In Leegin Creative Leather Products, Inc. v. PSKS, Inc., the U.S. Supreme Court held that resale price maintenance (RPM) agreements are to be judged under the rule of reason. An RPM agreement is an agreement between a manufacturer and retailers stipulating that retailers will charge a certain price for the manufacturer's products. This Note argues that the Supreme Court should have instructed lower courts to consider intertype competition in addition to interbrand and intrabrand competition when evaluating RPM agreements under the rule of reason. Two reasons lead to this conclusion. First, the Internet has invigorated intertype competition and has made it an important competitive force in the economy. Resale price maintenance agreements have the potential to harm intertype competition; therefore, courts should consider intertype competition when applying the rule of reason. Second, the growth of online retailing has challenged the traditional rationales for RPM agreements. Online retailers may not react to an RPM agreement in the same way as traditional retailers, and the existence of online retailers now makes it more difficult for courts to determine whether an RPM agreement is necessary for a manufacturer to prevent free riding. If courts would consider intertype competition when applying the rule of reason, they would more accurately and fairly assess the competitive effects of these agreements.
Daniel B. Nixa,
Internet Retailers and Intertype Competition: How the Supreme Court's Incomplete Analysis in Leegin v. PSKS Leaves Lower Courts Improperly Equipped to Consider Modern Resale Price Maintenance Agreements,
11 Vanderbilt Journal of Entertainment and Technology Law
Available at: https://scholarship.law.vanderbilt.edu/jetlaw/vol11/iss2/5