Supreme Court Ruling on Minimum Advertised Pricing (MAP)

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What is a Minimum Advertised Price?

Federal Trade commission
Federal Trade commission

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.

First we start with what the retailer needs to be successful.  His costs are considerably higher than a kitchen table selling on EBay which isn’t even allowed.  EBays 10% fee is nothing compared to people cost, rent insurance business rates phones and CC fees.  The vape industry has a handicap of averaging 10% on just their Credit Card fees.  That 10% is on the gross and is best calculated on the wholesale at 14%.  Plus other overhead at all industry standard for MAP at 30%  So for a Vape industry the ADD 44%

$20 x 1.44 = $28

Are you manufacture direct to retailer on your product?  If you intend to grow you won’t be for long and you will have painted yourself in a corner when you pick up your first distributor and he actually wants a profit.  There is a benefit to the retailer to pay more at a distributor since they can blend freight.  Less stress on buying larger quantities factory direct.  But if you do not protect that margin for BOTH factory direct and distribution you will plant the seed of hate and find yourself losing that precious SQFT that displays your product to hundreds of buyers each week.   You have 2 layers of shipping in this model to the distributor and FROM the distributor your product cost is going up dramatically.  To many manufactures talk to me about THEIR cost and forget what it costs the market to sell their product.  ADD 30%

$28 x 1.3 = 37.4  round up 39.99

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.

First of all ESTABLISH A RETAIL PRICE before you try to tell people what the bottom dollar is.  You do this on the label.  You pay for UPC codes so that Search engines can catch offenders easily for you.  If $37.4 is our MAP what should our retail look like?  When you do not put a retail price on a product you leave 100% of the market to VALUE your product.  Price equals Value to a customer.  The Price is on the bottle what they paid for it is the deal.  No price = No value.  ADD 40%

39.99 x 1.4 = $55.40  with round up $59.00

 

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.

Instore MAP  (Manufactures lowest direct x 2)

Online MAP (Manufactures lowest direct x 2.5)

Retail on Box (Manufactures lowest direct x 3)

 

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.

 

 

 

SUPREME COURT OF THE UNITED STATES

Syllabus

LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC., DBA KAY’S KLOSET . . . KAY’S SHOES
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FIFTH CIRCUIT

No. 06–480. Argued March 26, 2007—Decided June 28, 2007

Given its policy of refusing to sell to retailers that discount its goods
below suggested prices, petitioner (Leegin) stopped selling to respondent’s (PSKS) store. PSKS filed suit, alleging, inter alia, that Leegin violated the antitrust laws by entering into vertical agreements with its retailers to set minimum resale prices. The District Court excluded expert testimony about Leegin’s pricing policy’s procompetitive effects on the ground that Dr. Miles Medical Co. v. John D. Park
& Sons Co., 220 U. S. 373, makes it per se illegal under §1 of the
Sherman Act for a manufacturer and its distributor to agree on the
minimum price the distributor can charge for the manufacturer’s
goods. At trial, PSKS alleged that Leegin and its retailers had agreed to fix prices, but Leegin argued that its pricing policy was lawful under §1. The jury found for PSKS. On appeal, the Fifth Circuit declined to apply the rule of reason to Leegin’s vertical price-fixing
agreements and affirmed, finding that Dr. Miles’ per se rule rendered
irrelevant any procompetitive justifications for Leegin’s policy.

Held: Dr. Miles is overruled and vertical price restraints are to be
judged by the rule of reason. Pp. 5–28.

(a) The accepted standard for testing whether a practice restrains trade in violation of §1 is the rule of reason, which requires the fact-
finder to weigh “all of the circumstances,” Continental T. V., Inc. v.
GTE Sylvania Inc., 433 U. S. 36, 49, including “specific information about the relevant business” and “the restraint’s history, nature, and
effect,” State Oil Co. v. Khan, 522 U. S. 3, 10. The rule distinguishes between restraints with anticompetitive effect that are harmful to the consumer and those with procompetitive effect that are in the consumer’s best interest. However, when a restraint is deemed
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Syllabus
“unlawful per se,” ibid., the need to study an individual restraint’s reasonableness in light of real market forces is eliminated, Business
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.
Thus, a per se rule is appropriate only after courts have had considerable experience with the type of restraint at issue, see Broadcast
Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 9, and
only if they can predict with confidence that the restraint would be invalidated in all or almost all instances under the rule of reason, see
Arizona v. Maricopa County Medical Soc., 457 U. S. 332, 344. Pp. 5–

7.

