Leegin: A Reasonable Decision for Retail Pricing

By August 1, 2007Briefly Legal

Stephen Bolerjack, the chairman of the NAM’s Competition Task Force, testified Tuesday at a hearing by the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, reviewing the recent Leegin decision by the U.S. Supreme Court.

That ruling (download here) held that retail price maintenance agreements did not by definition violate anti-trust laws; the NAM’s position is that these agreements can serve a competitive purpose and you’d have to make a case — with convincing evidence — that they represent a violation. At the same time, retail price agreements among competitors remain a per se violation.

Here’s the core of the argument as made by Bolerjack, an attorney with Dykema Gossett in Detroit.

  • Leegin follows the guiding rule of modern antitrust jurisprudence that limits the per se analysis to practices that “always or almost always tend to restrict competition or decrease output.” This is simply not true of minimum resale price maintenance. Leegin applies the rule of reason, the accepted standard for antitrust cases, to minimum resale price maintenance agreements;
  • Leegin reflects the progression of antitrust law for the past thirty years in limiting the scope of the per se rule. Sylvania in 1977 and Khan in 1997 each overruled prior Supreme Court decisions to apply the rule of reason to vertical restraints; and
  • Leegin requires courts to make decisions based on substance – the effect of the restraint on competition in a market – rather than on formalistic analysis of whether conduct shows an agreement between a manufacturer and a reseller. In addition, it will permit defendants to defend themselves in these cases by proving facts about competitive effects that they were precluded from using under the per se rule.
  • We’re persuaded.

    Bolerjack’s testimony is here, and you can access other testimony here. The NAM submitted a brief to the court, which is available here.

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