Free Minds, Slightly More Expensive Markets


Peter Barile at the liberal American Constitution Society's blog flags the case of Leegin Creative Leather Products, Inc. v. PSKS, Inc, argued before the SCOTUS yesterday.

A fundamental rule of our free-market system is at stake in Leegin v. PSKS: the rule that manufacturers may not prevent retail discounting by colluding with dealers to fix the prices at which their products are sold at retail. The question presented is whether such minimum resale price maintenance ("RPM") agreements should continue to be per se illegal or, rather, should be evaluated under a very lenient standard, which in antitrust parlance is called the "rule of reason."

When employed, RPM prevents consumers from "shopping around" for the best price because it prevents retailers from putting on sale any and all types of products, including not only large purchases, but also everyday purchases—from groceries to gasoline. Because of the per se rule against RPM, consumers have saved hundreds of billions of dollars over the years, while the retailing industry has progressed from small shops to department stores to discount warehouses to, most recently, online commerce. Abandoning the per se rule in favor of rule of reason would provide cold comfort to American consumers; for it is widely recognized that to accord RPM a rule of reason treatment would effectively make RPM legal.

Short version: Hey, don't you like getting those $20 sale copies of 24 from Amazon ("You might also be interested in: The War Against the Terror Masters by Michael Ledeen; Twin Peaks: Fire Walk With Me by David Lynch")? Too bad. Soon, companies will have to agree to the price set by manufacturers.

This strikes me as a Constitutionally correct-yet-lousy idea, but I'd like to hear arguments to the contrary. (I imagine they'll sound like the FairTax arguments, as the prices businesses set will end up being so close to their old retail prices that no one will notice.)

(Via Slashdot.)