(b) Because the reasons upon which Dr. Miles relied do not justify a
per se rule, it is necessary to examine, in the first instance, the economic effects of vertical agreements to fix minimum resale prices and
to determine whether the per se rule is nonetheless appropriate.
Were this Court considering the issue as an original matter, the rule of reason, not a per se rule of unlawfulness, would be the appropriate
standard to judge vertical price restraints. Pp. 7–19.
(1) Economics literature is replete with procompetitive justifications for a manufacturer’s use of resale price maintenance, and the
few recent studies on the subject also cast doubt on the conclusion that the practice meets the criteria for a per se rule. The justifications for vertical price restraints are similar to those for other vertical restraints. Minimum resale price maintenance can stimulate inter brand competition among manufacturers selling different brands
of the same type of product by reducing intra brand competition among retailers selling the same brand. This is important because the antitrust laws’ “primary purpose . . . is to protect interbrand
competition,” Khan, supra, at 15. A single manufacturer’s use of vertical price restraints tends to eliminate intrabrand price competition;
this in turn encourages retailers to invest in services or promotional
efforts that aid the manufacturer’s position as against rival manufacturers. Resale price maintenance may also give consumers more options to choose among low-price, low-service brands; high-price, high-
service brands; and brands falling in between. Absent vertical price restraints, retail services that enhance interbrand competition might
be underprovided because discounting retailers can free ride on retailers who furnish services and then capture some of the demand
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.
(2) Setting minimum resale prices may also have anticompetitive
Syllabus

effects; and unlawful price fixing, designed solely to obtain monopoly profits, is an ever present temptation. Resale price maintenance may, for example, facilitate a manufacturer cartel or be used to organize retail cartels. It can also be abused by a powerful manufacturer or retailer. Thus, the potential anticompetitive consequences of
vertical price restraints must not be ignored or underestimated.
Pp. 12–14.

(3) Notwithstanding the risks of unlawful conduct, it cannot be stated with any degree of confidence that retail price maintenance
“always or almost always tend[s] to restrict competition and decrease output,” Business Electronics, supra, at 723. Vertical retail-price agreements have either procompetitive or anticompetitive effects, depending on the circumstances in which they were formed; and the
limited empirical evidence available does not suggest efficient uses of
the agreements are infrequent or hypothetical. A per se rule should
not be adopted for administrative convenience alone. Such rules can
be counterproductive, increasing the antitrust system’s total cost by prohibiting procompetitive conduct the antitrust laws should encourage. And a per se rule cannot be justified by the possibility of higher prices absent a further showing of anticompetitive conduct. The antitrust laws primarily are designed to protect interbrand competition from which lower prices can later result. Respondent’s argument overlooks that, in general, the interests of manufacturers and consumers are aligned with respect to retailer profit margins. Resale
price maintenance has economic dangers. If the rule of reason were
to apply, courts would have to be diligent in eliminating their anti-
competitive uses from the market. Factors relevant to the inquiry
are the number of manufacturers using the practice, the restraint’s
source, and a manufacturer’s market power. The rule of reason is designed and used to ascertain whether transactions are anticompetitive or procompetitive. This standard principle applies to vertical
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.
(c) Stare decis is does not compel continued adherence to the per se rule here. Because the Sherman Act is treated as a common-law
statute, its prohibition on “restraint[s] of trade” evolves to meet the dynamics of present economic conditions. The rule of reason’s case-
by-case adjudication implements this common-law approach. Here,
respected economics authorities suggest that the per se rule is inappropriate. And both the Department of Justice and the Federal
Trade Commission recommend replacing the per se rule with the rule

LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Syllabus
of reason. In addition, this Court has “overruled [its] precedents
when subsequent cases have undermined their doctrinal underpinnings.” Dickerson v. United States, 530 U. S. 428, 443. It is not surprising that the Court has distanced itself from Dr. Miles’ rationales,
for the case was decided not long after the Sherman Act was enacted,
when the Court had little experience with antitrust analysis. Only
eight years after Dr. Miles, the Court reined in the decision, holdingthat a manufacturer can suggest resale prices and refuse to deal withdistributors who do not follow them, United States v. Colgate & Co.,
250 U. S. 300, 307–308; and more recently the Court has tempered,
limited, or overruled once strict vertical restraint prohibitions, see,
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.
Deciding that procompetitive effects of resale price maintenance are
insufficient to overrule Dr. Miles would call into question cases such
as Colgate and GTE Sylvania. Respondent’s arguments for reaffirming Dr. Miles based on stare decisis do not require a different result.
Pp. 19–28.

171 Fed. Appx. 464, reversed and remanded.

KENNEDY, J., delivered the opinion of the Court, in which ROBERTS,

C. J., and SCALIA, THOMAS, and ALITO, JJ., joined. BREYER, J., filed a
dissenting opinion, in which STEVENS, SOUTER, and GINSBURG, JJ.,
joined.
Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in thepreliminary print of the United States Reports. Readers are requested tonotify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in orderthat corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

No. 06–480

LEEGIN CREATIVE LEATHER PRODUCTS, INC.,
PETITIONER v. PSKS, INC., DBA KAY’S
KLOSET . . . KAY’S SHOES
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT
[June 28, 2007]
JUSTICE KENNEDY delivered the opinion of the Court.

