Monday, July 02, 2007
END OF THE DISCOUNTER?
CigarCyclopedia.com - Perelman's Pocket Cyclopedias of Cigars: "END OF THE DISCOUNTER?
Supreme Court reverses precedent on retail price fixing!
Los Angeles, July 2 – If you think the Supreme Court isn’t important, guess again.
In a decision which did not get as much play as those on school integration and campaign funding, Justice Anthony Kennedy’s decision in Leegin Creative Leather Products vs. PSKS, Inc. dba Kay’s Kloset now makes it potentially legal for manufacturers – including cigar manufacturers – to set minimum retail prices for their products.
Announced on Thursday, June 28, the decision – by a 5-4 vote – overturned a 1911 decision in Dr. Miles Medical Co. vs. John D. Park & Sons Co., (220 U.S. 373) in which the Court held that it is illegal “for a manufacturer to agree with its distributor to set the minimum price the distributor can charge for the manufacturer’s goods.”
Instead of this immutable rule, Justice Kennedy prefers the “rule of reason” and wrote that:
• “Minimum resale price maintenance can stimulate interbrand competition – the competition between manufacturers selling different brands of the same type of product – by reducing intrabrand competition – the competition among retailers selling the same brand.”
• "A single manufacturer’s use of vertical price restraints tends to eliminate intrabrand price competition; this in turn encourages retailers to invest in tangible or intangible services or promotional efforts that aid the manufacturer’s position as against rival manufacturers. Resale price maintenance also has the potential to give consumers more options so that they can choose among low-price, low-service brands; high-price, high-service brands; and brands that fall inbetween.”
• “Absent vertical price restraints, the retail services that enhance interbrand competition might be underprovided. This is because discounting retailers can free ride on retailers who furnish services and then capture some of the increased demand those services generate.”
• “With price competition decreased, the manufacturer’s retailers compete among themselves over services.”
Supreme Court reverses precedent on retail price fixing!
Los Angeles, July 2 – If you think the Supreme Court isn’t important, guess again.
In a decision which did not get as much play as those on school integration and campaign funding, Justice Anthony Kennedy’s decision in Leegin Creative Leather Products vs. PSKS, Inc. dba Kay’s Kloset now makes it potentially legal for manufacturers – including cigar manufacturers – to set minimum retail prices for their products.
Announced on Thursday, June 28, the decision – by a 5-4 vote – overturned a 1911 decision in Dr. Miles Medical Co. vs. John D. Park & Sons Co., (220 U.S. 373) in which the Court held that it is illegal “for a manufacturer to agree with its distributor to set the minimum price the distributor can charge for the manufacturer’s goods.”
Instead of this immutable rule, Justice Kennedy prefers the “rule of reason” and wrote that:
• “Minimum resale price maintenance can stimulate interbrand competition – the competition between manufacturers selling different brands of the same type of product – by reducing intrabrand competition – the competition among retailers selling the same brand.”
• "A single manufacturer’s use of vertical price restraints tends to eliminate intrabrand price competition; this in turn encourages retailers to invest in tangible or intangible services or promotional efforts that aid the manufacturer’s position as against rival manufacturers. Resale price maintenance also has the potential to give consumers more options so that they can choose among low-price, low-service brands; high-price, high-service brands; and brands that fall inbetween.”
• “Absent vertical price restraints, the retail services that enhance interbrand competition might be underprovided. This is because discounting retailers can free ride on retailers who furnish services and then capture some of the increased demand those services generate.”
• “With price competition decreased, the manufacturer’s retailers compete among themselves over services.”
Labels: cigars, National Politics, News, tabacco
