The Supreme Court in the United States has recently overturned a 96 year old precedent that resale price maintenance (RPM) is per se illegal. The precedent was set in Dr Miles Medical Co. v John D Park & Sons Co., 220 U.S. 373 (1911).
Whilst the economics literature has said for some time that RPM can be pro as well as anti-competitive, this is a major shift in antitrust law in the United States and it begs the question when and what type of RPM is going to be allowed and will the trend towards allowing RPM be followed in Australia? If so, the potential commercial impacts are huge.
Background facts
In the case of Leegin Creative Leather Products, Inc. v PSKS, Inc., No. 06-480 at 6 (2007), the facts are straightforward: Leegin refused to sell to retailers that sold its products below a minimum resale price. As a result of this policy, Leegin stopped selling its goods to PSKS who filed a federal lawsuit against Leegin. The trial Court found that Leegin’s minimum resale price
