The Supreme Court ruled today in Leegin v. PSKS that manufacturers can collude with retailers to set the minimum prices of products, arguing that such a decision was good for competition. Succumbing to the court’s recent bender of conservatism is a 96 year-old precedent from Dr. Miles v Park that held minimum price accords as intrinsically – or in legalese, “per se” – illegal. Writing for the majority, swing-Justice Anthony Kennedy showed kiddies the dangers of taking crazy pills:
Minimum price agreements can benefit consumers, Kennedy wrote, by enabling retailers to invest in greater customer service without fear of being undercut by discount rivals. The agreements also could make it easier for new products to compete, he added, because a retailer could recoup the costs of marketing a new good by charging a higher price.
Pardon us for scoffing at the notion that Best Buy might “invest in greater customer service” now that they can work with manufacturers to screw consumers out of an additional $20 for a DVD player. Or as Justice Stevens put it slightly more eloquently in his dissent, “The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail.”
Under the old system, manufacturers could send pricing signals to retailers by way of a Manufacturer Suggested Retail Price (MSRP,) though retailers were free to compete by selling products below MSRP. Under the new system, championed by Justices who promised to respect stare decisis at their confirmation hearings, manufacturers can now use resale price maintenance (RPM) agreements to ban retailers from offering discounts.
Leegin is the 15th ruling this term that harms consumers by shielding businesses and corporations from lawsuits.
Justices End 96-Year-Old Ban on Price Floors [NYT]
Minimum-Price Accords May Be Allowed, Top Court Says [Bloomberg]
Leegin Creative Leather Products v. PSKS (PDF) [Supreme Court]