In Leegin Creative Leather Prods., Inc. v. PSKS, Inc., the Supreme Court
overruled Dr. Miles Medical Co. v. John D. Park & Sons Co., holding that
minimum resale price maintenance (RPM) is no longer per se illegal. Since
then, much has been written on how to evaluate minimum RPM under
Section 1 of the Sherman Act. Some mourn Dr. Miles’ passing, while
others celebrate it. Many of the commentators accept the Leegin majority’s
invitation to develop a structured rule of reason for minimum RPM,
although there is very little agreement on what the new rule should be.
Meanwhile, the lower courts and the Federal Trade Commission (FTC)
have been trying their hands at interpreting and applying Leegin. These
attempts to develop a structured rule of reason have been about as
consistent as those of the commentators. Finally, and at least in part in
response to some of the lower courts’ post-Leegin decisions, Congress is
now considering Leegin-repealer legislation.
In all the discussion of liability standards, one important impact of
Leegin has been largely ignored: what impact, if any, does Leegin have on the
standard for proving a minimum RPM “agreement” under section 1 of the
Sherman Act. In other words, when Leegin overruled Dr. Miles, did it also
call into question cases such as United States v. Colgate & Co., Monsanto Co. v.
Spray-Rite Service Corp., and Business Electronics Corp. v. Sharp Electronics
Corp., which sought to limit the effect of Dr. Miles by limiting what would
qualify as an RPM “agreement?” With Dr. Miles no longer in need of
limitation, can or should the holdings of these later cases survive?
The demise of Dr. Miles, while seemingly tragic from the perspective of
aggressive antitrust enforcement, may actually lay the foundation for the
development of new and even more robust vertical price fixing enforcement,
unconstrained by the artificial distinctions of Colgate, Monsanto and Business
Electronics. Antitrust enforcers now have an unprecedented opportunity to
work towards a world where litigants seeking to prove a minimum RPM
agreement no longer focus on “formalistic line drawing” and instead focus
on the restraint’s actual “economic effects.”