In Dr. Miles Medical Co. v. John D. Park & Sons Co.,
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.
§1, for a manufacturer to agree with its distributor to setthe minimum price the distributor can charge for the
manufacturer’s goods. The question presented by the
instant case is whether the Court should overrule the per
se rule and allow resale price maintenance agreements to
be judged by the rule of reason, the usual standard applied
to determine if there is a violation of §1. The Court has
abandoned the rule of per se illegality for other verticalrestraints a manufacturer imposes on its distributors.
Respected economic analysts, furthermore, conclude that
vertical price restraints can have procompetitive effects.
We now hold that Dr. Miles should be overruled and that
vertical price restraints are to be judged by the rule of
reason.

I
Petitioner, Leegin Creative Leather Products, Inc.
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
(Leegin), designs, manufactures, and distributes leather
goods and accessories. In 1991, Leegin began to sell beltsunder the brand name “Brighton.” The Brighton brand
has now expanded into a variety of women’s fashion accessories. It is sold across the United States in over 5,000
retail establishments, for the most part independent,
small boutiques and specialty stores. Leegin’s president,
Jerry Kohl, also has an interest in about 70 stores that sell
Brighton products. Leegin asserts that, at least for itsproducts, small retailers treat customers better, provide
customers more services, and make their shopping experience more satisfactory than do larger, often impersonalretailers. Kohl explained: “[W]e want the consumers to
get a different experience than they get in Sam’s Club or
in Wal-Mart. And you can’t get that kind of experience orsupport or customer service from a store like Wal-Mart.” 5
Record 127.

Respondent, PSKS, Inc. (PSKS), operates Kay’s Kloset,
a women’s apparel store in Lewisville, Texas. Kay’s Kloset
buys from about 75 different manufacturers and at one
time sold the Brighton brand. It first started purchasingBrighton goods from Leegin in 1995. Once it began selling
the brand, the store promoted Brighton. For example, itran Brighton advertisements and had Brighton days in
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.

In 1997, Leegin instituted the “Brighton Retail Pricing
and Promotion Policy.” 4 id., at 939. Following the policy,
Leegin refused to sell to retailers that discounted Brightongoods below suggested prices. The policy contained anexception for products not selling well that the retailer did
not plan on reordering. In the letter to retailers establishing the policy, Leegin stated:
“In this age of mega stores like Macy’s, Blooming-
dales, May Co. and others, consumers are perplexedby promises of product quality and support of product
which we believe is lacking in these large stores.
Consumers are further confused by the ever popularsale, sale, sale, etc.

“We, at Leegin, choose to break away from the pack
by selling [at] specialty stores; specialty stores that
can offer the customer great quality merchandise, superb service, and support the Brighton product 365
days a year on a consistent basis.

“We realize that half the equation is Leegin producing great Brighton product and the other half is you,
our retailer, creating great looking stores selling ourproducts in a quality manner.” Ibid.

Leegin adopted the policy to give its retailers sufficientmargins to provide customers the service central to its
distribution strategy. It also expressed concern that discounting harmed Brighton’s brand image and reputation.

A year after instituting the pricing policy Leegin introduced a marketing strategy known as the “Heart Store
Program.” See id., at 962–972. It offered retailers incentives to become Heart Stores, and, in exchange, retailers
pledged, among other things, to sell at Leegin’s suggested
prices. Kay’s Kloset became a Heart Store soon after
Leegin created the program. After a Leegin employeevisited the store and found it unattractive, the parties
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.

In December 2002, Leegin discovered Kay’s Kloset had
been marking down Brighton’s entire line by 20 percent.
Kay’s Kloset contended it placed Brighton products on saleto compete with nearby retailers who also were undercutting Leegin’s suggested prices. Leegin, nonetheless, re
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
quested that Kay’s Kloset cease discounting. Its requestrefused, Leegin stopped selling to the store. The loss of
the Brighton brand had a considerable negative impact onthe store’s revenue from sales.

PSKS sued Leegin in the United States District Court
for the Eastern District of Texas. It alleged, among other
claims, that Leegin had violated the antitrust laws by“enter[ing] into agreements with retailers to charge onlythose prices fixed by Leegin.” Id., at 1236. Leeginplanned to introduce expert testimony describing the
procompetitive effects of its pricing policy. The District
Court excluded the testimony, relying on the per se rule
established by Dr. Miles. At trial PSKS argued that the
Heart Store program, among other things, demonstratedLeegin and its retailers had agreed to fix prices. Leeginresponded that it had established a unilateral pricing
policy lawful under §1, which applies only to concerted
action. See United States v. Colgate & Co., 250 U. S. 300,
307 (1919). The jury agreed with PSKS and awarded it
$1.2 million. Pursuant to 15 U. S. C. §15(a), the District
Court trebled the damages and reimbursed PSKS for its
attorney’s fees and costs. It entered judgment against
Leegin in the amount of $3,975,000.80.

