Early last month, the Kansas Supreme Court delivered a decision in O’Brien v. Leegin Creative Products, holding that resale price maintenance (RPM) is per se unlawful under Kansas law.1 The court found that the U.S. Supreme Court’s 2007 decision in Leegin Creative Leather Products v. PSKS.2 did not require Kansas courts to apply the rule of reason to RPM claims under the Kansas Restraint of Trade Act (KRTA), the state’s analog to Section 1 of the Sherman Act. Resale price maintenance, a vertical restraint under which a manufacturer sets a minimum (or maximum) price at which a dealer may resell its products, restricts intrabrand competition, but has long been recognized as potentially beneficial to interbrand competition. However, owing to federal courts’ early treatment of vertical restraints as similar to horizontal restraints, minimum RPM was traditionally treated harshly under the Sherman Act and was per se unlawful until recently. In 2007, Leegin overturned nearly 100 years of precedent by rejecting the per se rule against minimum RPM in favor of the rule of reason.
The O’Brien court declined to follow Leegin’s reasoning, holding that under Kansas law, RPM is per se unlawful and rejecting the respondents’ argument that the Kansas antitrust statute, like Section 1 of the Sherman Act, should be interpreted to prohibit only unreasonable restraints of trade.3 Wasting little time, the Kansas Legislature immediately introduced a bill with the explicit intention to “correct” the ruling and bring Kansas law in line with federal antitrust law regarding both RPM and other restraints falling under Section 1 of the Sherman Act. Despite easily passing through the Kansas House of Representatives, the bill fell just short of the necessary majority in the Kansas Senate to undo O’Brien. 4
