary, 427 U. S. 160, 175 (1976); Edelman v. Jordan, 415 U. S. 651, 671 (1974).
One element of the system of interrelated vertical restraints invalidated in Schwinn was a retail-customer restriction prohibiting franchised retailers from selling Schwinn products to nonfranchised retailers. The Court rests its inability to distinguish Schwinn entirely on this retail-customer restriction, finding it “[i]n intent and competitive impact . . . indistinguishable from the location restriction in the present case,” because “[i]n both cases the restrictions limited the freedom of the retailer to dispose of the purchased products as he desired.” Ante, at 46. The customer restriction may well have, however, a very different “intent and competitive impact” than the location restriction: It prevents discount stores from getting the manufacturer’s product and thus prevents intrabrand price competition. Suppose, for example, that in-terbrand competition is sufficiently weak that the franchised retailers are able to charge a price substantially above wholesale. Under a location restriction, these franchisers are free to sell to discount stores seeking to exploit the potential for sales at prices below the prevailing retail level. One of the franchised retailers may be tempted to lower its price and act in effect as a wholesaler for the discount house in order to share in the profits to be had from lowering prices and expanding volume.1
*61Under a retail customer restriction, on the other hand, the franchised dealers cannot sell to discounters, who are cut off altogether from the manufacturer’s product and the opportunity for intrabrand price competition. This was precisely the theory on which the Government successfully challenged Schwinn’s customer restrictions in this Court. The District Court in that case found that “[e]ach one of [Schwinn’s franchised retailers] knows also that he is not a wholesaler and that he cannot sell as a wholesaler or act as an agent for some other unfranchised dealer, such as a discount house retailer who has not been franchised as a dealer by Schwinn.” 237 F. Supp. 323, 333 (ND Ill. 1965). The Government argued on appeal, with extensive citations to the record; that the effect of this restriction was “to keep Schwinn products out of the hands of discount houses and other price cutters so as to discourage price competition in retailing . . . .” Brief for United States, O. T. 1966, No. 25, p. 26. See id., at 29-37.2
It is true that, as the majority states, Sylvania’s location restriction inhibited to some degree “the freedom of the retailer to dispose of the purchased products” by requiring the retailer to sell from one particular place of business. But the retailer is still free to sell to any type of customer — including discounters and other unfranchised dealers — from any area. I think this freedom implies a significant difference for the effect of a location clause on intrabrand competition. The *62District Court on remand in Schwinn evidently thought so as well, for after enjoining Schwinn’s customer restrictions as directed by this Court it expressly sanctioned location clauses, permitting Schwinn to “designate] in its retailer franchise agreements the location of the place or places of business for which the franchise is issued.” 291 F. Supp. 564, 565-566 (ND Ill. 1968).
An additional basis for finding less restraint of intrabrand competition in this case, emphasized by the Ninth Circuit en banc, is that Schwinn involved restrictions on competition among distributors at the wholesale level. As Judge Ely wrote for the six-member majority below:
“[Schwinn] had created exclusive geographical sales territories for each of its 22 wholesaler bicycle distributors and had made each distributor the sole Schwinn outlet for the distributor’s designated area. Each distributor was prohibited from selling to any retailers located outside its territory. . . .
“. . . Schwinn’s territorial restrictions requiring dealers to confine their sales to exclusive territories prescribed by Schwinn prevented a dealer from competing for customers outside his territory. . . . Schwinn’s restrictions guaranteed each wholesale distributor that it would be absolutely isolated from all competition from other Schwinn wholesalers.” 537 F. 2d 980, 989-990 (1976).
Moreover, like its franchised retailers, Schwinn’s distributors were absolutely barred from selling to nonfranchised retailers, further limiting the possibilities of intrabrand price competition.