The Court of Appeals for the Fifth Circuit affirmed. 171
Fed. Appx. 464 (2006) (per curiam). On appeal Leegin didnot dispute that it had entered into vertical price-fixingagreements with its retailers. Rather, it contended that
the rule of reason should have applied to those agreements. The Court of Appeals rejected this argument. Id.,
at 466–467. It was correct to explain that it remainedbound by Dr. Miles “[b]ecause [the Supreme] Court hasconsistently applied the per se rule to [vertical minimum
price-fixing] agreements.” 171 Fed. Appx., at 466. On this
premise the Court of Appeals held that the District Courtdid not abuse its discretion in excluding the testimony ofLeegin’s economic expert, for the per se rule rendered
irrelevant any procompetitive justifications for Leegin’spricing policy. Id., at 467. We granted certiorari to determine whether vertical minimum resale price maintenance agreements should continue to be treated as per se
unlawful. 549 U. S. ___ (2006).

II
Section 1 of the Sherman Act prohibits “[e]very contract,
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.
While §1 could be interpreted to proscribe all contracts,
see, e.g., Board of Trade of Chicago v. United States, 246

U. S. 231, 238 (1918), the Court has never “taken a literalapproach to [its] language,” Texaco Inc. v. Dagher, 547

U. S. 1, 5 (2006). Rather, the Court has repeated time and
again that §1 “outlaw[s] only unreasonable restraints.”
State Oil Co. v. Khan, 522 U. S. 3, 10 (1997).

The rule of reason is the accepted standard for testingwhether a practice restrains trade in violation of §1. See
Texaco, supra, at 5. “Under this rule, the factfinder
weighs all of the circumstances of a case in decidingwhether a restrictive practice should be prohibited as
imposing an unreasonable restraint on competition.”
Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36,
49 (1977). Appropriate factors to take into account include
“specific information about the relevant business” and “the
restraint’s history, nature, and effect.” Khan, supra, at 10.
Whether the businesses involved have market power is a
further, significant consideration. See, e.g., Copperweld
Corp. v. Independence Tube Corp., 467 U. S. 752, 768
(1984) (equating the rule of reason with “an inquiry into
market power and market structure designed to assess [arestraint’s] actual effect”); see also Illinois Tool Works Inc.

v. Independent Ink, Inc., 547 U. S. 28, 45–46 (2006). In its
design and function the rule distinguishes between re
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
straints with anticompetitive effect that are harmful to
the consumer and restraints stimulating competition thatare in the consumer’s best interest.

The rule of reason does not govern all restraints. Some
types “are deemed unlawful per se.” Khan, supra, at 10.
The per se rule, treating categories of restraints as necessarily illegal, eliminates the need to study the reasonableness of an individual restraint in light of the real marketforces at work, Business Electronics Corp. v. Sharp Electronics Corp., 485 U. S. 717, 723 (1988); and, it must be
acknowledged, the per se rule can give clear guidance forcertain conduct. Restraints that are per se unlawful include horizontal agreements among competitors to fixprices, see Texaco, supra, at 5, or to divide markets, see
Palmer v. BRG of Ga., Inc., 498 U. S. 46, 49–50 (1990) (per
curiam).

Resort to per se rules is confined to restraints, like those
mentioned, “that would always or almost always tend torestrict competition and decrease output.” Business Electronics, supra, at 723 (internal quotation marks omitted).
To justify a per se prohibition a restraint must have“manifestly anticompetitive” effects, GTE Sylvania, supra,
at 50, and “lack . . . any redeeming virtue,” Northwest
Wholesale Stationers, Inc. v. Pacific Stationery & Printing
Co., 472 U. S. 284, 289 (1985) (internal quotation marksomitted).

As a consequence, the per se rule is appropriate onlyafter courts have had considerable experience with the
type of restraint at issue, see Broadcast Music, Inc. v.
Columbia Broadcasting System, Inc., 441 U. S. 1, 9 (1979),
and only if courts can predict with confidence that it wouldbe invalidated in all or almost all instances under the rule
of reason, see Arizona v. Maricopa County Medical Soc.,
457 U. S. 332, 344 (1982). It should come as no surprise,
then, that “we have expressed reluctance to adopt per serules with regard to restraints imposed in the context of
business relationships where the economic impact of
certain practices is not immediately obvious.” Khan,
supra, at 10 (internal quotation marks omitted); see also
White Motor Co. v. United States, 372 U. S. 253, 263 (1963)
(refusing to adopt a per se rule for a vertical nonpricerestraint because of the uncertainty concerning whether
this type of restraint satisfied the demanding standardsnecessary to apply a per se rule). And, as we have stated,
a “departure from the rule-of-reason standard must be
based upon demonstrable economic effect rather than . . .
upon formalistic line drawing.” GTE Sylvania, supra, at
58–59.

