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Dr. Miles is Dead. Now What?: Structuring a Rule of Reason for Evaluating Minimum Resale Price Maintenance

61 Pages Posted: 4 Sep 2008  

Thomas A. Lambert

University of Missouri - School of Law

Date Written: September 4, 2008

Abstract

In Leegin Creative Leather Prods., Inc. v. PSKS, Inc., decided in 2007, the U.S. Supreme Court overruled its 1911 precedent declaring vertical minimum resale price maintenance (RPM) to be per se illegal. The Leegin Court held that the practice should instead be examined on a case-by-case basis under antitrust's rule of reason. The Court further exhorted the lower courts to craft a "structured" rule of reason for evaluating RPM. This article critiques six approaches that have been proposed for evaluating minimum RPM and offers an alternative approach. The six approaches critiqued are (1) the Brandeisian, unstructured rule of reason; (2) Judge Posner's rule of per se legality; (3) the approach advocated by 27 states in the recent Nine West case; (4) the approach adopted by the Federal Trade Commission in that case; (5) the approach advocated by economists William Comanor and F.M. Scherer; and (6) the approach proposed in the Areeda & Hovenkamp Antitrust Law treatise. Finding each of these approaches deficient, the article proposes an alternative evaluative approach that harnesses economic learning and allocates proof burdens in a manner that minimizes the sum of decision and error costs, thereby maximizing the net social benefits of RPM regulation.

Keywords: antitrust, Dr. Miles, Leegin, resale price maintenance, rule of reason, vertical price restraints, vertical restraints, vertical-price fixing

Suggested Citation

Lambert, Thomas A., Dr. Miles is Dead. Now What?: Structuring a Rule of Reason for Evaluating Minimum Resale Price Maintenance (September 4, 2008). University of Missouri School of Law Legal Studies Research Paper No. 2008-25. Available at SSRN: https://ssrn.com/abstract=1263376 or http://dx.doi.org/10.2139/ssrn.1263376

Thomas Andrew Lambert (Contact Author)

University of Missouri - School of Law ( email )

Missouri Avenue & Conley Avenue
Columbia, MO 65211
United States

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