Source: https://skyvapemagazine.com/supreme-court-ruling-on-minimum-advertised-pricing-map/
Timestamp: 2019-04-21 19:18:23+00:00

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MAP pricing is brand protection. While no company wants to state it out loud the best example of MAP comes from the furniture industry. Where nobody would pay $1500 for a couch if they knew that the store only pays $200 for them. Customers tend to ignore the reality of the business world and that furniture store is paying rent by the square foot. The bigger the couch the more it costs each month to sit in the showroom. Selling couches is how they make money not showing them that is how you spend money.
In the vape world there haven’t been any interest in setting retail let alone MAP pricing and let me be frank the powers that be right now are not capable of making that decision in any fashion that doesn’t benefit their sole introspective.
We recently did a sell through on Kanger sub tanks via EBay. Paying $27 wholesale buying them in lots of 10 freight included in that price. Selling them on EBay for $39.00 We lost $2 on every sale.
$12 wasn’t enough room to pay the Postage, Fees and labor. Never mind the point of selling things is have a profit.
We did sell 10 a day for 4 days straight before EBay figured out that Steel was tobacco and enforced their no tobacco policy on us. Shipped me a free Star of David to have sewn on my shoulder sleeve. So as customers here this they are not going to like the math. I debated about this being a private article to just the retailers but the lack of education and the falsehoods put out by the education system it would hurt our younger crowd to gain an understanding of why the guy you gave $150 bucks to is driving a 10 year old car.
So what are the factors for creating a MAP.
We start with wholesale. Lets make it a fictional $20 wholesale product.
Your goal is to sell product in a steady stream, big sales may give you a quick sellers high but the week of no sales will give super lows. Bread trucking ( placing product in high traffic areas at no cost to the store its how a bread isle is stocked at a store) Everyone wants to follow the Wal-mart profit model but no manufacture wants retailers to catch on that visibility is THE key to their success.
Our Kanger subtank plus example had a suggested retail of $59.00 yet on Ebay they went as low as $10 china direct. If I put $59.00 something in my store and its $10 online. The counterfeiter is not the thief I am. And word of mouth, my best advertising, become “that thief”. So as a manufacture do you do business with thieves? Wholesalers and Manufactures have been stealing the retail stores hands on customer interaction by lowering prices.
Have a store buy your item for $20 and need to sell it at $40 to make $3 bucks and you put it online for $22.00 + Freight. That is currently AGAINST THE LAW but its on almost every sale.
We suggest a separate MAP for online and offline. $39.99 for the guy holding the sale in a store and 49.99 for the online guy.
The following is the text of the supreme court decision which states you can establish a MAP to protect your products value to the market. But its illegal for a manufacture to set a MAP that protects their direct sales. Other words pick a side are you a legitimate manufacture or a retailer in disguise.
FTC policy spells out how price gougers take a free ride off those who provide service to the product which elevates its value for them to profiteer without any effort in doing so.
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
irrelevant any procompetitive justifications for Leegin’s policy.
judged by the rule of reason. Pp. 5–28.
finder to weigh “all of the circumstances,” Continental T. V., Inc. v.
Electronics Corp. v. Sharp Electronics Corp., 485 U. S. 717, 723. Resort to per se rules is confined to restraints “that would always or almost always tend to restrict competition and decrease output.” Ibid.
to determine whether the per se rule is nonetheless appropriate.
standard to judge vertical price restraints. Pp. 7–19.
those services generate. Retail price maintenance can also increase interbrand competition by facilitating market entry for new firms and brands and by encouraging retailer services that would not be provided even absent free riding. Pp. 9–12.
vertical price restraints must not be ignored or underestimated.
price restraints. As courts gain experience with these restraints by applying the rule of reason over the course of decisions, they can establish the litigation structure to ensure the rule operates to eliminate anticompetitive restraints from the market and to provide more guidance to businesses. Pp. 14–19.
e.g., GTE Sylvania, supra, at 57–59. The Dr. Miles rule is also inconsistent with a principled framework, for it makes little economicsense when analyzed with the Court’s other vertical restraint cases.
as Colgate and GTE Sylvania. Respondent’s arguments for reaffirming Dr. Miles based on stare decisis do not require a different result.
220 U. S. 373 (1911), the Court established the rule that itis per se illegal under §1 of the Sherman Act, 15 U. S. C.
abandoned the rule of per se illegality for other verticalrestraints a manufacturer imposes on its distributors.
vertical price restraints can have procompetitive effects.
Petitioner, Leegin Creative Leather Products, Inc.
the store. Kay’s Kloset became the destination retailer inthe area to buy Brighton products. Brighton was thestore’s most important brand and once accounted for 40 to50 percent of its profits.
which we believe is lacking in these large stores.
