Antitrust Law Alert: Supreme Court Abolishes Per Se Rule Against Retail Price Maintenance Agreements

Antitrust Law Alert: Supreme Court Abolishes Per Se Rule Against Retail Price Maintenance Agreements
6/29/2007

Yesterday the Supreme Court overruled 100 years of antitrust law and held that resale price maintenance agreements no longer constitute a per se violation of the Sherman Act but, rather will now be judged by the "rule of reason." To read the opinion, see here.

This is a momentous decision, one that will have major impact on anyone supplying goods for resale in the U.S. or reselling goods in the U.S. It will mean that most retail price maintenance agreements henceforth will be legal, at least when the seller does not have "market power" (i.e. a high share of the relevant market) and where there is an arguable or colorable procompetitive justification for the price restriction (usually to promote pre and post-sale services to customers and to cut off "free riding" by discounting resellers). This justification will be particularly applicable to anyone selling high-end or complex products, as opposed to commodity products, where explaining and supporting the product is important to interbrand competition (i.e., selling against competitors).

One caveat: the impact of this decision on state laws against retail price maintenance agreements is uncertain and needs to be evaluated before taking advantage of the new freedom from the federal per se rule.

If you want to read commentaries on this case, see here and here.

If you want to schedule a (free) briefing session to discuss the impact of this development on your business send us an email.

If you have questions or comments, contact: