California Challenges Minimum Resale Price Maintenance as Per Se Illegal

In the 2007 Leegin Creative Leather v. PSKS case, the Supreme Court held that, under the federal antitrust laws, minimum vertical resale price fixing agreements are no longer per se illegal, but governed by the rule of reason, like maximum resale price fixing. Antitrust observers were quick to point out that over 30 states had laws that would continue to treat these kinds of agreements as per se illegal. A February 2010 settlement by the California Attorney General's office, California v. DermaQuest, is a recent reminder that state attorneys general have in fact continued to view vertical price fixing or "resale price maintenance" agreements as appropriate enforcement targets.

The California AG claimed that DermaQuest, Inc., a seller of beauty-care products, had entered into per se illegal vertical price fixing agreements with its distributors, in violation of California's antitrust law, the Cartwright Act, codified in Section 16720 of California's Business and