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Resale price maintenance – rule of reason prevails?

Resale price maintenance (RPM) touches upon the ground of vertical agreements in a restraint of trade and price-fixing. RPM can be diverse and typically includes three categories when a manufacturer and distributor agree to:

  1. The certain price distributor may charge for a product.
  2. The price floor above which distributor may charge for a product (minimum resale price maintenance).
  3. The price at or below which distributor may charge for a product (maximum resale price maintenance).

At the very beginning the approach of U.S. authorities was to treat these agreements according to the per se rule.

However, recent decision of the Supreme Court of the United States in Leegin Creative Leather Products, Inc. v. PSKS, Inc.  from 2006 shows that it is the rule of reason that is to prevail.

The Court decision relates to the minimum resale price maintenance and rules that it must be judged under the rule of reason, not strict per se rule.

The decision was not made animously. The judges voted 5:4 and long dissenting opinion by Justice Breyer was delivered.

The maximum resale price maintenance is treated according to the rule of reason from 1997 when the Supreme Court overruled Albrecht v. Herald Co., in State Oil v. Khan.

The modern view on vertical agreements in the United States is more likely to treat them under rule of reason. As the economists find a lot of arguments in favour of their efficiency, it is also visible through similar Supreme Court decisions on vertical agreements.

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O autorze

Szymon Syp współpracuje z kancelarią Spaczyński, Szczepaniak i Wspólnicy oraz jest doktorantem w Kolegium Gospodarki Światowej Szkoły Głównej Handlowej w Warszawie więcej »