September 12, 2008 / Law Alert

Update: Resale Price Maintenance After Leegin

Since the Supreme Court's 2007 decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., lower federal courts and agencies have relied on the Court's newly created teaching that agreements requiring retailers to adhere to a manufacturer's minimum resale prices are no longer per se illegal under the antitrust laws. 127 S. Ct. 2705 (2007). Instead, they are to be evaluated under the rule of reason. However, neither the Court nor subsequent applications of Leegin have developed rule-of-reason guidelines to differentiate between lawful and unlawful resale price maintenance ("RPM") programs. Moreover, the rule-of-reason approach to RPMs faces proposed legislation in Congress, which would reinstate the per se rule, and opposition from the states, whose laws and case precedent support continued application of the per se approach. The uncertainty surrounding future developments cautions that the best approach is not to establish RPM programs but instead employ alternatives such as "suggested" resale pricing or "minimum advertised pricing" programs.