The majority apparently gives no weight to the Court of Appeals’ reliance on the difference between the competitive effects of Sylvania’s location clause and Schwinn’s interlocking “system of vertical restraints affecting both wholesale and retail distribution.” Id., at 989. It also ignores post-Schwinn *63decisions of the Third and Tenth Circuits upholding the validity of location clauses similar to Sylvania’s here. Salco Corp. v. General Motors Corp., 517 F. 2d 567 (CA10 1975) ; Kaiser v. General Motors Corp., 530 F. 2d 964 (CA3 1976), aff’g 396 F. Supp. 33 (ED Pa. 1975). Finally, many of the scholarly authorities the majority cites in support of its overruling of Schwinn have not had to strain to distinguish location clauses from the restrictions invalidated there. E. g., Robinson, Recent Antitrust Developments: 1974, 75 Colum. L. Rev. 243, 278 (1975) (outcome in Sylvania not preordained by Schwinn because of marked differences in the vertical restraints in the two cases); McLaren, Territorial and Customer Restrictions, Consignments, Suggested Retail Prices and Refusals to Deal, 37 Antitrust L. J. 137, 144M45 (1968) (by implication Schwinn exempts location clauses from its per se rule); Pollock, Alternative Distribution Methods After Schwinn, 63 Nw. U. L. Rev. 595, 603 (1968) (“Nor does the Schwinn doctrine outlaw the use of a so-called ‘location clause’. . .”).
Just as there are significant differences between Schwinn and this case with respect to intrabrand competition, there are also significant differences with respect to interbrand competition. Unlike Schwinn, Sylvania clearly had no economic power in the generic product market. At the time they instituted their respective distribution policies, Schwinn was “the leading bicycle producer in the Nation,” with a national market share of 22.5%, 388 U. S., at 368, 374, whereas Syl-vania was a “faltering, if not failing” producer of television sets, with “a relatively insignificant 1% to 2%” share of the national market in which the dominant manufacturer had a 60% to 70% share. Ante, at 38, 58 n. 29. Moreover, the Schwinn brand name enjoyed superior consumer acceptance and commanded a premium price as, in the District Court’s words, “the Cadillac of the bicycle industry.” 237 F. Supp., at 335. This premium gave Schwinn dealers a margin of *64protection from interbrand competition and created the possibilities for price cutting by discounters that the Government argued were forestalled by Schwinn’s customer restrictions.3 Thus, judged by the criteria economists use to measure market power — -product differentiation and market share4 — Schwinn enjoyed a substantially stronger position in the bicycle market than did Sylvania in the television market. This Court relied on Schwinn’s market position as one reason not to apply the rule of reason to the vertical restraints challenged there. “Schwinn was not a newcomer, seeking to break into or stay in the bicycle business. It was not a 'failing company.’ On the contrary, at the initiation of these practices, it was the leading bicycle producer in the Nation.” 388 U. S., at 374. And the Court of Appeals below found “another significant distinction between our case and Schwinn” in Syl-vania’s “precarious market share,” which “was so small when it adopted its locations practice that it was threatened with expulsion from the television market.” 537 F. 2d, at 991.5
*65In my view there are at least two considerations, both relied upon by the majority to justify overruling Schwinn, that would provide a “principled basis” for instead refusing to extend Schwinn to a vertical restraint that is imposed by a “faltering” manufacturer with a “precarious” position in a generic product market dominated by another firm. The first is that, as the majority puts it, “when interbrand competition exists, as it does among television manufacturers, it provides a significant check on the exploitation of intrabrand market power because of the ability of consumers to substitute a different brand of the same product.” Ante, at 52 n. 19. See also ante, at 54.6 Second is the view, argued forcefully in the economic literature cited by the majority, that the potential benefits of vertical restraints in promoting interbrand competition are particularly strong where the manufacturer imposing the restraints is seeking to enter a new market or to expand a small market share. Ibid.7 The majority even recognizes that Schwinn “hinted” at an exception for new entrants and failing firms from its per se rule. Ante, at 53-54, n. 22.
