''Leegin Creative Leather Products, Inc. v. PSKS, Inc.'', 551 U.S. 877 (2007), is a US antitrust case in which the

United States Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that turn on question ...

overruled '' Dr. Miles Medical Co. v. John D. Park & Sons Co.'' ''Dr Miles'' had ruled that vertical price restraints were illegal ''per se'' under Section 1 of the

Sherman Antitrust Act The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce and consequently prohibits unfair monopolies. It was passed by Congress and is named for S ...

. ''Leegin'' established that the legality of such restraints are to be judged based on the

rule of reason The rule of reason is a legal doctrine used to interpret the Sherman Antitrust Act, one of the cornerstones of United States antitrust law. While some actions like price-fixing are considered illegal ''per se', ''other actions, such as pos ...

Facts

Leegin, a manufacturer of leather

apparel Clothing (also known as clothes, garments, dress, apparel, or attire) is any item worn on a human human body, body. Typically, clothing is made of fabrics or textiles, but over time it has included garments made from animal skin and other thin s ...

, concluded that its interests would be best served by opting out of a price war "race to the bottom," focusing instead on quality and brand cachet. Accordingly, with specific exceptions, it decided to refuse sale to retailers if they intended to discount its products below their recommended retail price. Five years after this policy was introduced, Leegin discovered that Kay's Kloset was violating the policy by marking down the Leegin products by 20%. When Kay's refused to comply with Leegin's policy, Leegin cut them off. PSKS, the parent company of Kay's, sued charging that Leegin had violated antitrust laws when it entered into "agreements with retailers to charge only those prices fixed by Leegin." After the district court refused to hear testimony describing the procompetitive effects of Leegin's pricing policy, Leegin appealed seeking to have ''Dr. Miles'' overruled.

Judgment

''Dr. Miles'' became an outlier almost as soon as it was decided; the court started moving away from ''per se'' rules in antitrust, both generally and in the particular area of vertical restraints. After a brief mid-century period in which the court imposed a more social goals-oriented jurisprudence,'' United States v. Alcoa'' (2d Cir. 1945), for example, which inveighed that antitrust serve "the helplessness of individual before" "great aggregations of capital" by restricting industry to "small units"; ''see also'' '' United States v. Columbia Steel Co.'', 334 U.S. 495, 535-36 (1948) (Douglas, J., dissenting). the court tacked to an understanding of antitrust based on

allocative efficiency Allocative efficiency is a state of the economy in which production is aligned with the preferences of consumers and producers; in particular, the set of outputs is chosen so as to maximize the Economic surplus, social welfare of society. This is a ...

, primarily under the influence of

Robert Bork Robert Heron Bork (March 1, 1927 – December 19, 2012) was an American legal scholar who served as solicitor general of the United States from 1973 until 1977. A professor by training, he was acting United States Attorney General and a judge on ...

's book ''

The Antitrust Paradox ''The Antitrust Paradox'' is an influential 1978 book by Robert Bork that criticized the state of United States antitrust law in the 1970s. A second edition, updated to reflect substantial changes in the law, was published in 1993. Bork has credi ...

''. This trend continued in cases like '' Continental Television, Inc. v. GTE Sylvania, Inc.'' (1977), '' State Oil Co. v. Khan'' (1997), and '' Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP'' (2004). In ''Leegin'', the court formally overruled ''Dr. Miles''. Citing Bork,

Ronald Coase Ronald Harry Coase (; 29 December 1910 – 2 September 2013) was a British economist and author. Coase was educated at the London School of Economics, where he was a member of the faculty until 1951. He was the Clifton R. Musser Professor of Eco ...

, and others, the Court stated that manufacturer-imposed minimum resale prices can lead retailers to compete efficiently for customer sales in ways other than cutting the retail price.

References

External links

*
Oral Argument, March 26, 2007 (Transcript)Brief for Petitioner Leegin Creative Leather Products, Inc.Brief for Respondent PSK Inc. D/B/A Kay's Kloset, Kay's ShoesReply Brief for Petitioner Leegin Creative Leather Products, Inc.
{{DEFAULTSORT:Leegin Creative Leather Products, Inc. V. Psks, Inc. United States Supreme Court decisions that overrule a prior Supreme Court decision United States Supreme Court cases United States Supreme Court cases in 2007 United States antitrust case law Leather clothing United States Supreme Court cases of the Roberts Court

Facts

Judgment

See also

References

Further reading

External links