Andrew Gavil, Jun 14, 2010
The conventional wisdom today holds that the federal law of vertical restraints in the United States has been “harmonized.” Thanks to the U.S. Supreme Court’s 2007 decision in Leegin, the nearly century-old per se rule that absolutely banned minimum resale price maintenance (“RPM”) has been abandoned. The more economically sound approach of the Court’s 1977 decision in Sylvania, which held that non-price intrabrand restraints should be judged under the “rule of reason,” has been extended to price restraints, which were largely indistinguishable in effect. As a consequence, vertical intrabrand price and non-restraints will be treated alike-both are presumptively unlikely to significantly harm competition. Suppliers may now freely choose from a full pallet of vertical restraints to accomplish their marketing goals, provided they do not unreasonably restrain trade in some very specific, narrowly defined ways.
The true picture is far less clear. Three years after Leegin, the state of RPM in the United States is surprisingly uncertain, and that uncertainty is a reminder of the complexity of the U.S. competition policy system. Many voices can now be heard in the post-Leegin debate-federal, state, public, and private-and at least three camps have formed. Whereas some would overrule Leegin and restore the per se rule of Dr. Miles, others would work within Leegin, accepting its invitation to develop a structured and tailored approach to applying the rule of