The Organization for Competitive Markets is extremely disappointed in the U.S. Supreme Court’s decision to further weaken antitrust laws by allowing price fixing.  The ruling, released June 28, reversed the per se rule against resale price maintenance agreements.  These agreements allow manufacturers to fix the prices set by retailers on the store shelf. 

“Agreements to fix prices should always be illegal, whether ADM and Cargill agree to fix prices on high fructose corn syrup, or Kelloggs and the retail supermarkets agree to fix prices on corn flake cereals,” said Keith Mudd, OCM president.  “The law has always been clear that manufacturers cannot require retailers to fix minimum retail prices to consumers.  It was a black and white rule good for consumers because retailers should be able to choose whether to set lower prices.”

The Supreme Court’s five to four decision overturns a 96 year old precedent in a gift to corporations that dominate their product category. 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.

“We neither need nor want activist judges overturning precedent on a whim, merely because they favor big business,” continued Mudd.  “Price fixing should be illegal in all cases.  The market is the best judge of what prices should be, not corporate bureaucrats working for monopolists and cutting price fixing deals with others.”

“Per se” rules in antitrust law mean that certain market conduct is always unlawful, with few or no defenses.  But the court said a “rule of reason” approach is better.  “Rule of reason” cases allow businesses accused of antitrust violations to argue that their conduct is beneficial to consumers and the economy.  Courts in recent years have developed a knee-jerk reflex to accept these defenses.