Consumers are further confused by the ever popularsale, sale, sale, etc.
days a year on a consistent basis.
our retailer, creating great looking stores selling ourproducts in a quality manner.” Ibid.
distribution strategy. It also expressed concern that discounting harmed Brighton’s brand image and reputation.
appear to have agreed that Kay’s Kloset would not be aHeart Store beyond 1998. Despite losing this status, Kay’sKloset continued to increase its Brighton sales.
been marking down Brighton’s entire line by 20 percent.
the Brighton brand had a considerable negative impact onthe store’s revenue from sales.
Leegin in the amount of $3,975,000.80.
unlawful. 549 U. S. ___ (2006).
combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the severalStates.” Ch. 647, 26 Stat. 209, as amended, 15 U. S. C. §1.
State Oil Co. v. Khan, 522 U. S. 3, 10 (1997).
restraint’s history, nature, and effect.” Khan, supra, at 10.
market power and market structure designed to assess [arestraint’s] actual effect”); see also Illinois Tool Works Inc.
the consumer and restraints stimulating competition thatare in the consumer’s best interest.
types “are deemed unlawful per se.” Khan, supra, at 10.
mentioned, “that would always or almost always tend torestrict competition and decrease output.” Business Electronics, supra, at 723 (internal quotation marks omitted).
Co., 472 U. S. 284, 289 (1985) (internal quotation marksomitted).
type of restraint at issue, see Broadcast Music, Inc. v.
based upon demonstrable economic effect rather than . . .
per se rule against a vertical agreement between a manufacturer and its distributor to set minimum resale prices.
the manufacturer’s control of resale prices to be unlawful.
were analogous to a combination among competing distributors, which the law treated as void. Id., at 407–408.
The reasoning of the Court’s more recent jurisprudencehas rejected the rationales on which Dr. Miles was based.
based on “formalistic” legal doctrine rather than “demonstrable economic effect,” GTE Sylvania, supra, at 58–59.
not chattels, the rule arose from restrictions removing realproperty from the stream of commerce for generations.
weight on doctrines from antiquity but of slight relevance.
433 U. S., at 53, n. 21 (internal quotation marks omitted).
manufacturer makes with its distributors as analogous toa horizontal combination among competing distributors.
agreements to fix minimum resale prices, and to determine whether the per se rule is nonetheless appropriate.
See Business Electronics, 485 U. S., at 726.
Antitrust Paradox 288–291 (1978) (hereinafter Bork).
Scherer & Ross) (“The overall balance between benefitsand costs [of resale price maintenance] is probably close”).
rule. See T. Overstreet, Resale Price Maintenance: Economic Theories and Empirical Evidence 170 (1983) (hereinafter Overstreet) (noting that “[e]fficient uses of [resaleprice maintenance] are evidently not unusual or rare”); seealso Ippolito, Resale Price Maintenance: Empirical Evidence From Litigation, 34 J. Law & Econ. 263, 292–293(1991) (hereinafter Ippolito).
manufacturer’s position as against rival manufacturers.
brands; and brands that fall in between.
Absent vertical price restraints, the retail services thatenhance interbrand competition might be underprovided.
that has a reputation for selling high-quality merchandise.
will seek to discover if some manufacturers are undercutting the cartel’s fixed prices. Resale price maintenancecould assist the cartel in identifying price-cutting manufacturers who benefit from the lower prices they offer.
ibid.; see also Posner 172; Overstreet 19–23.
examples suggest this possibility is a legitimate concern.
attempting to prove the existence of a horizontal cartel.
of vertical price restraints must not be ignored orunderestimated.
these agreements appear ill suited for per se condemnation.
Arrangements and the Rule of Reason, 53 Antitrust L. J.
costs cannot alone justify the Dr. Miles rule.
and the price retailers charge consumers represents partof the manufacturer’s cost of distribution, which, like anyother cost, the manufacturer usually desires to minimize.
“increase in demand resulting from enhanced service . . .
will more than offset a negative impact on demand of ahigher retail price.” Mathewson & Winter 67.
and eliminate any gains to retailers from their price-fixingagreement over a single brand. See Posner 172; Bork 292.
outcomes of vertical arrangements depends on the uniformity of the practice”).
retailer-induced price restraints because they can harm itscompetitive position.
power, there is less likelihood it can use the practice tokeep competitors away from distribution outlets.
they can establish the litigation structure to ensure therule operates to eliminate anticompetitive restraints fromthe market and to provide more guidance to businesses.
proof, or even presumptions where justified, to make therule of reason a fair and efficient way to prohibit anticompetitive restraints and to promote procompetitive ones.
appropriate standard to judge vertical price restraints.
We do not write on a clean slate, for the decision in Dr.
Miles is almost a century old. So there is an argument forits retention on the basis of stare decisis alone. Even if Dr.