III
The Court has interpreted Dr. Miles Medical Co. v. John

D. Park & Sons Co., 220 U. S. 373 (1911), as establishing a
per se rule against a vertical agreement between a manufacturer and its distributor to set minimum resale prices.
See, e.g., Monsanto Co. v. Spray-Rite Service Corp., 465

U. S. 752, 761 (1984). In Dr. Miles the plaintiff, a manufacturer of medicines, sold its products only to distributorswho agreed to resell them at set prices. The Court found
the manufacturer’s control of resale prices to be unlawful.
It relied on the common-law rule that “a general restraint
upon alienation is ordinarily invalid.” 220 U. S., at 404–

405. The Court then explained that the agreements would
advantage the distributors, not the manufacturer, and
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.
By relying on the common-law rule against restraints onalienation, id., at 404–405, the Court justified its decision
based on “formalistic” legal doctrine rather than “demonstrable economic effect,” GTE Sylvania, supra, at 58–59.
The Court in Dr. Miles relied on a treatise published in
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
1628, but failed to discuss in detail the business reasons
that would motivate a manufacturer situated in 1911 to
make use of vertical price restraints. Yet the Sherman
Act’s use of “restraint of trade” “invokes the common law
itself, . . . not merely the static content that the commonlaw had assigned to the term in 1890.” Business Electronics, supra, at 732. The general restraint on alienation,
especially in the age when then-Justice Hughes used the
term, tended to evoke policy concerns extraneous to the
question that controls here. Usually associated with land,
not chattels, the rule arose from restrictions removing realproperty from the stream of commerce for generations.
The Court should be cautious about putting dispositive
weight on doctrines from antiquity but of slight relevance.
We reaffirm that “the state of the common law 400 or even
100 years ago is irrelevant to the issue before us: the effect
of the antitrust laws upon vertical distributional restraints in the American economy today.” GTE Sylvania,
433 U. S., at 53, n. 21 (internal quotation marks omitted).

Dr. Miles, furthermore, treated vertical agreements a
manufacturer makes with its distributors as analogous toa horizontal combination among competing distributors.
See 220 U. S., at 407–408. In later cases, however, the
Court rejected the approach of reliance on rules governinghorizontal restraints when defining rules applicable tovertical ones. See, e.g., Business Electronics, supra, at 734
(disclaiming the “notion of equivalence between the scopeof horizontal per se illegality and that of vertical per se
illegality”); Maricopa County, supra, at 348, n. 18 (noting
that “horizontal restraints are generally less defensible
than vertical restraints”). Our recent cases formulate
antitrust principles in accordance with the appreciateddifferences in economic effect between vertical and horizontal agreements, differences the Dr. Miles Court failed
to consider.

The reasons upon which Dr. Miles relied do not justify a
Opinion of the Court

per se rule. As a consequence, it is necessary to examine,
in the first instance, the economic effects of vertical
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.

A
Though each side of the debate can find sources to support its position, it suffices to say here that economicsliterature is replete with procompetitive justifications for amanufacturer’s use of resale price maintenance. See, e.g.,
Brief for Economists as Amici Curiae 16 (“In the theoretical literature, it is essentially undisputed that minimum[resale price maintenance] can have procompetitive effectsand that under a variety of market conditions it is
unlikely to have anticompetitive effects”); Brief for United
States as Amicus Curiae 9 (“[T]here is a widespread consensus that permitting a manufacturer to control the price
at which its goods are sold may promote interbrand competition and consumer welfare in a variety of ways”); ABA
Section of Antitrust Law, Antitrust Law and Economics of
Product Distribution 76 (2006) (“[T]he bulk of the economic literature on [resale price maintenance] suggeststhat [it] is more likely to be used to enhance efficiency
than for anticompetitive purposes”); see also H. Hovenkamp, The Antitrust Enterprise: Principle and Execution
184–191 (2005) (hereinafter Hovenkamp); R. Bork, The
Antitrust Paradox 288–291 (1978) (hereinafter Bork).
Even those more skeptical of resale price maintenance
acknowledge it can have procompetitive effects. See, e.g.,
Brief for William S. Comanor et al. as Amici Curiae 3
(“[G]iven [the] diversity of effects [of resale price maintenance], one could reasonably take the position that a rule
of reason rather than a per se approach is warranted”);

F.M. Scherer & D. Ross, Industrial Market Structure and
Economic Performance 558 (3d ed. 1990) (hereinafter
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
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Opinion of the Court
Scherer & Ross) (“The overall balance between benefitsand costs [of resale price maintenance] is probably close”).

