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Supreme Court issues a pricey ruling

John Dimsdale Jun 28, 2007

Supreme Court issues a pricey ruling

John Dimsdale Jun 28, 2007


Scott Jagow: In 1911, the Supreme Court banned what are called “minimum price agreements.” These are deals between companies that make things and the retailers that sell them. For example, a TV manufacturer tells the electronics store its new TV has to sell for a thousand dollars, not a penny less. The electronics store says, OK.

Until a few hours ago, that kind of deal was illegal. Today, the Supreme Court overturned its 96-year-old decision. John Dimsdale looks at how this ruling might affect what we pay.

John Dimsdale: Disagreeing with today’s decision, Justice Stephen Breyer writes it will likely raise the price of retail goods.

But Quentin Riegel, at the National Association of Manufacturers, says not necessarily.

Quentin Riegel: There will be some manufacturers that may try to do that. But manufacturers have to compete. Consumers demand lower prices and in order to compete, manufacturers are going to have to meet that demand.

Riegel says pricing agreements between manufacturers and retailers can still be challenged on a case-by-case basis. For nearly a hundred years, they’ve been automatically deemed illegal.

He says now, product makers at least have the chance to convince a judge that a minimum price is pro-consumer. How can they argue that?

Anti-trust lawyer Jerry Ganzfried says by showing price agreements will increase competition.

Jerry Ganzfried: One of the great invitations for competitors to come in is the prospect of thinking that they can sell below somebody else’s price. So you do get additional competition, you do get additional choice, and that’s a large part of the rationale in this decision.

But Mark Cooper at the Consumer Federation of America says the onus is now on discounters who have to court to challenge the prices set by manufacturers.

Mark Cooper: It puts the burden of proof on the people most likely to do good for the consumer and least likely to have the resources to carry the case forward.

Cooper says this is the fourth Supreme Court decision in as many months to favor big business over consumers.

In Washington, I’m John Dimsdale for Marketplace.

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