Re: Suprised to see at Williams-Sonoma

You're doing a good job explaining this. Currently, "resale price
maintenance" (requiring retailers to charge a minimum price) is a "per se"
(automatic) violation of the anti-trust laws (there are various tricks
around it, such as withholding coop advertising money unless you do not
advertise a lower price, but in the end the manufacturer cannot legally
dictate what a retailer charges a consumer). In the current case, the
defendant is arguing that the "rule of reason" standard should apply - that
sometimes such schemes can be justified because they result in better
service to the customer and you should have to prove that there were actual
anti-competitive effects in each case vs. nowadays where such cases are a
slam-dunk - all you have to prove is the existence of the resale price
maintenance scheme - the anti-competitive (and therefore illegal)
consequences are assumed to exist. The argument is that "per se" rules
should only exist when the conduct almost always tends to lead to the result
(in this case reduced competition). For example, in automobile cases, it is
"negligence per se" if you drive thru a red light. You don't have to provide
expert testimony in each case that driving thru a red light is not a good
idea. The argument for changing the rule is that modern economic research
shows that in some cases resale price maintenance has good (competition
enhancing) effects - for example it can lead to better customer service - if
retailers can compete freely on price, there is a race to the bottom as the
retailer who provides better service cannot charge for it - people will use
his "free" services - visit his showroom, pick his salespeople's brains, go
to him for after sale-support and then order from the discounter if the
discounter charges one nickel less, so everyone ends up providing no
services (the result has been that you could die before you find
knowledgeable sales help on the floor of most modern American retailers).
The leather goods retailer wants to be able to prove in this particular case
the good effects outweighed the bad but under current law the jury can't
consider this at all - again it's just assumed to be automatic bad.


I am betting that they will not change the rule. You have 2 blocs on the
court that are against this for different reasons - the "left" bloc
considers the current system as something that generally saves poor people
money (and it does, at the expense of service). The "conservative" block
thinks that this rule has been around for almost 100 years and believes that
S. Court precedents should rarely be overturned, or that it should be up to
Congress to mess with such long standing rules (also right IMHO). So that
all that is left is the economic libertarian argument, which is basically
that the government should not mess with privately reached agreements or
take sides in the fight between manuf. and retailers and consumers but let
the free market set the balance of where this fight comes out. This
argument has a certain theoretical appeal but we really don't have a true
free market system in this country - the left likes to mess with the market
for redistributionist reasons, the right likes to mess with the market for
moralistic/ religious reasons, so the constituency for a pure libertarian
system is rather small and usually less than 5 votes on the SC.


"D. Ross" <ross@xxxxxxxxxxxxxxxxxxxxxx> wrote in message
news:4609b29e.80536635@xxxxxxxxxxxx
| > Well, not always twice; they tend to charge MSRP (which might well
become
| > minimum selling price, depending on a case currently before the
Supreme
| > Court).
|
|
| What case is that?

This is a biggie to be flying below everyone's radar. Yesterday the Court
heard testimony on a case which might cause them to overturn the "Dr.
Miles"
rule of the Sherman Act, which since 1911 has said that
distributors/manufacturers cannot force retailers to sell at or above a
minimum price. Right now, for example, if a Gaggia dealer wants to run a
sale and sell the Carezza for $25, they can do so. If the rule is
changed,
the distributor can force them to stop on pain of having their machine
supply cut off. (This is essentially what the current case is about: a
high-end handbag company feels that one dealer cheapened the product by
running unauthorized sales.)

The lawyers on a.c can probably render what I said above more correct!

- David R.
--
Less information than you ever thought possible:
http://www.demitasse.net


.

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