But the Court inexplicably turns its back on the values of competition by independent merchants and the flexible wisdom of the rule of reason when dealing with distribution effected through sales to wholesalers. In Schwinn’s particular marketing system, this mode of distribution plays a subsidiary role, serving to meet “fill-in” orders by dealers, whose basic stock is obtained through the Schwinn Plan. Without considering its function, purpose or effect, the Court declares this aspect of Schwinn’s program to be per se invalid.
During the 1960s, Schwinn aggressively campaigned to retain and expand its dominance of the child and youth bicycle markets. The company advertised heavily on television, and was an early sponsor of the children’s television program Captain Kangaroo. The Captain himself was enlisted to regularly hawk Schwinn-brand bicycles to the show’s audience, typically six years old and under. As these children matured, it was believed they would ask for from their parents. By 1971, United States government councils had objected to Schwinn’s marketing practices. The Captain no longer insisted that viewers buy a Schwinn, but instead made regular on-air consultations of a new character, “Mr. Schwinn Dealer”.
Though weighing slightly less, the mid-priced Schwinn Superior or Sports Tourer was almost indistinguishable from Schwinn’s other heavy, mass-produced models, such as the Varsity and Continental. While competitive in the 1960s, by 1972 these bicycles were much heavier and less responsive in comparison to the new sport and racing bicycles arriving from England, France, Italy, and increasingly, Japan. The company also joined with other United States bicycle manufacturers in a campaign to raise import tariffs across the board on all imported bicycles.
“And the crook doesn’t have a clue. To him, it’s just another bicycle.” That decision foreshadowed a broader decline in U.S. manufacturing, with the sector supplying 5 million fewer jobs today than at its peak in 1979. Meanwhile, family income huffy mountain bike growth slowed, rising only about 15 percent over nearly a quarter-century. Americans without a college degree — who make up about three-quarters of the adult population — now earn lower wages in real terms than they did a generation ago.
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. In exchange for huffy mountain bike ensuring the presence of the Schwinn name, distributors retained the right to distribute Schwinn bikes to any hardware store, toy store, or bicycle shop that ordered them. W. Schwinn tasked a new team to plan future business strategy, consisting of marketing supervisor Ray Burch, general manager Bill Stoeffhaas, and design supervisor Al Fritz.