Bush Administration Legalizes Price Fixing??
Buried on page 4, in fine print… today before the US Supreme Court…
A family-owned Texas boutique (PSKS AKA Kay's Kloset) sued Leegin Creative Leather Products (Brighton brand) because Brighton stopped supplying products to the company in 2002.
The Texas boutique's offense? It sold the products at 20 percent off, violating the "Brighton Retail Pricing and Promotion Policy."
In effect Leegin, tried to fix the price at which retailer PSKS could sell Brighton's manufactured goods.
An agreement between a manufacturer and a distributor that fixes the minimum resale price to consumers, constitutes illegal minimum resale price fixing, a "per se" or automatic violation of federal and state antitrust laws.
In PSKS, Inc. v. Leegin Creative Leather Products, Inc., No. 04-41243, 2006 U.S. App. LEXIS 6879 (5th Cir. Mar. 20, 2006), defendant Leegin, a manufacturer of women's accessories sold under the brand name Brighton, was ordered to pay $3.6 million in trebled damages to plaintiff PSKS, Inc., a women's clothing and accessories store doing business as Kay's Kloset in the Lewisville, Texas area.
On appeal, Leegin did not challenge the jury's finding that it entered into price fixing agreements. Most likely, this was because of the amount and weight of PSKS' evidence. Rather, Leegin challenged the standard of per se illegality. The Fifth Circuit rejected Leegin's arguments.
Leegin also challenged PSKS' showing of antitrust injury, a standing question, and the lower court's calculation of damages.
The Fifth Circuit affirmed that PSKS suffered antitrust injury as PSKS' refusal to follow Leegin's pricing policy resulted in inability to obtain its bestselling and most profitable product line, and that this injury was the type the antitrust laws were intended to prevent.
The court noted that the per se rule standard for minimum vertical price fixing has stood for 95 years since its establishment by the Supreme Court in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 373 (1911).
The US Supreme Court recently reaffirmed Dr. Miles. See Business Elec.; Monsanto; and State Oil v. Khan, 522 U.S. 3 (1997).
On appeal the US Supreme Court has agreed to hear the case. Why? The Bush Administration, along with the National Association of Manufacturers, is supporting Brighton.
On the side of the boutique: 36 state attorneys general and the Consumer Federation of America.
The fact that the Court agreed to hear the case suggests it is willing to revise or reverse the decision in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 373 (1911).
Who's arguing the case for Brighton? Washington lawyer Theodore Olson, who represented Texas Gov. George W. Bush in Bush vs. Gore, the Supreme Court case that decided the 2000 presidential election.
Wanna hear the argument Brighton is making? One argument is that the law is "premised upon the antiquated common-law rule" and that it "squarely conflicts with the modern economic understanding that resale price-maintenance agreements can have significant procompetitive effects."
Right. Manufacturer mandated retail price controls = "pro-competitive" market for consumers. [This team has a score of economists lined up to parrot these arguments.]
Brighton says that by maintaining price consistency among its retailers, stores can offer improved customer service. The extra service, says the manufacturer, enables smaller stores to compete against rival brands sold by bigger cut-rate competitors.
Alrighty then…. Brighton has decided it knows better than its customers what their costs are and what profit margins are acceptable. It's treating a small boutique in a low-cost area exactly the same as a large chain or a boutique on Rodeo Drive or Madison Avenue.
Brighton says it doesn't want its brand to "degrade" and its "customers to feel cheated when they buy at the wrong moment." Oh boy, now they want to protect us from ourselves.
If the Court overrules the jury verdict in this case, "MSRP" (manufacturer suggested retail price) could become not a "suggestion" but a "requirement."
Its bad enough whats going on with Verizon vs Vonage, so you better hope the Court doesn't blow it on this one, 95 years of anti trust protection could be over.
See here and here for further details.
A family-owned Texas boutique (PSKS AKA Kay's Kloset) sued Leegin Creative Leather Products (Brighton brand) because Brighton stopped supplying products to the company in 2002.
The Texas boutique's offense? It sold the products at 20 percent off, violating the "Brighton Retail Pricing and Promotion Policy."
In effect Leegin, tried to fix the price at which retailer PSKS could sell Brighton's manufactured goods.
An agreement between a manufacturer and a distributor that fixes the minimum resale price to consumers, constitutes illegal minimum resale price fixing, a "per se" or automatic violation of federal and state antitrust laws.
In PSKS, Inc. v. Leegin Creative Leather Products, Inc., No. 04-41243, 2006 U.S. App. LEXIS 6879 (5th Cir. Mar. 20, 2006), defendant Leegin, a manufacturer of women's accessories sold under the brand name Brighton, was ordered to pay $3.6 million in trebled damages to plaintiff PSKS, Inc., a women's clothing and accessories store doing business as Kay's Kloset in the Lewisville, Texas area.
On appeal, Leegin did not challenge the jury's finding that it entered into price fixing agreements. Most likely, this was because of the amount and weight of PSKS' evidence. Rather, Leegin challenged the standard of per se illegality. The Fifth Circuit rejected Leegin's arguments.
Leegin also challenged PSKS' showing of antitrust injury, a standing question, and the lower court's calculation of damages.
The Fifth Circuit affirmed that PSKS suffered antitrust injury as PSKS' refusal to follow Leegin's pricing policy resulted in inability to obtain its bestselling and most profitable product line, and that this injury was the type the antitrust laws were intended to prevent.
The court noted that the per se rule standard for minimum vertical price fixing has stood for 95 years since its establishment by the Supreme Court in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 373 (1911).
The US Supreme Court recently reaffirmed Dr. Miles. See Business Elec.; Monsanto; and State Oil v. Khan, 522 U.S. 3 (1997).
On appeal the US Supreme Court has agreed to hear the case. Why? The Bush Administration, along with the National Association of Manufacturers, is supporting Brighton.
On the side of the boutique: 36 state attorneys general and the Consumer Federation of America.
The fact that the Court agreed to hear the case suggests it is willing to revise or reverse the decision in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 373 (1911).
Who's arguing the case for Brighton? Washington lawyer Theodore Olson, who represented Texas Gov. George W. Bush in Bush vs. Gore, the Supreme Court case that decided the 2000 presidential election.
Wanna hear the argument Brighton is making? One argument is that the law is "premised upon the antiquated common-law rule" and that it "squarely conflicts with the modern economic understanding that resale price-maintenance agreements can have significant procompetitive effects."
Right. Manufacturer mandated retail price controls = "pro-competitive" market for consumers. [This team has a score of economists lined up to parrot these arguments.]
Brighton says that by maintaining price consistency among its retailers, stores can offer improved customer service. The extra service, says the manufacturer, enables smaller stores to compete against rival brands sold by bigger cut-rate competitors.
Alrighty then…. Brighton has decided it knows better than its customers what their costs are and what profit margins are acceptable. It's treating a small boutique in a low-cost area exactly the same as a large chain or a boutique on Rodeo Drive or Madison Avenue.
Brighton says it doesn't want its brand to "degrade" and its "customers to feel cheated when they buy at the wrong moment." Oh boy, now they want to protect us from ourselves.
If the Court overrules the jury verdict in this case, "MSRP" (manufacturer suggested retail price) could become not a "suggestion" but a "requirement."
Its bad enough whats going on with Verizon vs Vonage, so you better hope the Court doesn't blow it on this one, 95 years of anti trust protection could be over.
See here and here for further details.
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