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For almost a century we lived with unreal rationales regarding the status of
resale price maintenance under Section 1 of the Sherman Act. From
Dr Miles
to Parke Davis to Black & Decker, it was obvious that no judge who ever sat
on a resale pricing case had ever been involved in the operation of any
business in which it was important that its products not be used as
footballs to drive customer traffic.
Pricing restraints have always been the black plague of Antitrust in the
United States, following to the letter the comment of Justice Douglas in
Socony Vacuum that any tampering with price mechanisms was a per se
violation of Section 1 of the Sherman Act. While that case was a horizontal
conspiracy case, conduct that could be characterized as tantamount to an
agreement in a vertical pricing case was treated with the same medicine.
The ruled of reason approach in vertical territory restriction cases
enunciated in White Motor and seemingly extended and confirmed in
Sylvania never until 2008 migrated into the arena of vertical price
restraints. Finally, in 2008, the Supreme Court in the Leegin case rules
that a producer could offer justification evidence in vertical price
restraint cases. If ever there were an invitation to “gloss”, that was
certainly one for the books, and a future boon to antirust lawyers
everywhere.
As we see it, in the presence of substantial interbrand competition, a
producer will be allowed to offer justification evidence in vertical price
restraint cases. Looking to rationales like that in the territory cases
mentioned above, smaller companies, recent entries into markets (geographic
and product markets) and luxury goods producers will all benefit from this
ruling. However, until future court opinions flesh out how this evidentiary
opportunity will work, each vertical price restraint situation will have to
be analyzed for the availability of cogent evidence for a rule of reason
rather than a per se rationale.
We have many years experience in fashion, design and luxury products
antitrust representation. That head start is very high value to any company
in fashion and luxury goods markets.
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