Reevaluating Vertical Restraints Precedent After Leegin
The Supreme Court’s decision in Leegin stripped away a number of complex and largely artificial distinctions and significantly simplified the analysis of vertical restraints. As a result, we need to carfully reconsider the value of precedent from various pre-Leegin periods. It seems that, as a general matter, pre-1977 precedent is of little value, because pre-Sylvania the horizontal/vertical distinction was of no legal significance as both horizontal and vertical restraints on price and non-price elements were per se illegal. Precedent from between 1977 and 1997 (from Sylvania to Khan) is valuable to the extent that it addresses the vertical/horizontal distinction. The focus on price v. non-price restraints, however, is now obsolete. Finally, precedent falling in the 1997-2007 period deals with three distinctions: horizontal/vertical, price/non-price, and maximum/minimum price, of which only the first remains relevant. The table below attempts to summarize four relevant periods of precedent for vertical restraints. The “territorial restraint” category stands for all non-price restraints.
I am reminded of the saying that simple rules give rise to complex and intelligent behavior whereas complex rules give rise to simple and stupid behavior. If that’s true, then we should expect to see some marked improvement in the practice and legal treatment of vertical restraints. That said, the pre-1977 rules were even simpler than the present rules. So simplicity alone doesn’t do the trick. We need rules that are simple and sensible.
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