Franchisor Price Fixing: What Does Leegin Really Mean for Franchising?

By now, everyone seriously involved in the practice of franchise law is aware of <i>Leegin Creative Leather Products, Inc. v. PSKS, Inc.</i>, 2007 WL 1835892 (S. Ct. June 28, 2007). The Supreme Court in <i>Leegin</i> held that vertical resale price maintenance is no longer unlawful in and of itself. Although hailing the decision as overruling a nearly 100-year prohibition on minimum price fixing, the pundits writing in the wake of <i>Leegin</i> have nevertheless hedged their bets on just how revolutionary the decision is. Their constant mantra is this: <i>Leegin</i> does not open the door to unrestrained resale price maintenance, but rather changes the rules under which courts will evaluate sales agreements setting minimum prices. No longer will courts treat them as unlawful <i>per se</i>; they will now evaluate their legality under something called 'the rule of reason.' If a court (or jury) concludes that an agreement establishing a minimum price is an 'unreasonable restraint of trade,' then the supplier has violated the antitrust laws. If the threat of treble damages from such a finding isn't sobering enough, writers warn us that courts may interpret state 'baby Sherman Acts' as still making resale price maintenance unlawful <i>per se</i>, regardless of what the U.S. Supreme Court says.

20 minute read August 31, 2007 at 10:51 AM

By

William L. Killion