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Supreme Court Considers Price Fixing Agreements

By Cynthia M. Klaus and Sejal Desai Winkelman
June 28, 2007

Franchisors and franchisees alike are awaiting a decision from the U.S. Supreme Court that could change the marketing and promotional practices of franchisors and distributors. In PSKS, Inc. d/b/a Kay's Kloset v. Leegin Creative Leather Products, Inc., the Supreme Court heard challenges to the application of the per se rule to vertical minimum price fixing agreements under antitrust law, and some commentators believe that the Court will overturn this requirement, which was adopted almost a century ago in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911).

In 1995, Leegin, a manufacturer of Brighton women's accessories, began selling its product to PSKS, a women's clothing and accessories specialty store. Shortly thereafter, Leegin instituted the 'Brighton Retail Pricing and Promotion Policy,' stating it would do business only with retailers that follow its suggested retail prices for Brighton products. Leegin made clear that it would not do business with retailers who engaged in discounting Brighton products. Leegin later introduced the 'Heart Store Program,' a marketing initiative designed to provide incentives to Brighton retailers to promote the brand within a separate section of their stores. To become a Brighton Heart Store, retailers had to pledge to 'follow the Brighton Suggested Retail Pricing Policy at all times.'

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