The few recent studies documenting the competitiveeffects of resale price maintenance also cast doubt on theconclusion that the practice meets the criteria for a per se
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).

The justifications for vertical price restraints are similar
to those for other vertical restraints. See GTE Sylvania,
433 U. S., at 54–57. Minimum resale price maintenance
can stimulate interbrand competition—the competitionamong manufacturers selling different brands of the same
type of product—by reducing intrabrand competition—the
competition among retailers selling the same brand. See
id., at 51–52. The promotion of interbrand competition is
important because “the primary purpose of the antitrust
laws is to protect [this type of] competition.” Khan, 522

U. S., at 15. A single manufacturer’s use of vertical pricerestraints tends to eliminate intrabrand price competition;
this in turn encourages retailers to invest in tangible orintangible services or promotional efforts that aid the
manufacturer’s position as against rival manufacturers.
Resale price maintenance also has the potential to giveconsumers more options so that they can choose amonglow-price, low-service brands; high-price, high-service
brands; and brands that fall in between.

Absent vertical price restraints, the retail services thatenhance interbrand competition might be underprovided.
This is because discounting retailers can free ride on
retailers who furnish services and then capture some ofthe increased demand those services generate. GTE Syl
vania, supra, at 55. Consumers might learn, for example,
about the benefits of a manufacturer’s product from aretailer that invests in fine showrooms, offers productdemonstrations, or hires and trains knowledgeable employees. R. Posner, Antitrust Law 172–173 (2d ed. 2001)
(hereinafter Posner). Or consumers might decide to buythe product because they see it in a retail establishment
that has a reputation for selling high-quality merchandise.
Marvel & McCafferty, Resale Price Maintenance and
Quality Certification, 15 Rand J. Econ. 346, 347–349
(1984) (hereinafter Marvel & McCafferty). If the consumer can then buy the product from a retailer that discounts because it has not spent capital providing services
or developing a quality reputation, the high-service retailer will lose sales to the discounter, forcing it to cut
back its services to a level lower than consumers would
otherwise prefer. Minimum resale price maintenance
alleviates the problem because it prevents the discounter
from undercutting the service provider. With price competition decreased, the manufacturer’s retailers compete
among themselves over services.

Resale price maintenance, in addition, can increaseinterbrand competition by facilitating market entry for
new firms and brands. “[N]ew manufacturers and manufacturers entering new markets can use the restrictions in
order to induce competent and aggressive retailers tomake the kind of investment of capital and labor that isoften required in the distribution of products unknown tothe consumer.” GTE Sylvania, supra, at 55; see Marvel &
McCafferty 349 (noting that reliance on a retailer’s reputation “will decline as the manufacturer’s brand becomes
better known, so that [resale price maintenance] may be
particularly important as a competitive device for newentrants”). New products and new brands are essential to
a dynamic economy, and if markets can be penetrated by
using resale price maintenance there is a procompetitive
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effect.

Resale price maintenance can also increase interbrand
competition by encouraging retailer services that wouldnot be provided even absent free riding. It may be difficultand inefficient for a manufacturer to make and enforce a
contract with a retailer specifying the different services
the retailer must perform. Offering the retailer a guaranteed margin and threatening termination if it does not live
up to expectations may be the most efficient way to expand the manufacturer’s market share by inducing the
retailer’s performance and allowing it to use its own initiative and experience in providing valuable services. See
Mathewson & Winter, The Law and Economics of Resale
Price Maintenance, 13 Rev. Indus. Org. 57, 74–75 (1998)
(hereinafter Mathewson & Winter); Klein & Murphy,
Vertical Restraints as Contract Enforcement Mechanisms,
31 J. Law & Econ. 265, 295 (1988); see also Deneckere,
Marvel, & Peck, Demand Uncertainty, Inventories, and
Resale Price Maintenance, 111 Q. J. Econ. 885, 911 (1996)
(noting that resale price maintenance may be beneficial tomotivate retailers to stock adequate inventories of a
manufacturer’s goods in the face of uncertain consumer
demand).

B
While vertical agreements setting minimum resaleprices can have procompetitive justifications, they may
have anticompetitive effects in other cases; and unlawful
price fixing, designed solely to obtain monopoly profits, is
an ever present temptation. Resale price maintenancemay, for example, facilitate a manufacturer cartel. See
Business Electronics, 485 U. S., at 725. An unlawful cartel
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.
Opinion of the Court

Resale price maintenance, furthermore, could discourage amanufacturer from cutting prices to retailers with the
concomitant benefit of cheaper prices to consumers. See
ibid.; see also Posner 172; Overstreet 19–23.