524 U. S. 236, 251 (1998).
law statute. See National Soc. of Professional Engineers v.
National Soc. of Professional Engineers, supra, at 688.
Business Electronics, 485 U. S., at 732.
the economics literature suggest the per se rule is inappropriate, and there is now widespread agreement thatresale price maintenance can have procompetitive effects.
has been “called into serious question” justifies our reevaluation of it. Khan, supra, at 21.
Other considerations reinforce the conclusion that Dr.
undermined their doctrinal underpinnings.” Dickerson v.
resale prices and refuse to deal with distributors who donot follow them. Colgate, 250 U. S., at 307–308.
Sylvania, 433 U. S., at 57–59 (overruling United States v.
69–70 (White, J., concurring in judgment).
U. S., at 726–727, 735–736.
illegal. Khan, 522 U. S., at 22 (overruling Albrecht v.
of other vertical restraints justify the conclusion that Dr.
Miles should not be retained.
competition and consumer welfare because manufacturersare forced to engage in second-best alternatives and because consumers are required to shoulder the increasedexpense of the inferior practices.
Furthermore, depending on the type of product it sells, amanufacturer might be able to achieve the procompetitivebenefits of resale price maintenance by integrating downstream and selling its products directly to consumers. Dr.
based on the per se rule, not on real market conditions.
386 (1937). This distortion might lead to inefficient integration that would not otherwise take place, so that consumers must again suffer the consequences of the suboptimal distribution strategy. And integration, unlikevertical price restraints, eliminates all intrabrand competition. See, e.g., GTE Sylvania, 433 U. S., at 57, n. 26.
(1997) (indicating that “antitrust law should recognizethat the consumer interest is often better served by [resaleprice maintenance]—contrary to its per se illegality andthe rule-of-reason status of vertical nonprice restraints”).
horizontal market division and horizontal price fixingbecause both have similar economic effect. There is likewise little economic justification for the current differential treatment of vertical price and nonprice restraints.
Brief for Economists as Amici Curiae 17–18.
second-best options to achieve sound business objectives.
basis of stare decisis do not require a different result.
shows Congress ratified the rule.
restraints within the ambit of §1 of the Sherman Act.
in the common-law tradition. Texas Industries, Inc. v.
conduct, the rule of reason promotes the same objective.
permit the Department of Justice or the Federal TradeCommission to use funds to advocate overturning Dr.
much as they might show congressional approval for Dr.
and reached a short-term compromise instead.
Reliance interests do not require us to reaffirm Dr.
maintenance was legal under fair trade laws in a majorityof States for a large part of the past century up until 1975.
(1911), is now overruled. Vertical price restraints are tobe judged according to the rule of reason.
Noting that Leegin’s president has an ownership interest in retail stores that sell Brighton, respondent claimsLeegin participated in an unlawful horizontal cartel withcompeting retailers. Respondent did not make this allegation in the lower courts, and we do not consider it here.
at 28. And in doing so it overturns Dr. Miles.
States, 246 U. S. 231, 238 (1918).
to find the practice unlawful all (or nearly all) the time.
ates, Inc., 405 U. S. 596, 609–611 (1972); United States v.
(citing and quoting Trenton Potteries, supra, at 397–398).
course, the Court is not writing on a blank slate, and thatfact makes a considerable legal difference.
U. Chi. L. Rev. 6, 22–26 (1981); Brief for William S. Comanor and Frederic M. Scherer as Amici Curiae 7–10.
Stage Thinking, 49 The Antitrust Bulletin 877, 899–900(2004); Comanor, Vertical Price-Fixing, Vertical MarketRestrictions, and the New Antitrust Policy, 98 Harv.
L. Rev. 983, 990–1000 (1985).
other’s pricing behavior, each understanding that pricecutting by one firm is likely to trigger price competition byall. See 8 Areeda & Hovenkamp ¶1632d, at 321–323; P.
Areeda & L. Kaplow, Antitrust Analysis ¶¶231–233, pp.
276–283 (4th ed. 1988) (hereinafter Areeda & Kaplow).
Cf. United States v. Container Corp. of America, 393 U. S.
333 (1969); Areeda & Kaplow ¶¶247–253, at 327–348.
1490–1491. Cf., e.g., Container Corp., supra, at 336–337.
Deputy Assistant Attorney General, Antitrust Division).
vertical restraints lead to higher consumer prices”).
On the other hand, those favoring resale price maintenance have long argued that resale price maintenanceagreements can provide important consumer benefits.
Areeda & Hovenkamp ¶¶1617a, 1631b, at 193–196, 308.
The result might be increased competition at the producerlevel, i.e., greater inter-brand competition, that bringswith it net consumer benefits.
