Thursday, April 19, 2012, 11:48 AM

Reminder from State AGs: Resale Price Maintenance May Still Be Per Se Illegal Under State Law

One of the reoccurring themes at the 2012 Antitrust Spring Meeting was the emphasis placed on resale price maintenance (RPM) by state assistant attorneys general.  On more than one occasion, I was reminded that despite the Supreme Court's 2007 ruling that vertical price fixing is not per se illegal under federal antitrust law, see Leegin Creative Leather Products, Inc. v. PSKS, Inc., such agreements still may be per se illegal under state antitrust law. 

The most prominent advocate of this position was Bob Hubbard, Assistant Attorney General in New York.  New York has a unique statute entitled "Price-fixing prohibited," although the actual text of the statutue says something slightly different.  Mr. Hubbard pointed to a number of instances in which the NY AG office treated resale price maintenance as per se illegal under this state after Leegin.  The most important of these cases, New York v. Tempur-Pedic, is currently on appeal.  The Appellate Division's opinion will be important in determining if NY law is actually more stringent than the Sherman Act. 

Perhaps the most surprising discussion of state action against RPM was from Kip Sturgis, Assistant Attorney General for North Carolina.  Mr. Sturgis asserted that the North Carolina AG office still considers RPM to be per se illegal under North Carolina law even though North Carolina's antitrust statute has been consistently interpreted to mirror federal antitrust standards.  Mr. Sturgis prosecuted a gasoline distributor under a per se theory, shortly after Leegin was decided, but that case settled.  Therefore, there is no North Carolina case law supporting (or specifically contradicting) Mr. Sturgis's theory. 

Manufacturers and distributors should be aware that state enforcers still care about resale price maintenance.  It is not just New York, Maryland and California that are active in this area.  Even states that are generally considered pro-business (e.g. North Carolina) may bring resale price maintenance cases.  To make sure that your company is in compliance with state (and federal law), it is important to develop a comprehensive and manageable pricing policy.

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