Leegin Creative Leather Prods. v. PSKS, Inc.

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In Leegin Creative Leather Prods. v. PSKS, Inc., 127 S. Ct. 2705 (2007), a 5-4 U.S. Supreme Court overturned nearly 100 years of precedent in antitrust law and held that resale price maintenance is lawful if based on a reasonable justification. This decision overruled the precedent of Dr. Miles Medical Co. v. John D. Park and Sons Co., 220 U.S. 373 (1911), in which the Court had established the rule that it is per se illegal under § 1 of the Sherman Act, 15 U.S.C. § 1, for a manufacturer to agree with its distributor to set the minimum price the distributor can charge for the manufacturer's goods.

The Court relied on respected economic analysts to conclude that vertical price restraints can have procompetitive effects and thus should be judged by the rule of reason:

"Minimum resale price maintenance can stimulate interbrand competition -- the competition among manufacturers selling different brands of the same type of product -- by reducing intrabrand competition -- the competition among retailers selling the same brand. See id., at 51-52, 97 S. Ct. 2549, 53 L. Ed. 2d 568. The promotion of interbrand competition is important because 'the primary purpose of the antitrust laws is to protect [this type of] competition.' Khan, 522 U.S., at 15, 118 S. Ct. 275, 139 L. Ed. 2d 199."

Justice Anthony Kennedy wrote the decision and was joined by the conservative wing of the Court.

Advocates of stare decisis, including the liberal wing of the Court, complained about the overturning of this longstanding precedent.

See also

Resale price maintenance