Vertical price restraints also “might be used to organize
cartels at the retailer level.” Business Electronics, supra,
at 725–726. A group of retailers might collude to fix pricesto consumers and then compel a manufacturer to aid theunlawful arrangement with resale price maintenance. In
that instance the manufacturer does not establish the
practice to stimulate services or to promote its brand but
to give inefficient retailers higher profits. Retailers with
better distribution systems and lower cost structures
would be prevented from charging lower prices by the
agreement. See Posner 172; Overstreet 13–19. Historical
examples suggest this possibility is a legitimate concern.
See, e.g., Marvel & McCafferty, The Welfare Effects of
Resale Price Maintenance, 28 J. Law & Econ. 363, 373
(1985) (hereinafter Marvel) (providing an example of thepower of the National Association of Retail Druggists tocompel manufacturers to use resale price maintenance);
Hovenkamp 186 (suggesting that the retail druggists in
Dr. Miles formed a cartel and used manufacturers to
enforce it).

A horizontal cartel among competing manufacturers orcompeting retailers that decreases output or reduces
competition in order to increase price is, and ought to be,
per se unlawful. See Texaco, 547 U. S., at 5; GTE Sylvania, 433 U. S., at 58, n. 28. To the extent a vertical
agreement setting minimum resale prices is entered uponto facilitate either type of cartel, it, too, would need to beheld unlawful under the rule of reason. This type of
agreement may also be useful evidence for a plaintiff
attempting to prove the existence of a horizontal cartel.

Resale price maintenance, furthermore, can be abused
by a powerful manufacturer or retailer. A dominant re
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tailer, for example, might request resale price maintenance to forestall innovation in distribution that decreases
costs. A manufacturer might consider it has little choice
but to accommodate the retailer’s demands for vertical
price restraints if the manufacturer believes it needs
access to the retailer’s distribution network. See
Overstreet 31; 8 P. Areeda & H. Hovenkamp, AntitrustLaw 47 (2d ed. 2004) (hereinafter Areeda & Hovenkamp);
cf. Toys “R” Us, Inc. v. FTC, 221 F. 3d 928, 937–938 (CA7
2000). A manufacturer with market power, by comparison, might use resale price maintenance to give retailers
an incentive not to sell the products of smaller rivals or
new entrants. See, e.g., Marvel 366–368. As should
be evident, the potential anticompetitive consequences
of vertical price restraints must not be ignored orunderestimated.

C
Notwithstanding the risks of unlawful conduct, it cannot
be stated with any degree of confidence that resale price
maintenance “always or almost always tend[s] to restrict
competition and decrease output.” Business Electronics,
supra, at 723 (internal quotation marks omitted). Vertical
agreements establishing minimum resale prices can have
either procompetitive or anticompetitive effects, dependingupon the circumstances in which they are formed. And
although the empirical evidence on the topic is limited, itdoes not suggest efficient uses of the agreements areinfrequent or hypothetical. See Overstreet 170; see also
id., at 80 (noting that for the majority of enforcementactions brought by the Federal Trade Commission between 1965 and 1982, “the use of [resale price maintenance] was not likely motivated by collusive dealers whohad successfully coerced their suppliers”); Ippolito 292(reaching a similar conclusion). As the rule would proscribe a significant amount of procompetitive conduct,
Opinion of the Court

these agreements appear ill suited for per se condemnation.

Respondent contends, nonetheless, that vertical pricerestraints should be per se unlawful because of the administrative convenience of per se rules. See, e.g., GTE Sylvania, supra, at 50, n. 16 (noting “per se rules tend to provideguidance to the business community and to minimize the
burdens on litigants and the judicial system”). That argument suggests per se illegality is the rule rather than
the exception. This misinterprets our antitrust law. Per
se rules may decrease administrative costs, but that is
only part of the equation. Those rules can be counterproductive. They can increase the total cost of the antitrust
system by prohibiting procompetitive conduct the antitrust laws should encourage. See Easterbrook, Vertical
Arrangements and the Rule of Reason, 53 Antitrust L. J.
135, 158 (1984) (hereinafter Easterbrook). They also mayincrease litigation costs by promoting frivolous suits
against legitimate practices. The Court has thus explained that administrative “advantages are not sufficient
in themselves to justify the creation of per se rules,” GTE
Sylvania, 433 U. S., at 50, n. 16, and has relegated their
use to restraints that are “manifestly anticompetitive,” id.,
at 49–50. Were the Court now to conclude that vertical
price restraints should be per se illegal based on administrative costs, we would undermine, if not overrule, the
traditional “demanding standards” for adopting per se
rules. Id., at 50. Any possible reduction in administrative
costs cannot alone justify the Dr. Miles rule.

