Wednesday, October 29, 2008

FTC to Hold Workshops on Resale Price Maintenance

FTC Workshops - The FTC announced yesterday that it will hold a series of public workshops between January and March 2008 about how to distinguish between uses of resale price maintenance ("RPM") that benefit consumers and those that do not.

Topics - The FTC plans to hold four to six RPM workshops, and is accepting requests to participate and public comments until December 12. The FTC plans to address three general subjects:

  1. The legal, economic, and management principles relevant to applying Sections 1 of the Sherman Act and Section 5 of the FTC Act to RPM, including the ability to administer current or potential antitrust or other rules for applying these laws;

  2. The business circumstances regarding the use of RPM that the Commission should examine in the upcoming workshops, including examples of actual conduct; and

  3. Empirical studies or analyses that might provide better guidance and assistance to the business and legal communities regarding RPM enforcement issues.

The FTC's Federal Register notice also asks ten more specific questions, namely:

  1. How should the structure of the market and the market shares of participants be taken into account in analyzing RPM?
  2. Are there other specific market facts or circumstances that might have an impact on the likely competitive effects of RPM under the circumstances described? Without limiting the scope of this question, commenters are specifically invited to comment on the effect on marginal and inframarginal consumers.
  3. What are the business reasons (e.g., management, marketing, financial, etc.) for the use of RPM? Are there alternative business strategies available to achieve the same results? What factors, including any cost savings, entered the decision to use RPM to achieve the desired result?
  4. To what extent does uncertainty regarding the legality of RPM under state law affect the decision to use RPM?
  5. What are the likely procompetitive and anticompetitive effects of RPM under the circumstances described?
  6. What strategies might competitors use to respond to a loss of sales to a firm that uses RPM?
  7. Under what market conditions is the use of RPM likely either to promote or hinder market entry by other manufacturers or retailers?
  8. Are there industries where the use of RPM is prominent?
  9. Are there any original theoretical, analytical or empirical studies on the nature or competitive effects of RPM or alternatives to RPM that should be brought to the attention of the Commission?
  10. What tests or standards should courts or enforcement agencies use in assessing whether particular conduct violates Sections 1 or 5? Commenters are specifically requested to assess whether the test or standard applicable to a particular usage of RPM might vary based on particular market facts or circumstances. Additionally, are there particular market facts and circumstances where the approach established by the Court of Appeals for the District of Columbia Circuit in Polygram Holding, Inc. v. Fed. Trade Comm'n, 416 F. 3d (D.C. Cir. 2005), would or would not be appropriate?

As this blog has discussed previously, the law surrounding resale price maintenance has been unclear ever since the Supreme Court's decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007), which held that RPM was subject to the rule of reason rather than the per se rule.

FTC Reports - The FTC will almost certainly publish a report that summarizes issues presented and discussed during the resale price maintenance workshop. FTC reports can help shape the direction of the law, as a litigant may present portions of a report to support its case to a court, which may influence the court's decision. Industry constituents that have a vested interest in the subject matter of an FTC workshop typically retain antitrust counsel to actively participate in the workshop and "give voice" to the constituents throughout the workshop. With respect to resale price maintenance issues, large manufacturers and retailers will certainly be represented during the course of the workshop. For those interested in Kotchen & Low's perspective on resale price maintenance issues, please refer to related blog posts below.

Related posts: WSJ Examines Manufacturers' RPM Practices; FTC's Nine West Order Explores Resale Price Maintenance Under Leegin; State Resale Price Maintenance Laws and Leegin; Herman Miller Contends That Consent Decree Allows it to Continue Minimum Resale Pricing Policy; Developing Legally-Compliant Trade Promotion Management Programs.


The Law Firm of Kotchen & Low LLP - Civil Litigation, Counseling, and Representation Before Government Agencies

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