On June 28, the United States Supreme Court issued its decision in Leegin Creative Leather Products v. PSKS, Inc. That decision abolishes a 96-year-old prohibition on vertical minimum pricing agreements between manufacturers and retailers. Leegin marks the death knell for Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911), which held that all minimum vertical pricing restraints, without exception, are unlawful violations of the Sherman Antitrust Act.
Although the Court’s decision in Leegin will allow brand owners the ability to set minimum prices for their goods, they must be all the more cautious of running afoul of the antitrust laws. Following Leegin, there is greater freedom, but no clear-cut rule to follow. Instead, minimum vertical price restraints are to be judged by the rule of reason, which examines the circumstances underlying each restraint to determine whether its impact on competition is lawful. Brand owners, therefore, must be mindful of the tension between controlling how retailers market their brands and stifling competition.
