S 75
112th CONGRESS
1st Session
S. 75
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.
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, and Mr. WYDEN) introduced the following
bill; which was read twice and referred to the Committee on the Judiciary
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Discount Pricing Consumer Protection Act'.
SEC. 2. STATEMENT OF FINDINGS AND DECLARATION OF PURPOSES.
(a) Findings- Congress finds the following:
(1) 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 `vertical price fixing').
(2) 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.
(3) Many economic studies showed that the rule against resale price
maintenance led to lower prices and promoted consumer welfare.
(4) Abandoning the 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 so-called `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.
(5) 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.
(b) Purposes- The purposes of this Act are--
(1) to correct the Supreme Court's mistaken interpretation of the
Sherman Act in the Leegin decision; and
(2) 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.
SEC. 3. PROHIBITION ON VERTICAL PRICE FIXING.
(a) 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.'.
(b) Effective Date- The amendment made by subsection (a) shall take
effect 90 days after the date of enactment of this Act.
END
