Leegin Creative Leather Products v. PSKS, Inc.
Issues
Should the Court review resale price maintenance agreements on a case-by-case basis instead of holding such agreements illegal on their face, given that resale price maintenance could enhance competition and benefit consumers?
Kaye’s Kloset, a boutique apparel store in Texas, claims that Leegin Creative Leather Products, a manufacturer of brand-name leather products, has violated U.S. antitrust law by requiring retailers to maintain a price floor on Brighton-brand accessories. Under Supreme Court precedent, resale price maintenance (RPM) agreements are per se illegal. However, Leegin argues that RPM agreements should instead be evaluated under a rule of reason because RPM has significant pro-competitive effects. Kaye’s Kloset responds that RPM is never pro-competitive and thus the per se rule against RPM should stand. In this case, the Supreme Court will re-examine the economics of a controversial marketing strategy. The Court’s decision will impact how manufacturers distribute their products, how industries market these products, and how consumers shop for these products.
Questions as Framed for the Court by the Parties
This Court has held that antitrust “per se rules are appropriate only for conduct that . . . would always or almost always tend to restrict competition.” Modern economic analysis establishes that vertical minimum resale price maintenance does not meet this condition because the practice often has substantial competition-enhancing effects. The question presented is whether vertical minimum resale price maintenance agreements should be deemed per se illegal under Section 1 of the Sherman Act, or whether they should instead be evaluated under the rule of reason.
Leegin Creative Leather Products (“Leegin”) is a California-based leather manufacturer that produces and markets women’s accessories. Brief for Petitioner at 2.
The authors would like to thank for Professor George Hay for his insight into this case.