SEMA eNews Vol. 13, No. 12, March 25, 2010

Senate Committee Votes to Reverse Court Decision on MAP Pricing

The Senate Judiciary Committee approved a bill to reinstate the doctrine that treats minimum resale price agreements as automatically illegal under the Sherman Antitrust Act. Minimum price agreements allow manufacturers to establish a set pricing system with distributors and retailers in exchange for the rights to market their products.

In 2007, the Supreme Court overturned a precedent dating back to 1911 which outlawed “vertical price fixing.” The court found that minimum-pricing requirements by manufacturers no longer constitute an automatic violation of federal law. Rather, such agreements will now be considered on a case-by-case basis according to a “rule of reason” to determine whether they interfere with market competition. (Since the court ruling is not a “green light” to set prices, businesses considering establishing resale price policies or agreements should proceed with caution and consult with antitrust counsel.)

It is unclear if the bill has the support of a super-majority of senators to allow passage in the Senate. The House Judiciary Committee has already approved similar legislation.

For additional information, contact Stuart Gosswein.

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