Are Manufacturer-imposed price restrictions Illegal?
November 2, 2015
Many of our clients are retailers who have been subjected to price restrictions from manufacturers, whether in the form of minimum advertised pricing (MAP), unilateral pricing policies (UPP), or resale price maintenance (RPM).
In fact, it is one of the most common situations our clients encounter. In many ways, the explosion of e-commerce has been good for consumers but bad for less-efficient brick-and-mortar retailers, who cannot effectively compete on price with high-volume, low-margin internet retailers. These less-efficient retailers, however, still make up a significant percentage of the market and have long-established relationships with manufacturers and distributors. In some cases, they have unique advantages in influencing manufacturers. Disruptive innovation invariable leads the old guard to use whatever tools it can to maintain their position in the market. Sometimes they use interest-group politics: for example, cab companies that seek municipal intervention against Uber. But more often they convince manufacturers to implement pricing restrictions to make the market less competitive.
Following the U.S. Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877, 890 (2007), resale price maintenance is no longer per se illegal. Whether an antitrust violation has occurred thus depends on the facts and circumstances specific to you and the market in which you operate. Recourse may also be available through state competition laws, consumer protection laws, contract, and business tort laws. If you have been unwillingly subjected to price restrictions, you should consult an experienced antitrust attorney. Please contact us for more information.