Legislation introduced in October by Senator Herb Kohl (D-Wis.), co-sponsored by Senators Biden (D-Del.) and Clinton (D-N.Y.), aims to reverse the Supreme Court’s recent decision in Leegin Creative Leather Products Inc. v. PSKS Inc., and once again make vertical minimum resale price fixing arrangements per se unlawful under the Sherman Act. If enacted, the Discount Pricing Consumer Protection Act (S. 2261) would effectively reinstate the 96-year-old precedent from the 1911 Supreme Court decision in Dr. Miles Medical Co. v. Hohn D. Park & Sons Co., banning arrangements by manufacturers that impose minimum price restrains on retailers. Under the landmark 5-4 decision in the Leegin case, such arrangements are now analyzed under “rule of reason” on a case-by-case basis.
The proposed legislation follows a series of hearings in August before the US Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, conducted to analyze the likely impact of the Leegin decision. Among the experts testifying before the committee was Federal Trade Commission (FTC) commissioner Pamela Jones Harbour. Harbour, one of the two commissioners voting against the FTC’s amicus brief supporting a rule of reason analysis, sent an open letter to the Supreme Court urging the justices to uphold Dr. Miles. Harbor testified: “It remains speculative and theoretical to say that minimum vertical price fixing is almost always good for consumers. On the other hand, it is extremely likely that retail prices for thousands of products will go up in the wake of Leegin, with no countervailing benefits – which clearly is not good for consumers.” Senator Kohl, who served as president of his family’s department store chain Kohl’s Corp. from 1970 to 1979, added “I know firsthand the dangers to competition and discounting of permitting the practice of vertical price fixing.”