The Antitrust Review of the Americas 2009

A Year of Living With Leegin

01 January 2009

It has been just over a year since the Supreme Court issued its decision in Leegin Creative Leather Products Inc v PSKS Inc1 on 28 June 2007. Leegin reinterpreted the federal Sherman Act, the principal United States antitrust statute, by ending its per se prohibition against vertical resale price maintenance (RPM) arrangements that the Supreme Court had judicially declared nearly a century earlier. All sides of the debate over RPM saw Leegin as a watershed, and hoped for, or dreaded, rapid change in response to the ruling. On the one hand, business groups and some economists hoped Leegin would serve as a harbinger encouraging states to drop their parallel, per se prohibition of RPM arrangements. Consumer advocates and discount retailers, on the other hand, feared that large numbers of franchisors and other suppliers would treat Leegin as a green light to adopt, participate in, or enforce RPM programmes. One year into the post-Leegin era, it now seems that little has changed, or will change fast, in regard to franchise and distribution arrangements. States have not been persuaded of the wisdom of allowing any RPM arrangements, have not backed off their condemnation of RPM, and are pushing Congress to restore the per se rule legislatively. In the meantime, whether as the result of these potential hurdles or the practicalities of the situation, it does not appear that there are any widespread efforts by franchisors and suppliers to incorporate express RPM elements in their distribution arrangements, with the occasional newsworthy exception.

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