Calendar No. 215
IN THE SENATE OF THE UNITED STATES
January 25 (legislative day, January 5), 2011
Mr. Kohl (for himself, Mrs. Feinstein, Mr. Durbin, Mr. Whitehouse, Ms. Klobuchar, Mr. Franken, Mr. Wyden, Mr. Schumer, and Mr. Blumenthal) introduced the following bill; which was read twice and referred to the Committee on the Judiciary
November 3, 2011
Reported by Mr. Leahy, without amendment
To restore the rule that agreements between manufacturers and retailers, distributors, or wholesalers to set the minimum price below which the manufacturer’s product or service cannot be sold violates the Sherman Act.
This Act may be cited as
Discount Pricing Consumer
Statement of findings and declaration of purposes
Congress finds the following:
From 1911 in the
Dr. Miles decision until June 2007 in the Leegin decision, the Supreme Court
had ruled that the Sherman Act forbid in all circumstances the practice of a
manufacturer setting a minimum price below which any retailer, wholesaler or
distributor could not sell the manufacturer’s product (the practice of
resale price maintenance or
The rule of per se illegality forbidding resale price maintenance promoted price competition and the practice of discounting all to the substantial benefit of consumers and the health of the economy.
Many economic studies showed that the rule against resale price maintenance led to lower prices and promoted consumer welfare.
rule against resale price maintenance will likely lead to higher prices paid by
consumers and substantially harms the ability of discount retail stores to
compete. For 40 years prior to 1975, Federal law permitted states to enact
fair trade laws allowing vertical price fixing.
Studies conducted by the Department of Justice in the late 1960s indicated that
retail prices were between 18 and 27 percent higher in states that allowed
vertical price fixing than those that did not. Likewise, a 1983 study by the
Bureau of Economics of the Federal Trade Commission found that, in most cases,
resale price maintenance increased the prices of products sold.
The 5–4 decision of the Supreme Court majority in Leegin incorrectly interpreted the Sherman Act and improperly disregarded 96 years of antitrust law precedent in overturning the per se rule against resale price maintenance.
The purposes of this Act are—
to correct the Supreme Court’s mistaken interpretation of the Sherman Act in the Leegin decision; and
to restore the rule that agreements between manufacturers and retailers, distributors or wholesalers to set the minimum price below which the manufacturer’s product or service cannot be sold violates the Sherman Act.
Prohibition on vertical price fixing
Amendment to the Sherman Act
Section 1 of the Sherman Act (15 U.S.C. 1) is amended by adding after the first sentence the following: “Any contract, combination, conspiracy or agreement setting a minimum price below which a product or service cannot be sold by a retailer, wholesaler, or distributor shall violate this Act.”.
The amendment made by subsection (a) shall take effect 90 days after the date of enactment of this Act.
November 3, 2011
Reported without amendment