Current Issues in Business Economics: Leegin vs PSKS (price fixing issue) - Essay Example

It is for the first reason that Resale Price Maintenance was an unlawful conduct among manufacturers and was categorized together with bid rigging, market allocation, tying arrangements and horizontal price fixing. Needless to say, there was also a reprieve of the RPM that was the Colgate exception. This exception permitted a producer to direct its distributors to offer its products at a certain price (Areeda & Hovenkamp, 2011). It also allowed a company to terminate the services of a distributor if the distributor did not want to abide by the terms of the agreement.

In this regard, the antitrust law was applicable in situations where the supplier entered into a contract with the retailer to sell the manufacturer’s items at a given price (Garret et al., 2008), which was a totally different story. However, the uncertainty around RPM seems to have been resolved in Leegin v. PSKS (2007) when the Supreme Court overruled a century old precedent, the Dr. Miles Medical Company that acknowledged that resale price maintenance is per se unlawful. The case Leegin v.

PSKS presents issues of resale price maintenance and its legality under the Sherman Antitrust Act. Therefore, from the decision of the Supreme Court in Leegin v. PSKS, this paper will identify the legality of resale price maintenance through the arguments presented in the court and the basis of the Supreme Court’s decision. In the facts of the case Leegin Creative leather products Incorporation, petitioner, v. PSKS incorporation, respondent, Leegin got into a minimum price agreement with its retailers, which needed the retailers to charge a set minimum price for leegin products (Roberts et al., 2007). According to Leegin Incorporation, this was bound to promote competition among the retailers in product promotion and customer service.

However, Leegin later discovered that one of the retailers, PSKS, was selling its products at a