Date: October 29, 2007 Contact: |
OCM Supports Price Fixing Prohibition
In a letter sent to the Senate Judiciary Committee this week, the Organization for Competitive Markets expressed its support for legislation prohibiting a form of price fixing. A divided Supreme Court issued a five to four decision earlier this year holding that retail price maintenance contracts are not per se illegal. Senators Kohl, Biden and Clinton have introduced the Discount Pricing Consumer Protection Act (S. 2261) to re-establish the longstanding antitrust rule that this form of price fixing is illegal, regardless of claimed justifications. Resale price maintenance is the practice whereby a manufacturer and its distributors agree that the latter will sell the former's product at certain prices (resale price maintenance), at or above a price floor (minimum resale price maintenance) or at or below a price ceiling (maximum resale price maintenance). The majority opinion in the case, Leegin Creative Leather Products, Inc. v. PSKS, Inc., was delivered by Justice Anthony Kennedy, who was joined by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr. The Bush Administration advocated for the position ultimately accepted by the majority. The letter sent by OCM supporting the bill is below. OCM issued a previous comment on the case in this prior news release. |
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November 26, 2007 Senator Patrick J. Leahy Senator Herb Kohl Senator Arlen Specter Senator Orrin G. Hatch Re: Support for S. 2261 Dear Senators: The Organization for Competitive Markets strongly endorses S. 2261, the “Discount Pricing Consumer Protection Act.” This legislation will restore the per se rule banning resale price maintenance agreements. We urge the Judiciary Committee to move this bill forward promptly. OCM generally favors re-instating and protecting per se rules in antitrust jurisprudence. The judicial trend is to allow justifications and defenses to otherwise unlawful conduct to excessively weaken antitrust law. Price fixing should be prohibited in virtually all forms. Without a per se rule prohibiting resale price maintenance agreements, consumers are likely to face higher prices. Efficient discounters will be impaired. Indeed, Nine West Group, Inc., a footwear company, is currently seeking Federal Trade Commission permission to set the resale prices of dealers that sell its products. If the FTC grants the request, consumers will face higher prices for Nine West products than they would otherwise pay in a competitive market. The biggest risk to America’s successful free markets is excessive market power. Competition and innovation can prosper only if bad practices are clearly prohibited. Please favorably consider S. 2261. Respectfully,
Keith Mudd, President |
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The Organization for Competitive Markets is an nonprofit organization working for open and competitive markets as well as fair trade for American food producers, consumers and rural communities.