I was browsing through some articles lately and one of the more recent things that have been passed caught my eye. I was wondering what you the Members of the Debate Hall feel about the lifting of the ban on the Minimum Retail Price. Here is an article on what I am bringing to the table.
Century-Old Ban Lifted on Minimum Retail Pricing
By STEPHEN LABATON
Published: June 29, 2007
WASHINGTON, June 28 — Striking down an antitrust rule nearly a century old, the Supreme Court ruled on Thursday that it was not automatically unlawful for manufacturers and distributors to agree on minimum retail prices.
The decision will give producers significantly more, though not unlimited, power to dictate retail prices and to restrict the flexibility of discounters.
Five justices, agreeing with the nation’s major manufacturers, said the new rule could in some instances lead to more competition and better service. But four dissenting justices agreed with 37 states and some consumer groups that abandoning the old rule could result in significantly higher prices and less competition for consumer and other goods.
The court struck down the 96-year-old rule that resale price maintenance agreements were an automatic, or per se, violation of the Sherman Antitrust Act. In its place, the court instructed judges considering such agreements for possible antitrust violations to apply a case-by-case approach, known as a “rule of reason,” to assess their impact on competition. The new rule is considerably more favorable to defendants.
The decision was handed down on the last day of the court’s term, which has been notable for overturning precedents and for victories for big businesses and antitrust defendants. It was also the latest of a series of antitrust decisions in recent years rejecting per se rules that had prohibited various marketing agreements between companies.
The Bush administration, along with economists of the Chicago school, had argued that the blanket prohibition against resale price maintenance agreements was archaic and counterproductive because, they said, some resale price agreements actually promote competition.
For example, they said, such agreements can make it easier for a new producer by assuring retailers that they will be able to recoup their investments in helping to market the product. And some distributors would be unfairly harmed by others, like Internet-based retailers, which could offer discounts because they would not have the expense of product demonstrations or other specialized consumer services.
A majority of the court agreed that the flat ban on price agreements discouraged these services and other marketing practices that could promote competition.
“In sum, it is a flawed antitrust doctrine that serves the interests of lawyers — by creating legal distinctions that operate as traps for the unaware — more than the interests of consumers — by requiring manufacturers to choose second-best options to achieve sound business objectives,” the court said in an opinion written by Justice Anthony M. Kennedy and signed by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr.
“The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail and that it will create considerable legal turbulence as lower courts seek to develop workable principles,” he wrote. “I do not believe that the majority has shown new or changed conditions sufficient to warrant overruling a decision of such long standing.”
Discuss your thoughts on what could change here, and who would it most affect.
Century-Old Ban Lifted on Minimum Retail Pricing
By STEPHEN LABATON
Published: June 29, 2007
WASHINGTON, June 28 — Striking down an antitrust rule nearly a century old, the Supreme Court ruled on Thursday that it was not automatically unlawful for manufacturers and distributors to agree on minimum retail prices.
The decision will give producers significantly more, though not unlimited, power to dictate retail prices and to restrict the flexibility of discounters.
Five justices, agreeing with the nation’s major manufacturers, said the new rule could in some instances lead to more competition and better service. But four dissenting justices agreed with 37 states and some consumer groups that abandoning the old rule could result in significantly higher prices and less competition for consumer and other goods.
The court struck down the 96-year-old rule that resale price maintenance agreements were an automatic, or per se, violation of the Sherman Antitrust Act. In its place, the court instructed judges considering such agreements for possible antitrust violations to apply a case-by-case approach, known as a “rule of reason,” to assess their impact on competition. The new rule is considerably more favorable to defendants.
The decision was handed down on the last day of the court’s term, which has been notable for overturning precedents and for victories for big businesses and antitrust defendants. It was also the latest of a series of antitrust decisions in recent years rejecting per se rules that had prohibited various marketing agreements between companies.
The Bush administration, along with economists of the Chicago school, had argued that the blanket prohibition against resale price maintenance agreements was archaic and counterproductive because, they said, some resale price agreements actually promote competition.
For example, they said, such agreements can make it easier for a new producer by assuring retailers that they will be able to recoup their investments in helping to market the product. And some distributors would be unfairly harmed by others, like Internet-based retailers, which could offer discounts because they would not have the expense of product demonstrations or other specialized consumer services.
A majority of the court agreed that the flat ban on price agreements discouraged these services and other marketing practices that could promote competition.
“In sum, it is a flawed antitrust doctrine that serves the interests of lawyers — by creating legal distinctions that operate as traps for the unaware — more than the interests of consumers — by requiring manufacturers to choose second-best options to achieve sound business objectives,” the court said in an opinion written by Justice Anthony M. Kennedy and signed by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr.
“The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail and that it will create considerable legal turbulence as lower courts seek to develop workable principles,” he wrote. “I do not believe that the majority has shown new or changed conditions sufficient to warrant overruling a decision of such long standing.”
Discuss your thoughts on what could change here, and who would it most affect.