Document Type
Article
Publication Title
Loyola Consumer Law Review
Publication Date
2008
Volume
21
First Page
1
Abstract
(Excerpt)
In Leegin Creative Leather Products, Inc. v. PSKS, Inc., the Supreme Court by a vote of 5-4 overruled the century old per se ban on resale price maintenance ("r/p/r") enunciated in the Dr. Miles case. The Court did not rule that r/p/m is lawful per se but rather held that vertical price restraints should be adjudged under the broader rule of reason analysis. The decision was not unexpected; and, indeed, it was welcomed in many quarters. From one perspective, Leegin is a long overdue ruling that simply brings treatment of r/p/m into line with the treatment of vertical non-price restraints. From another perspective, Leegin is a watershed holding which marks a clear departure from prior precedent and shifts the focus of antitrust enforcement away from protection of consumer interests and toward protection of business interests at the expense of consumers. Particularly disturbing from this perspective is the Court's cavalier treatment of prior precedent and its willingness to accept largely theoretical economic justifications for r/p/m in abrogating the per se rule.
This article will examine the history of the per se rule against r/p/m and the merits of the arguments for and against retaining the per se rule in vertical price-fixing cases. It argues that Leegin contains significant analytical blind spots, is wrongly decided and that resale price maintenance is almost always harmful to consumers. At the same time, it acknowledges that neither the Supreme Court nor Congress is likely to reinstate the per se rule. The article concludes with a proposal made of analysis of r/p/m cases under which a finding of r/p/m will be viewed as presumptively unlawful and will shift the burden onto the defendants to come forward with a persuasive factual showing of actual pro-competitive benefits from r/p/m and that these benefits outweigh any harm to consumers.