The House Judiciary Committee approved a bill Wednesday that would essentially reverse a Supreme Court decision upholding manufacturers’ rights to set minimum prices below which their dealers cannot sell product.
The Discount Pricing Consumer Protection Act of 2009, or H.R. 3190, was passed out of the full committee. The bill, sponsored by Rep. Henry Johnson, D-GA, currently has only two co-sponsors, including Rep. John Conyers Jr., D-MI. The Senate has yet to vote on a companion bill (S. 148) sponsored by Sen. Herb Kohl, former head of the Kohl's Department Store chain.
H.R. 3190 would effectively ban manufacturers from dictating minimum prices to dealers as a violation of the anti-trust provisions of the Sherman Act. Such “minimum resale price maintenance programs,” also known as “vertical price agreements,” remain illegal in many states, despite a 2007 Supreme Court ruling (Leegin Creative Leather Products, Inc. v. PSKS, Inc.).
That decision determined the agreements do not automatically violate federal anti-trust laws in certain circumstances. The decision overturned a century of law by ruling that such agreements can lead to better customer service when there is adequate competition between brands. Consumer advocates, attorneys general and Federal Trade Commissioners have condemned the Leegin ruling and called for Congress and state legislators to pass laws to overturn it.
The issue is being watched closely by premium sporting goods brands, which began incorporating “minimum advertised pricing,” or MAP, policies into their dealer agreements in a bigger way early last year to counter rampant discounting.
The policies are aimed largely at online discounters and often enforced by third-party Web-monitoring firms like NetEnforcers.com. Dealers who violate the policies risk losing co-op ad dollars and being cut off by the vendor.
