Discount Pricing Consumer Protection Act

From 1911 in the Dr. Miles decision until June 2007 in the Leegin decision, the Supreme Court had ruled that the Sherman Act forbid in all circumstances the practice of a manufacturer setting a minimum price below which any retailer, wholesaler or distributor could not sell the manufacturer’s product (the practice of resale price maintenance or vertical price fixing).

The rule of per se illegality forbidding resale price maintenance promoted price competition and the practice of discounting all to the substantial benefit of consumers and the health of the economy.

Many economic studies showed that the rule against resale price maintenance led to lower prices and promoted consumer welfare.

Abandoning the rule against resale price maintenance will likely lead to higher prices paid by consumers and substantially harms the ability of discount retail stores to compete. For 40 years prior to 1975, Federal law permitted states to enact so-called fair trade laws allowing vertical price fixing. Studies conducted by the Department of Justice in the late 1960s indicated that retail prices were between 18 and 27 percent higher in states that allowed vertical price fixing than those that did not. Likewise, a 1983 study by the Bureau of Economics of the Federal Trade Commission found that, in most cases, resale price maintenance increased the prices of products sold.

The 5–4 decision of the Supreme Court majority in Leegin incorrectly interpreted the Sherman Act and improperly disregarded 96 years of antitrust law precedent in overturning the per se rule against resale price maintenance.

to correct the Supreme Court’s mistaken interpretation of the Sherman Act in the Leegin decision; and

to restore the rule that agreements between manufacturers and retailers, distributors or wholesalers to set the minimum price below which the manufacturer’s product or service cannot be sold violates the Sherman Act.