Legislation is Response to Supreme Court’s Decision to Overturn Ban on Vertical Price Fixing

            WASHINGTON – The Senate Judiciary Committee today approved by voice vote legislation sponsored by U.S. Senator Herb Kohl to protect discount shopping for consumers.  The “Discount Pricing Consumer Protection Act” (S. 148) would restore the century-old ban on vertical price fixing which was abolished by a 2007 Supreme Court decision in the Leegin case.  The Court’s ruling allows manufacturers to set a minimum price below which a retailer cannot sell the manufacturer’s product, threatening the existence of discounting and discount stores and leading to higher prices for consumers.  Kohl’s legislation overturns the Court’s decision.

“Since the Court’s decision three years ago, we have heard reports from all across the nation of manufacturers demanding an end to discounting engaged in by all types of retailers, from small mom-and-pop stores to giant Internet retailers,” Kohl said.  “For nearly a century the rule against vertical price fixing permitted discounters to sell goods at the most competitive price.   But now, at exactly the wrong time - in the midst of a serious economic recession when families’ budgets are under tremendous pressure - this very practice of discounting is imperiled.”

Kohl is the chairman of the Senate Antitrust, Competition Policy and Consumer Rights panel, which conducted an extensive hearing into the Leegin decision and the likely effects of abolishing the ban on vertical price fixing.

In June, 2007, a narrow 5-4 Supreme Court majority in the Leegin case interpreted the Sherman Act to overturn the ban on vertical price fixing.  In his dissenting opinion in the Leegin case, Justice Breyer estimated that if only 10 % of manufacturers engaged in vertical price fixing, the volume of commerce affected today would be $300 billion dollars, translating into retail bills that would average $750 to $1,000 dollars higher for the average family of four every year.

The “Discount Pricing Consumer Protection Act” is co-sponsored by Senate Judiciary Committee members Dianne Feinstein (D-CA), Russ Feingold (D-WI), Charles Schumer (D-NY), Richard Durbin (D-IL), Sheldon Whitehouse (D-RI), Amy Klobuchar (D-MN), Edward Kaufman (D-DE), Arlen Specter (D-PA) and Al Franken (D-MN).

Kohl’s bill was also endorsed by 39 of the nation’s state attorneys general, numerous large and small businesses, consumer groups and antitrust experts.