Distribution, Competition, and Antitrust / IP Law

Enforcing Online Resale Prices Can Be Problematic

Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007), held that resale price maintenance – even minimum resale price maintenance – is not per se illegal under federal antitrust laws. However, resale price maintenance, or RPM, remains vulnerable to attack under various state laws. In California v. Bioelements, Inc., Cal. Superior Ct. (Riverside County, Jan. 11, 2011), the California Attorney General reached an agreement with a cosmetics company to resolve charges brought under the Cartwright Act and California’s Unfair Competition Law that the company had engaged in price-fixing by prohibiting retailers from selling products online at a discount from suggested retail prices. The Attorney General did not charge that products sold in brick-and-mortar stores were subject to any similar agreement. The settlement agreement contemplates injunctive relief and civil penalties. Bioelements cautions that RPM remains problematic, and illustrates the limits of what manufacturers can do to address tensions between online and brick-and-mortar distribution – e.g., tensions caused by the perception that online retailers may “free ride” on the efforts of brick-and-mortar distributors.

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.

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