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Why the New Evidence on Minimum Resale Price Maintenance Does Not Justify a Per Se or 'Quick Look' Approach

11 Pages Posted: 4 Dec 2013 Last revised: 5 Dec 2013

Thomas A. Lambert

University of Missouri - School of Law

Michael E. Sykuta

University of Missouri at Columbia - Contracting and Organizations Research Institute (CORI); University of Missouri at Columbia - Division of Applied Social Sciences

Date Written: November 1, 2013

Abstract

The battle over the proper legal treatment of minimum resale price maintenance (RPM) continues to rage in the United States. While the U.S. Supreme Court’s 2007 Leegin decision abrogated the per se rule of the 1911 Dr. Miles decision and required that RPM be evaluated under antitrust’s Rule of Reason, policy makers and commentators have divided over what a Rule of Reason inquiry should look like. Many have pushed for a “quick look” approach that would effectively deem instances of minimum RPM to be presumptively unreasonable in numerous situations. Others, including one of the authors here, have advocated a full-blown Rule of Reason that places a heavy burden on RPM challengers. At the state level, a number of states have declined to follow Leegin and will continue to deem minimum RPM to be per se illegal under state antitrust law.

A recent study by University of Chicago economists Alexander MacKay and David Aron Smith purports to show that states following Leegin, rather than maintaining their old rules of per se illegality, have experienced anticompetitive effects in the form of higher prices for, and reduced output of, household consumer goods. The study thus provides ammunition to those advocating state rules of per se illegality and a federal “quick look” approach.

Examined closely, the MacKay & Smith study fails to establish that adherence to stricter RPM rules results in procompetitive benefit. It therefore cannot overcome the persuasive theory- and evidence-based arguments for assessing minimum RPM under a full-blown Rule of Reason. This essay summarizes those arguments and explains why the MacKay & Smith study cannot refute them.

Keywords: antitrust, minimum, resale, price, maintenance, RPM, Miles, rule of reason, Mckay, Leegin

JEL Classification: K21, L4, L42

Suggested Citation

Lambert, Thomas A. and Sykuta, Michael E., Why the New Evidence on Minimum Resale Price Maintenance Does Not Justify a Per Se or 'Quick Look' Approach (November 1, 2013). CPI Antitrust Chronicle November 2013 (1); University of Missouri School of Law Legal Studies Research Paper No. 2013-20. Available at SSRN: https://ssrn.com/abstract=2363139

Thomas Andrew Lambert (Contact Author)

University of Missouri - School of Law ( email )

Missouri Avenue & Conley Avenue
Columbia, MO 65211
United States

Michael E. Sykuta

University of Missouri at Columbia - Contracting and Organizations Research Institute (CORI) ( email )

135 Mumford Hall
Columbia, MO 65211
United States
573-882-1738 (Phone)

HOME PAGE: http://cori.missouri.edu

University of Missouri at Columbia - Division of Applied Social Sciences ( email )

135 Mumford Hall
Columbia, MO 65211
United States

HOME PAGE: http://michaelsykuta.com

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