Supreme Court ruling eases retail-price restrictions

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Supreme Court ruling eases retail-price restrictions

June 29, 2007

Washington, D.C.—Manufacturers will have more flexibility to set minimum retail prices without violating antitrust laws, following a U.S. Supreme Court ruling on Thursday.

The 5-4 ruling in Leegin Creative Leather Products, Inc., v. PSKS, Inc. reversed a 1911 Supreme Court decision that asserted that minimum-pricing agreements violated federal antitrust laws.

"Offering the retailer a guaranteed margin and threatening termination if it does not live up to expectations may be the most efficient way to expand the manufacturer's market share by inducing the retailer's performance and allowing it to use its own initiative and experience in providing valuable services," states Thursday's majority opinion by Justice Anthony Kennedy.

The opinion still allows the Justice Department to take action when pricing agreements clearly reduce competition.

Dissenting justices, however, fear the ruling could hurt consumers and smaller retailers.

"The only safe predications to make about today's decision are that it will likely raise the price of goods at retail and that it will create considerable legal turbulence as lower courts seek to develop workable principles," writes dissenting Justice Steven Breyer.

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