In other areas of antitrust law, this Court has not hesitated to base its rules of per se illegality in part on the defendant’s market power. Indeed, in the very case from which the majority draws its standard for per se rules, Northern Pac. R. Co. v. United States, 356 U. S. 1, 5 (1958), the *66Court stated the reach of the per se rule against tie-ins under § 1 of the Sherman Act as extending to all defendants with “sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product ...” 356 U. S., at 6. And the Court subsequently approved an exception to this per se rule for “infant industries” marketing a new product. United States v. Jerrold Electronics Corp., 187 F. Supp. 545 (ED Pa. 1960), aff’d per curiam, 365 U. S. 567 (1961). See also United States v. Philadelphia Nat. Bank, 374 U. S. 321, 363 (1963), where the Court held presumptively illegal a merger “which produces a firm controlling an undue percentage share of the relevant market I see no doctrinal obstacle to excluding firms with such minimal market power as Sylvania’s from the reach of the Schwinn rule.8
I have, moreover, substantial misgivings about the approach the majority takes to overruling Schwinn. The reason for the distinction in Schwinn between sale and nonsale transactions was not, as the majority would have it, “the Court’s effort to accommodate the perceived intrabrand harm and interbrand benefit of vertical restrictions,” ante, at 52; the reason was rather, as Judge Browning argued in dissent below, the notion in many of our cases involving vertical restraints that inde*67pendent businessmen should have the freedom to dispose of the goods they own as they see fit. Thus the first case cited by the Court in Schwinn for the proposition that “restraints upon alienation . . . are beyond the power of the manufacturer to impose upon its vendees and ... are violations of § 1 of the Sherman Act,” 388 U. S., at 377, was this Court’s seminal decision holding a series of resale-price-maintenance agreements per se illegal, Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911). In Dr. Miles the Court stated that “a general restraint upon alienation is ordinarily invalid,” citing Coke on Littleton, and emphasized that the case involved “agreements restricting the freedom of trade on the part of dealers who own what they sell.” Id., at 404, 407-408. Mr. Justice Holmes stated in dissent: “If [the manufacturer] should make the retail dealers also agents in law as well as in name and retain the title until the goods left their hands I cannot conceive that even the present enthusiasm for regulating the prices to be charged by other people would deny that the owner was acting within his rights.” Id., at 411.
This concern for the freedom of the businessman to dispose of his own goods as he sees fit is most probably the explanation for two subsequent cases in which the Court allowed manufacturers to achieve economic results similar to that in Dr. Miles where they did not impose restrictions on dealers who had purchased their products. In United States v. Colgate & Co., 250 U. S. 300 (1919), the Court found no antitrust violation in a manufacturer’s policy of refusing to sell to dealers who failed to charge the manufacturer’s suggested retail price and of terminating dealers who did not adhere to that price. It stated that the Sherman Act did not “restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.” Id., at 307. In United States v. General Electric Co., 272 U. S. 476 (1926), the Court upheld resale-price-maintenance *68agreements made by a patentee with its dealers who obtained its goods on a consignment basis. The Court distinguished Dr. Miles on the ground that the agreements there were “contracts of sale rather than of agency” and involved “an attempt by the Miles Medical Company ... to hold its purchasers, after the purchase at full price, to an obligation to maintain prices on a resale by them.” 272 U. S., at 487. By contrast, a manufacturer was free to contract with his agents to “[fix] the price by which his agents transfer the title from him directly to [the] consumer . . . however comprehensive as a mass or whole in [the] effect [of these contracts].” Id., at 488. Although these two cases have been called into question by subsequent decisions, see United States v. Parke, Davis & Co., 362 U. S. 29 (1960), and Simpson v. Union Oil Co., 377 U. S. 13 (1964), their rationale runs through our case law in the area of distributional restraints. In Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U. S. 211, 213 (1951), the Court held that an agreement to fix resale prices was per se illegal under § 1 because “such agreements, no less than those to fix minimum prices, cripple the freedom of traders and thereby restrain their ability to sell in accordance with their own judgment.” Accord, Albrecht v. Herald Co., 390 U. S. 145, 152 (1968). See generally Judge Browning’s dissent below, 537 F. 2d, at 1018-1022; ABA Antitrust Section, Monograph No. 2, Vertical Restrictions Limiting Intrabrand Competition 29-31, 82-83, 87-91, 96-97 (1977); Blake & Jones, Toward a Three-Dimensional Antitrust Policy, 65 Colum. L. Rev. 422, 427-436 (1965).
