FTC Approves Resale Price Maintenance Agreements under Rule of Reason But State AG’s Appear Undeterred

On May 6, the Federal Trade Commission (FTC) issued an order In the Matter of Nine West Group, Inc. (Nine West) that brings federal enforcement of resale price maintenance (RPM) into line with the Supreme Court’s recent decision in Leegin Creative Leather Products, Inc. v. PSKS, 127 S.Ct. 2705 (2007) (Leegin).

Leegin held that RPM is to be evaluated under the rule of reason, and invited lower courts and enforcement agencies to flesh out the framework applicable to these sorts of agreements: “Courts can . . . devise rules over time for offering proof, or even presumptions where justified.” This decision has elicited considerable objection from state Attorneys General who have continued to argue in their post-Leegin enforcement activity (including Nine West and State of New York, et al. v. Herman Miller, Inc., No. 08-CV-02977 (S.D.N.Y. March 21, 2008) (Herman Miller)) that RPM remains per se illegal under state law, and that it should be presumed to be illegal under federal law. In the Nine West decision, the FTC rejected the states’ positions and adopted a relatively accommodating rule of reason framework for evaluating RPM schemes under federal law.

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