Resale Price Maintenance Agreements

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Resale Price Maintenance Agreements or (RPM) are arrangement where resellers agree that they will sell product or products at certain prices at or above price floor (minimum RPM) or at or below a price ceiling (maximum RPM). 

Early in the 20th century RPM agreements were per se illegal under federal antitrust law.  That changed in 1997 when U.S. Supreme Court in State Oil v. Khan[1] proclaimed that per se rule no longer applies to agreements setting maximum resale price and that they should be analyzed under the rule of reason. A couple of years later in Leegin,[2] U.S. Supreme Court also removed per se ban from minimum resale price arrangements making them subject to the rule of reason as well. 

However, states have their own antitrust laws. In general, federal law does not prevent states from having their own antitrust laws that conflict with federal law or providing different remedies compared to those available under the federal law. Even though the majority of states applies federal antitrust law (rule of reason) to RPM there are still some states with more stringent review. For example, Maryland and California have their own state RPM statutes; and, there RPM is considered to be a per se violation[3] Some states still treat RPM unfavorably, even though they do not consider it a per se violation. In New York, pricing arrangements are unenforceable but not actionable and Illinois continues to regularly challenge vertical price arrangements pushing settlements.[4]

 

Last update in March of 2020 by Krystyna Blokhina Gilkis

[1] State Oil Co. v. Khan, 522 U.S. 3 (1997).

[2] Leegin Creative Leather Products Inc. v. PSKS, Inc., 551 U.S. 877 (2007).

[3] Under Cartwright Act (CA) vertical price restrains are per se unlawful.

[4] People v. Tempur-Pedic Int’l, Inc., 95 A.D.3d 539, 539 (N.Y. App. Div. 2012); State v. Herman Miller, Inc., No. 08-2977 (S.D.N.Y. filed Mar. 21, 2008).