Hovenkamp ¶¶1611–1613, 1631c, at 126–165, 309–313; R.
circumstances just described: new entry, “free riding,” orvariations on those themes.
beneficial sheep from the antitrust goats?
their own administrative judgment to bear, sometimesapplying rules of per se unlawfulness to business practiceseven when those practices sometimes produce benefits.
Structure and Economic Performance 335–339 (3d ed.
of reasonableness assessment of such agreements).
on the Pacific Coast Highway. We all benefit freely fromideas, such as that of creating the first supermarket.
have made in building a product’s name and reputation.
The question is how often the “free riding” problem isserious enough significantly to deter dealer investment.
does it happen often? We do, after all, live in an economywhere firms, despite Dr. Miles’ per se rule, still sell complex technical equipment (as well as expensive perfumeand alligator billfolds) to consumers.
pp. 27, 29–30 (Jan./Feb. 1984) (similar analysis).
who simply seek to deal best with the circumstances theyfind? For another thing, as I just said, it is difficult todetermine just when, and where, the “free riding” problemis serious enough to warrant legal protection.
from instances where only benefits are likely to be found.
Enterprise 105 (2005) (litigating a rule of reason case is“one of the most costly procedures in antitrust practice”).
criteria in a merger case).
Are there special advantages to a bright-line rule?
into agreements that are, on balance, anticompetitive.
1495. But I am not now forced to decide this question.
the courts have applied for nearly a century.
at 51, n. 18 (“The per se illegality of [vertical] price restrictions has been established firmly for many years . . .”).
burden of proof. See Illinois Brick Co. v. Illinois, 431 U. S.
854–855 (1992). See also Federal Election Comm’n v.
concurring in part and concurring in judgment).
of some significant change in respect to those arguments.
argue, contrary to the testimony of the Justice Department and FTC to Congress in 1975, that resale price maintenance is not harmful. One study, relying on an analysis of litigated resale price maintenance cases from1975 to 1982, concludes that resale price maintenance does not ordinarily involve producer or dealer collusion.
and the tacit form that such collusion might take. See H.
(3d ed. 2005); supra, at 4–5.
Frederic M. Scherer as Amici Curiae 4.
they cannot constitute a major change in circumstances.
remarkable about the majority’s arguments is that nothing in this respect is new. See supra, at 3, 12 (citing articles and congressional testimony going back several decades). The only new feature of these arguments lies in thefact that the most current advocates of overruling Dr.
350–352 (listing “‘[t]raditional’ justifications” for resaleprice maintenance).
think that we should place significant weight upon justifications that the parties do not explain with sufficientclarity for a generalist judge to understand.
Food Security, The Oakland Institute, 1 Policy Brief, No.
thereby making it more difficult for price-cutting competitors (perhaps internet retailers) to obtain market share.
America, in Resale Price Maintenance 67, 80–81 (B.
Report Series, Concentration Ratios in Manufacturing, No.
the economy could help support its position.
concurring in judgment). And every relevant factor hementions argues against overruling Dr. Miles here.
statutory than in constitutional cases. See Glidden Co. v.
U. S., at 736. This is a statutory case.
Co., 362 U. S. 29, 45–47 (1960); Simpson v. Union Oil Co.
of Cal., 377 U. S. 13, 16–17 (1964).
legal regime argues in favor of overruling. See Payne v.
Tennessee, 501 U. S. 808, 827–828 (1991); Swift & Co. v.
at 20 (opinion of SCALIA, J.), particularly since Colgatewould remain good law with respect to unreasonable pricemaintenance.
51, n. 18. It is the majority’s change here that will unsettle the law.
it repealed Miller-Tydings and McGuire. Supra, at 12–13.
lower cost goods to Americans.
fraction of manufacturers ever employed’” the practice.
at 226, n. 59). It reflects a basic antitrust assumption(that consumers often prefer lower prices to more service).
an easily administered and enforceable bright line, “Donot agree about price,” that businesses as well as lawyershave long understood.
Co. v. Khan, 522 U. S. 3 (1997), overruling Albrecht v.
held that maximum resale price agreements were unlawful per se, and to Sylvania, overruling United States v.
Court had held that producer-imposed territorial limitswere unlawful per se.
noted the lack of any significant reliance upon Albrecht.
522 U. S., at 18–19 (Albrecht has had “little or no relevance to ongoing enforcement of the Sherman Act”).
Hovenkamp ¶1632, at 316–328 (analyzing potential harmsof minimum resale price maintenance), with id., ¶1637, at352–361 (analyzing potential harms of maximum resaleprice maintenance). See also, e.g., Pitofsky 1490, n. 17.
Albrecht’s rule. Khan, supra, at 19.
law, 433 U. S., at 47–49, a factor totally absent here.
that does not characterize today’s decision.
per se rule will outweigh the costs.

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