Post on 12-Jan-2016
Bob Hubbard 2
CWAG 2014 Annual meeting
The Future of Resale Price Fixing
Bob HubbardNY Assistant Attorney General
212 416-8267Robert.Hubbard@ag.ny.gov
Bob Hubbard 3
Caveats
• I speak only for myself• I make recommendations– My recommendations are sometimes rejected– Consideration of my recommendations improves
future recommendations– Multistate enforcement emphasizes merits, more
than hierarchy• I don’t instruct other states either
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Some success in recommending
• I’ve led many multistate efforts• I chaired the Multistate Antitrust Task Force
for 4 years• Resale price fixing is an area of interest for me
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My perspective
• My job is to represent consumers (and the state)– Others ably represent other interests
• My job is to push for competition– The Magna Carta of the free enterprise system– A public policy of the first magnitude
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Higher prices for consumers are good?
• Skeptical that consumers benefit from being forced to pay more– Price better set by consumers able to choose
among alternatives and businesses able to present alternatives
– If more value is being provided:• consumers will willingly pay more or • supplier will compensate the retailer
– Retailing innovations include charging consumers for fewer ancillary services
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Consumers benefit by paying more for the same thing?
• The very purpose of the restraint is to have consumers pay more
• I’ve been unable to convince non-antitrust lawyers that paying more is good for them
• A.G. skepticism is widespread and bipartisan– Not the best campaign slogan: I’m working hard so
you will be charged more
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State views have had an effect
• Leegin: 5-4 decision on federal antitrust law• State law constrains the formal use of resale
price restraints– CA enforcement– MD legislation– NY (and NJ) statute: “This statutory language
makes clear than an action may not be maintained in a court of law to enforce such a provision.”
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Government won’t help enforcement
• Haven’t seen judicial enforcement– No return to the Fair Trade Laws, during which
courts were clogged with litigations against businesses who wanted to sell to consumers at less than prices set by the manufacturers
• Haven’t seen contracts that would support such litigations
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Illustration of antitrust federalism
• Federal law is not the only antitrust law• Antitrust federalism– State law can be different– Different enforcers can reach different conclusions– State enforcers have different views and now• Antitrust less divorced from how voters think• Resale price restraints are more restrained
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The Beauty of Antitrust Federalism
• Laboratories of democracy have an effect– Closer to the people– Makes antitrust less something only for experts• Less technocratic• More something voters can understand
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Resale price restraints endure
• Setting resale prices without an “agreement”– Making supply contingent on resale price• Unilateral pricing policy (UPP)• Disclaiming an agreement in the distribution contract
– Making discounts hard to find• Minimum advertised price (MAP)• Manufacturer/supplier restrains the price shown in
advertisements of its products generally when manufacturer pays in part for the advertising
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UPP and MAP effects
• Usually focused on new high end products• Often luxury brands for which the higher price
is part of the cachet consumers want– Hard to justify using enforcement resources– Minimal impact– New York v. Tempur-Pedic: unsuccessful effort to
challenge a policy set up to avoid agreement
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Often applies to “just right” brands
• Strong brands have strong demand and can charge high wholesale prices
• Weak brands aren’t strong enough to make the resale price stick
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Retailing dynamics
• Internet sales and other forces make restraining a resale price harder and harder– Alternatives more visible and more available– Fewer intermediaries; direct connections between
producer and user– Fewer capacity constraints, like shelf space
Bob Hubbard
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Establishing an “agreement”
• Pre-Leegin case law: “conscious commitment to a common scheme”
• Barnacles connected to the per se rule that went down with the per se ship in Leegin?
• American Needle expresses functional, not formalistic, test