United States v Arnold, Schwinn & Co. :: 388 U.S. 365 1967 :: Justia US Supreme Court Center

W. Schwinn, grandson Frank Valentine Schwinn took over management of the company. The company also joined with other United States bicycle manufacturers in a campaign to raise import tariffs across the board on all imported bicycles. In August 1955, the Eisenhower administration implemented a 22.5% tariff rate for three out of four categories of bicycles. However, the most popular adult category, lightweight or “racer” bicycles, were only raised to 11.25%. The administration noted that the United States industry offered no direct competition in this category, and that lightweight bikes competed only indirectly with balloon-tire or cruiser bicycles. The share of the United States market taken by foreign-made bicycles dropped to 28.5% of the market, and remained under 30% through 1964.

In time bicycles became less expensive, but by the end of World War I automobiles had taken their place as the popular form of transportation. Bicycles began to serve more as vehicles for children, which led to the development of heavier and sturdier models. From huffy mountain bike the 1920’s until 1938 Arnold, Schwinn & Co. became primarily a producer of heavy-duty juvenile bicycles. Fillet-brazed bicycle frames are strong and have a neat and clean appearance, but they are uncommon because of the additional craftsmanship required.

Most people might not know this but Schwinn was involved in the marketing of motorscooters back in 2005. In the 50s, Schwinn changed its marketing strategy and became more aggressive when dealing with distributors; this was aimed at making the company a dominant force in the industry. By 1905, the annual sales of bikes had decreased to only 25% of the figures reached in 1900. Mechanical engineer Ignaz Schwinn is the German guy who started the Schwinn Bike Company. This is one of the oldest bike companies in the market having been established in 1895. Through most of the 20th century, the Chicago-based company reigned as a major manufacturer of American bikes.

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However, worker dissatisfaction, seldom a problem in the early years, grew with steep increases in inflation. In late 1980, the Schwinn Chicago factory workers voted to affiliate with the United Auto Workers. Plant assembly workers began a strike for higher pay in September 1980, and 1,400 assembly workers walked off the job for thirteen weeks. Although the strike ended in February 1981, only about 65% of the prior workforce was recalled to work.

This financial firm proved equally incompetent in running Schwinn and Schwinn again declared for bankruptcy in 2001. [Footnote 2/12] Thus, applying the rule of reason to the vertical restraints now in issue is not at all “illogical and inconsistent” with per se invalidation of the wholesalers’ horizontal division of markets. These retailers were predominantly the small independent bicycle sales and repair dealers mentioned above, who now represent nearly all of Schwinn’s outlets.

But I cannot understand how that marketing system becomes per se unreasonable and illegal in those instances where it is effectuated through sales to wholesalers and dealers. Its parts and accessory business is less than 4% of its total sales. Like other bicycle producers, Schwinn manufactures the basic parts of its bicycles and purchases components from parts producers.

Although they were fabricated in the same shop as the Paramounts, from there Schwinn’s fillet-brazed frames took a different production path. Paramounts continued through their own paint and assembly processes, while the fillet-brazed models were added to the assembly line with high-volume Schwinn flash-welded frames for serial-number stamping, electrostatic painting, and final assembly. Hence Paramount serial numbers are unique to Paramounts and serve as a tally of Paramount production, while serial numbers on the fillet-brazed models were mixed in with other Schwinn models. This is also why the fillet-brazed models came in the same colors as lower-priced Schwinns, which contributed to their obscurity. [Footnote 2/6] Accordingly, Schwinn unilaterally instituted a policy of ensuring that only franchised retailers would be supplied with its products.

Schwinn soon had a range of low, mid- and upper-level bicycles all imported from Japan. Schwinn’s standard road bike model from Panasonic was the World Traveler, which had a high-quality lugged steel frame and Shimano components. Schwinn also marketed a top-shelf touring model from Panasonic, the World Voyager, lugged with butted Tange chrome-molybdenum alloy tubing, Shimano derailleurs, and SunTour bar-end shifters, a serious challenge to the Paramount series at half the price. By 1950, Schwinn had decided the time was right to grow the brand. At the time, most bicycle manufacturers in the United States sold in bulk to department stores, which in turn sold them as store brand models. F. Goodrich bicycles, sold in tire stores, Schwinn eliminated the practice of producing private label bicycles in 1950, insisting that the Schwinn brand and guarantee appear on all products.