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Leegin, The Political Backlash

Roger Blair, Jessica Haynes, Jan 25, 2010

In 1911, the Supreme Court addressed resale price maintenance (“RPM”) for the first time. Although RPM is a vertical price restraint, the Court treated it as a horizontal restraint and found RPM to be illegal per se. This, we believe, was an error that went uncorrected for nearly 100 years. Finally, in 2007, the Court got it right and made RPM subject to rule of reason analysis. Now, several states legislatures are trying to roll back the clock and restore the per se illegality of RPM. This, we argue, is a mistake based on faulty economic reasoning. We support our contention by explaining briefly pro-competitive as well as anticompetitive uses of RPM. We then examine the antitrust treatment of RPM and the states’ reactions to the current antitrust status of RPM.

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