After summarily rejecting this concern, reflected in our interpretations of the Sherman Act, for “the autonomy of independent businessmen,” ante, at 53 n. 21, the majority not surprisingly finds “no justification” for Schwinn’s distinction between sale and nonsale transactions because the distinction is “essentially unrelated to any relevant economic impact.” Ante, at 56. But while according some weight to the business*69man’s interest in controlling the terms on which he trades in his own goods may be anathema to those who view the Sherman Act as directed solely to economic efficiency,9 this principle is without question more deeply eHrbeHded'ia our cases than the notions of “free rider” effects and distrmtK tional efficiencies borrowed by the majority from the “new economics of vertical relationships.” Ante, at 54^-57. Perhaps the Court is right in partially abandoning this principle and in judging the instant nonprice vertical restraints solely by their “relevant economic impact”; but the precedents which reflect this principle should not be so lightly rejected by the Court. The rationale of Schwinn is no doubt difficult to discern from the opinion, and it may be wrong; it is not, however, the aberration the majority makes it out to be here.
I have a further reservation about the majority’s reliance on “relevant economic impact” as the test for retaining per se rules regarding vertical restraints. It is common ground among the leading advocates of a purely economic approach to the question of distribution restraints that the economic arguments in favor of allowing vertical nonprice restraints generally apply to vertical price restraints as well.10 Although *70the majority asserts that “the per se illegality of price restrictions . . . involves significantly different questions of analysis and policy,” ante, at 51 n. 18, I suspect this purported distinction may be as difficult to justify as that of Schwinn under the terms of the majority’s analysis. Thus Professor Posner, in an article cited five times by the majority, concludes: “I believe that the law should treat price and nonprice restrictions the same and that it should make no distinction between the imposition of restrictions in a sale contract and their imposition in an agency contract.” Posner, supra, n. 7, at 298. Indeed, the Court has already recognized that resale price maintenance may increase output by inducing “demand-creating activity” by dealers (such as additional retail outlets, advertising and promotion, and product servicing) that outweighs the additional sales that would result from lower prices brought about by dealer price competition. Albrecht v. Herald Co., supra, at 151 n. 7. These same output-enhancing possibilities of nonprice vertical restraints are relied upon by the majority as evidence of their social utility and economic soundness, ante, at 55, and as a justification for judging them under the rule of reason. The effect, if not the intention, of the Court’s opinion is necessarily to call into question the firmly established per se rule against price restraints.
Although the case law in the area of distributional restraints has perhaps been less than satisfactory, the Court would do well to proceed more deliberately in attempting to improve it. In view of the ample reasons for distinguishing Schwinn from this case and in the absence of contrary congressional action, I would adhere to the principle that
“each case arising under the Sherman Act must be determined upon the particular facts disclosed by the record, and . . . the opinions in those cases must be read in the light of their facts and of a clear recognition of the essential differences in the facts of those cases, and in the facts of any new case to which the rule of earlier decisions *71is to be aplied.” Maple Flooring Mfrs. Assn. v. United States, 268 U. S. 563, 579 (1925).
In order to decide this case, the Court need only hold that a location clause imposed by a manufacturer with negligible economic power in the product market has a competitive impact sufficiently less restrictive than the Schwinn restraints to justify a rule-of-reason standard, even if the same weight is given here as in Schwinn to dealer autonomy. I therefore concur in the judgment.
The franchised retailers would be prevented from engaging in discounting themselves if, under the Colgate doctrine, see infra, at 67, the *61manufacturer could lawfully terminate dealers who did not adhere to his suggested retail price.
