The End of the Leegin Saga and the Beginning of Development for the Rule of Reason in RPM Cases

Resale Price Maintenance ("RPM") is a type of vertical agreement made among economic entities on the different levels of distribution for the sale of products or services, by setting the minimum price below which the products or services cannot be sold.Generally speaking, vertical restraints of trade have been treated less severely than horizontal restraints of trade, such as price fixing among competitors, which always, or almost always, tend to restrict competition and reduce output without any rewarding virtues.However, the only exception to the lenient rule for the vertical restraints was RPM.RPM had been treated illegal per se, just like horizontal restrains since Dr. Miles in 1911, until the Leegin Cour t overruled the longstanding precedent in 2007.During that period, many arguments against the per se illegal treatment for RPM had emerged from mostly antitrust economists who regarded promotion of the interbrand competition of dif ferent brands as more important compared to intrabrand competition within the same brand.In the four years after Leegin, several RPM-related cases were brought before the federal courts where deep discussions ensued contemplating the factors to consider when assessing RPM under the rule of reason.While the Leegin decision gained full support from the federal antitrust enforcers, Congress simultaneously embarked on a mission to legislatively negate the decision.Today, in the face of strong opposition both in and out of Congress, and several failed legislative attempts, the Leegin decision still stands firmly.