Jan

19

Posted by : Matthew Wild | On : January 19, 2011

On January 11, 2011, Bioelements and the California Attorney General entered into a consent decree that enjoins Bioelements from entering into any agreements with retailers and distributors concerning what price they may charge for Bioelements’ products and to send notice to all retailers and distributors that any such polices are immediately rescinded.  The action was brought in California Superior Court under the Cartwright Act, which the California Attorney General has interpreted to provide per se treatment for resale price maintenance in contrast to Section 1 of the Sherman Act after Leegin.  See March 12, 2010 Post.  Notably, the injunction extends to all of Biolelements’ transactions even if they take place outside of California.  Bioelements also had to pay $51,000 in fines and expenses.  This action is a cautionary tale that companies cannot rely on Leegin that resale price maintenance will be subject to lenient rule of reason treatment.  A number of state attorneys general have brought resale price maintenance actions under their state laws and Maryland amended its antitrust law expressly to prohibit resale price maintenance.

Oct

29

Posted by : Matthew Wild | On : October 29, 2009

In letters dated October 27, 2009 (State AG Letter re HR 3190; State AG Letter re S 148), 41 state attorneys general wrote to Congress asking them to overrule Leegin Creative Leather Product, Inc. v. PSKS, Inc., 551 U.S. 877 (2007).  In Leegin, the Supreme Court held that resale price maintenance — the practice in which a manufacturer requires a retailer to sell its products at a certain price — was subject to the rule of reason.  In doing so, the Court overruled Dr. Miles Medical Co. v. John D. Park & Sons, Co., 220 U.S. 373 (1911), which held that resale maintenance is a per se violation of section 1 of the Sherman Act.  The state attorneys general urge passage of H.R. 3190, which provides that “[a]ny contract, combination, conspiracy or agreement setting a minimum price below which a product or service cannot be sold by a retailer, wholesaler or distributor shall violate section 1 of the Sherman Act.”  As reported in the May 23, 2008 Post, 35 state attorneys general wrote to Congress on May 8, 2008 asking that it enact nearly identical legislation (S. 2261).

Practitioners should know that resale price maintenance can still be a per se violation of state antitrust laws.  As reported in the May 4, 2009 Post, Maryland enacted such a law.  And as reported in the March 31, 2008 Post, the New York, Michigan and Illinois attorneys general brought an action against Herman Miller in which they alleged that Herman Miller’s resale price maintenance program was a per se violation of their state antitrust laws.  Herman Miller entered into a consent decree.

May

04

Posted by : Matthew Wild | On : May 4, 2009

Maryland has amended its antitrust law to make resale price maintenance agreements per se illegal, thus overruling Leegin Creative Leather Products v. PSKS, 127 S.Ct. 2705 (2007).  In Leegin, the Supreme Court overruled Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911), and held that a resale price maintenance agreement in which the manufacturer requires a reseller to sell at a certain price is no longer a per se violation of Section 1 of the Sherman Act but instead is subject to rule of reason analysis.  Application of the rule of reason creates a burden on plaintiffs because they have to show that the restraint had an adverse effect on the relevant market and not just the price of the manufacturer’s goods that were subject to restraint.  This abrupt change in the law has been poorly received by state antitrust authorities.  As reported in the May 23, 2008 Post, 35  state attorneys general petitioned Congress to amend the Sherman Act to overrule Leegin.  And as reported in the March 31, 2009 Post, the state attorneys general of New York, Illinois and Michigan obtained a consent decree against Herman Miller in the United States District Court for the Southern District of New York for resale price maintenance involving the Aeron chair.  Their position was that their state antitrust law do not recognize the departure by Leegin and still provide that resale price maintenance is a per se offense.


May

23

Posted by : Matthew Wild | On : May 23, 2008

The state attorneys general continue to be hostile to the Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007), which overruled Dr. Miles Medical Co. v. John D. Parke & Sons. Co., 220 U.S. 373 (1911), and made resale price maintenance subject to the rule of reason under Section 1 of the Sherman Act. 35 state attorneys general have written to Congress asking that it pass S. 2261 which would make resale price maintenance a per se violation of Section 1.  State Attorney General Letter; S. 2261.  The March 31, 2008 post reported that the New York, Michigan and Illinois attorneys general obtained a consent decree under state law against Herman Miller for its resale price maintenance scheme. The May 8,2008 post reported that although the FTC modified Nine West’s consent decree that had prohibited resale price maintenance, the FTC reminded Nine West that it was still subject to state restrictions. This most recent letter further confirms that counselors must be cognizant of state law when they advise clients about the legality of resale price maintenance. It would be prudent for clients to act unilaterally and follow the Colgate doctrine rather than rely on Leegin.

Mar

31

Posted by : Matthew Wild | On : March 31, 2008

On March 21, 2008, Herman Miller, Inc. entered into a consent decree with the attorneys general for New York, Michigan and Illinois to resolve allegations of resale price maintenance over its Aeron chair — an ergonomic desk chair. Filed in the United States District Court for the Southern District of New York, the Complaint alleged that Herman Miller used its Suggested Retail Price policy to enforce a resale price maintenance scheme over the Aeron chairs. According to the Complaint, Herman Miller coerced retailers to agree not to advertise or discount Aeron chairs below Herman Miller’s Suggested Resale Price or a pre-determined discount set by Herman Miller. The states alleged violations of Section 1 of the Sherman Act and the New York, Illinois and Michigan antitrust statutes. Although this action was brought after the Supreme Court in Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007), held that resale price maintenance was subject to analysis under the rule of reason (and no longer a per se violation of Section 1), the Complaint pled only a per se violation. The consent decree requires Herman Miller to refrain from resale price maintenance and enforcement of its Suggested Retail Price policy for all of its products. Herman Miller also was required to pay a $750,000 fine. This case serves as a cautionary tale to manufacturers who take too much comfort from Leegin. With aggressive enforcement by state attorneys general and potential litigation by terminated retailers under more stringent state laws, manufacturers would be well advised to act unilaterally under the Colgate doctrine. They are free to terminate discounters unilaterally but should not require retailers to agree to adhere to resale prices as a condition of receiving shipments. Similarly, to reduce the chance that any termination of a discounter could be considered the product of a conspiracy between the manufacturer and other retailers, manufacturers should refuse to listen to complaints from retailers about discounting. The Herman Miller Complaint and Consent Decree are attached. Herman Miller Complaint; Herman Miller Consent Decree