Leegin Analysis
The Supreme Court - clearly unconcerned about my vacation plans - issued its decision in Leegin Leather Products v. PSKS, Inc. several weeks ago. When the Court released its decision I was here.
The Court overturned the per se rule for minimum resale pricing established in Dr. Miles. Among the many reactions and analyses are:
The Consumerist argues that the decision will harm consumers and asks that we “[p]ardon [them] for scoffing at the notion that Best Buy might ‘invest in greater customer service’ now that they can work with manufacturers to screw consumers out of an additional $20 for a DVD player.”
Thom Lambert has a lengthy analysis at Truth on the Market.
At the Volokh Conspiracy, Stuart Benjamin comments on the “ideological” 5-4 spilt and Tyler Cowen makes a “casual guess [ ] that > 50% of RPM represents a desire to collude and raise prices.”
Mark Botti at SCOTUSblog predicts that “Leegin seems likely to have a direct impact on manufacturers, distributors, and retailers of goods. These parties may now consider resale price maintenance agreements in an effort to improve competitiveness and increase sales.”
Randy Picker analyzes the decision at the University of Chicago law blog.
I do not have much to add to the above but one passage that caught my eye was in the dissent: “One cannot fairly expect judges and juries in such cases to apply complex economic criteria without making a considerable number of mistakes, which themselves may impose serious costs.” (page 10 of Breyer’s dissent). Breyer supports this sentence with the following citations:
See, e.g., H. Hovenkamp, The Antitrust Enterprise 105 (2005) (litigating a rule of reason case is “one of the most costly procedures in antitrust practice”). See also Bok, Section 7 of the Clayton Act and the Merging of Law and Economics, 74 Harv. L. Rev. 226, 238-247 (1960) (describing lengthy FTC efforts to apply complex criteria in a merger case).
Based on the parentheticals, these citations would support a statement that rule of reason cases can be lengthy and costly but not the statement that juries - and judges! - can not handle rule of reason cases without making mistakes. During ABA Spring meetings, for example, I have noticed a meme that antitrust is so complicated that only us specially trained antitrust attorneys and economists can understand it and therefore juries are incapable of understanding an antitrust case. It appears that Breyer picked up the meme - and then extended it judges. While juries do make mistakes (as do judges), I am a believer in the jury system. I am also not aware of any research that would support the statement that judges and juries make a “considerable number of mistakes” in cases that apply complex economic criteria (if you know of any, let us know in the comments or by email). If that is case, and if we are going to remove certain types of cases from juries (and, to be fair, Breyer is not - as I read it - directly advocating this in his dissent), such removal should be done legislatively, not by the Court.
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July 17th, 2007 at 2:20 am
Given that Congress has implied quite strongly, particularly through the Consumer Goods Pricing Act of 1975, that it does think judges and juries ought not be deciding on a case-by-case basis whether vertical price fixing is permissible, I’m not quite sure why you think the removal of decision-making would be done by Breyer.
July 17th, 2007 at 8:22 pm
I may not have explained myself well. I have three problems with Justice Breyer’s assertion that “One cannot fairly expect judges and juries in such cases to apply complex economic criteria without making a considerable number of mistakes, which themselves may impose serious costs.” First, the citations in the opinion do not seem to support the assertion. Second, I am not aware of any support for the statement (but please forward it to me if you have any). As for the argument that Congress ratified Dr. Miles via the Consumer Goods Pricing Act, I personally agree with Justice Kennedy’s analysis on pages 25-28 of the slip opinion. Third, even if you think we should remove juries from judging cases that apply complex economic criteria, then Congress (and state legislatures as to state antitrust acts) - not judges - should do this, not Congress. And Congress has not done that.
To be clear, I believe Justice Breyer is is making the argument that because a per se rule is easier to administrate - in part because we “cannot fairly expect judges and juries in such cases to apply complex economic criteria without making a considerable number of mistakes, which themselves may impose serious costs” - we should therefore keep the per se rule in place. I also disagree with Justice Breyer on the substance on this issue. I disagree, of course, that juries and judges cannot fairly be expected to apply complex economic criteria; and even if that were true, I do not believe that the costs would be so serious as to outweigh the benefits (I think the costs would be low in part because rule of reason cases are so hard to bring that few will be brought and the odds of mistakes being made are low).
July 21st, 2007 at 3:26 am
David, support for Breyer’s point comes from precedent. Indeed, Breyer himself has made a similar argument before, in Empagran, and to great praise from defense lawyers then. (Yes, the matter was also comity, but the argument on complexity is at least in part separate).
“Even in this relatively simple price-fixing case, for example, competing briefs tell us (1) that potential treble-damage liability would help enforce widespread anti-price-fixing norms (through added deterrence) and (2) the opposite, namely that such liability would hinder antitrust enforcement (by reducing incentives to enter amnesty programs). Compare, e.g., Brief for Certain Professors of Economics as Amici Curiae 2–4 with Brief for United States as Amicus Curiae 19–21. How could a court seriously interested in resolving so empirical a matter—a matter potentially related to impact on foreign interests—do so simply and expeditiously?”
So if nothing else, at least he is consistent, right?