U.S. Supreme Court Decision Has Implications For Cross-Border Manufacturers And Distributors

Originally published in Blakes Bulletin on Competition Law, September, 2007

In the recently decided case of Leegin Creative Leather Products, Inc. v. PSKS, Inc., the U.S. Supreme Court overturned the outright ban on agreements between suppliers and customers regarding minimum resale prices. That ban was created in 1911 as a result of the case of Dr. Miles Medical Co. v. John D. Park & Sons Co., which stood for the proposition that such agreements were per se (or, inherently) illegal and were not to be evaluated in light of their surrounding circumstances.

The Court in Leegin, however, held that the per se illegality test will not apply to these agreements. Instead, they must be examined pursuant to the rule of reason test; in other words, the U.S. courts must now consider the parties’ market power and assess the effect that such impugned agreements have on competition in the relevant market.