Leegin Creative Leather Products, Inc. v. PSKS, Inc.: Supreme Court Abrogates Century-Old Per Se Rule Against Resale Price Maintenance

Overturning a century-old precedent, the Supreme Court yesterday laid to rest—at least for federal antitrust purposes—the last per se prohibition on vertical restraints. The 5-to-4 decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc. holds that resale price maintenance agreements should be evaluated under the rule of reason standard rather than the per se standard that has applied since the Court’s decision 96 years ago in Dr. Miles Medical Co. v. John D. Park & Sons Co. The rule of reason standard, unlike the per se standard, requires courts to consider both the procompetitive and anticompetitive effects of challenged conduct.

The Leegin case involved a challenge to a policy of Leegin Creative Leather Products, a manufacturer of leather goods and accessories, prohibiting retailers from selling Leegin products below Leegin’s suggested retail prices. A terminated Leegin retailer, PSKS, sued, alleging that Leegin had violated the antitrust laws by agreeing with its retailers to offer them certain incentives in exchange for their agreement to sell at or above suggested retail prices. The United States District Court for the Eastern District of Texas, compelled by Dr. Miles, found the agreements per se illegal and entered judgment against Leegin in the amount of nearly $4 million. The Court of Appeals for the Fifth Circuit affirmed, and the Supreme Court granted certiorari.

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