Distribution, Competition, and Antitrust / IP Law

Is Resale Price Maintenance Illegal Under New York Law?

In People v. Tempur-Pedic International, Inc. (May 8, 2012), the appellate division of the New York Supreme Court affirmed a trial court’s decision dismissing the New York Attorney General’s complaint and finding  that Tempur-Pedic had not violated New York General Business Law Section 369-a by entering into Resale Price Maintenance (RPM) agreements with its retailers.

The appellate court agreed with the trial court that Section 369-a does not make RPM illegal as a matter of law — it only provides that RPM agreements will not be enforceable or actionable at law.  In other words, manufacturers cannot enforce RPM agreements under New York law, but they do not violate the law by entering into such agreements.

The appellate court also found that the Attorney General did not actually establish any RPM agreements, but merely that Tempur-Pedic had enacted its minimum price policy and that retailers independently decided to acquiesce to the pricing scheme in order to continue carrying Tempur-Pedic products.  An agreement as to advertising (apparently a sort of coop advertising program) could not be the subject of a vertical RPM claim, the court ruled, because such an agreement does not restrain resale prices, but merely restricts advertising.

This decision largely keeps New York law consistent with federal law and many other states’ laws — although New York is somewhat unique in not allowing the parties to RPM agreements to enforce them in court.

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.

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  1. […] and distribution law issues lurking in many retail networks.  See, e.g., the Tempur-Pedic case I reported on earlier today. Share […]

  2. […] bookend my recent discussion of the New York appellate division’s decision in Tempur-Pedic, I’ll mention here the […]

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