Given the Government’s emphasis on the inhibiting effect of the Schwinn restrictions bn discounting activities, the Court may well have been referring to this effect when it condemned the restrictions as “obviously destructive of competition.” 388 U. S., at 379. But the Court was also heavily influenced by its concern for the freedom of dealers to control the disposition of products they purchased from Schwinn. See infra, at 66-69. In any event, the record in Schwinn illustrates the potentially greater threat to intrabrand competition posed by customer as opposed to location restrictions.
Relying on the finding of the District Court, the Government argued: “[T]he declared purpose of the Schwinn franchising system [was] to establish and exploit a distinctive identity and superior consumer acceptance for the Schwinn brand name as the Cadillac of bicycles, thereby enabling the charging of a premium price .... This scheme could not possibly succeed, and doubtless would long ago have been abandoned, if in the consumer’s mind other bicycles were just as good as Schwinn’s.” Brief for United States, O. T. 1966, No. 25, p. 36.
See, e. g., F. Scherer, Industrial Market Structure and Economics Performance 10-11 (1970); P. Samuelson, Economics 485-491 (10th ed. 1976).
Schwinn’s national market share declined to 12.8% in the 10 years following the institution of its distribution program, at which time it ranked second behind a firm with a 22.8% share. 388 U. S., at 368-369. In the three years following the adoption of its locations practice, Syl-vania’s national market share increased to 5%, placing it eighth among manufacturers of color television sets. Ante, at 38-39. At this time Sylvania’s shares of the San Francisco,, Sacramento, and northern Cali-*65fomia markets were respectively 2.5%, 15%, and 5%. Ante, at 39 im. 4, 6. The District Court made no findings as to Schwinn’s share of local bicycle markets.
For an extensive discussion of this effect of interbrand competition, see ABA Antitrust Section, Monograph No. 2, Vertical Restrictions Limiting Intrabrand Competition 60-67 (1977).
Preston, Restrictive Distribution Arrangements: Economic Analysis and Public Policy Standards, 30 Law & Contemp. Prob. 506, 511 (1965); Posner, Antitrust Policy and the Supreme Court: An Analysis of the Restricted Distribution, Horizontal Merger and Potential Competition Decisions, 75 Colum. L. Rev. 282, 293 (1975); Scherer, supra, n. 4, at 510.
Cf. Sandura Co. v. FTC, 339 F. 2d 847, 850 (CA6 1964) (territorial restrictions on distributors imposed by small manufacturer "competing with and losing ground to the 'giants’ of the floor-covering industry” is not per se illegal); Baker, Vertical Restraints in Times of Change: From White to Schwinn to Where?, 44 Antitrust L. J. 537, 545-547 (1975) (presumptive illegality of territorial restrictions imposed by manufacturer with “any degree of market power”). The majority’s failure to use the market share of Schwinn and Sylvania as a basis for distinguishing these cases is the more anomalous for its reliance, see infra, at 68-70, on the economic analysis of those who distinguish the anticompetitive effects of distribution restraints on the basis of the market shares of the distributors. See Posner, supra, at 299; Bork, The Rule of Reason and the Per Se Concept: Price Fixing and Market Division [II], 75 Yale L. J. 373, 391-429 (1966).
A. g., Bork, Legislative Intent and the Policy of the Sherman Act, 9 J. Law & Econ. 7 (1966); Bork, The Rule of Reason and the Per Se Concept: Price Fixing and Market Division [I], 74 Yale L. J. 775 (1965).
Professor Posner writes, for example:
“There is no basis for choosing between [price fixing and market division] on social grounds. If resale price maintenance is like dealer price fixing, and therefore bad, a manufacturer’s assignment of exclusive sales territories is like market division, and therefore bad too ....
“[If helping new entrants break into a market] is a good justification for exclusive territories, it is an equally good justification for resale price maintenance, which as we have seen is simply another method of dealing with the free-rider problem. ... In fact, any argument that can be made on behalf of exclusive territories can also be made on behalf of resale price maintenance.” Posner, supra, n. 7, at 292-293. (Footnote omitted.)
See Bork, supra, n. 8, at 391-464.