Respondent also argues the per se rule is justified because a vertical price restraint can lead to higher prices
for the manufacturer’s goods. See also Overstreet 160
(noting that “price surveys indicate that [resale price
maintenance] in most cases increased the prices of products sold”). Respondent is mistaken in relying on pricing
effects absent a further showing of anticompetitive con
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duct. Cf. id., at 106 (explaining that price surveys “do not
necessarily tell us anything conclusive about the welfareeffects of [resale price maintenance] because the resultsare generally consistent with both procompetitive andanticompetitive theories”). For, as has been indicated
already, the antitrust laws are designed primarily toprotect interbrand competition, from which lower pricescan later result. See Khan, 522 U. S., at 15. The Court,
moreover, has evaluated other vertical restraints under
the rule of reason even though prices can be increased in
the course of promoting procompetitive effects. See, e.g.,
Business Electronics, 485 U. S., at 728. And resale price
maintenance may reduce prices if manufacturers have
resorted to costlier alternatives of controlling resale prices
that are not per se unlawful. See infra, at 22–25; see also
Marvel 371.

Respondent’s argument, furthermore, overlooks that, in
general, the interests of manufacturers and consumers are
aligned with respect to retailer profit margins. The difference between the price a manufacturer charges retailers
and the price retailers charge consumers represents partof the manufacturer’s cost of distribution, which, like anyother cost, the manufacturer usually desires to minimize.
See GTE Sylvania, 433 U. S., at 56, n. 24; see also id., at
56 (“Economists . . . have argued that manufacturers havean economic interest in maintaining as much intrabrand
competition as is consistent with the efficient distributionof their products”). A manufacturer has no incentive to
overcompensate retailers with unjustified margins. The
retailers, not the manufacturer, gain from higher retail
prices. The manufacturer often loses; interbrand competition reduces its competitiveness and market share because
consumers will “substitute a different brand of the same
product.” Id., at 52, n. 19; see Business Electronics, supra,
at 725. As a general matter, therefore, a single manufacturer will desire to set minimum resale prices only if the
“increase in demand resulting from enhanced service . . .
will more than offset a negative impact on demand of ahigher retail price.” Mathewson & Winter 67.

The implications of respondent’s position are far reaching. Many decisions a manufacturer makes and carries
out through concerted action can lead to higher prices. A
manufacturer might, for example, contract with differentsuppliers to obtain better inputs that improve productquality. Or it might hire an advertising agency to promoteawareness of its goods. Yet no one would think these
actions violate the Sherman Act because they lead tohigher prices. The antitrust laws do not require manufacturers to produce generic goods that consumers do not
know about or want. The manufacturer strives to improveits product quality or to promote its brand because it
believes this conduct will lead to increased demand despite higher prices. The same can hold true for resale
price maintenance.

Resale price maintenance, it is true, does have economic
dangers. If the rule of reason were to apply to verticalprice restraints, courts would have to be diligent in eliminating their anticompetitive uses from the market. This is
a realistic objective, and certain factors are relevant to theinquiry. For example, the number of manufacturers that
make use of the practice in a given industry can provideimportant instruction. When only a few manufacturerslacking market power adopt the practice, there is littlelikelihood it is facilitating a manufacturer cartel, for a
cartel then can be undercut by rival manufacturers. See
Overstreet 22; Bork 294. Likewise, a retailer cartel is
unlikely when only a single manufacturer in a competitive
market uses resale price maintenance. Interbrand competition would divert consumers to lower priced substitutes
and eliminate any gains to retailers from their price-fixingagreement over a single brand. See Posner 172; Bork 292.
Resale price maintenance should be subject to more care
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ful scrutiny, by contrast, if many competing manufacturers adopt the practice. Cf. Scherer & Ross 558 (noting
that “except when [resale price maintenance] spreads tocover the bulk of an industry’s output, depriving consumers of a meaningful choice between high-service and low-
price outlets, most [resale price maintenance arrangements] are probably innocuous”); Easterbrook 162 (suggesting that “every one of the potentially-anticompetitive
outcomes of vertical arrangements depends on the uniformity of the practice”).

The source of the restraint may also be an importantconsideration. If there is evidence retailers were the
impetus for a vertical price restraint, there is a greaterlikelihood that the restraint facilitates a retailer cartel or
supports a dominant, inefficient retailer. See Brief for
William S. Comanor et al. as Amici Curiae 7–8. If, bycontrast, a manufacturer adopted the policy independent
of retailer pressure, the restraint is less likely to promote
anticompetitive conduct. Cf. Posner 177 (“It makes all thedifference whether minimum retail prices are imposed by
the manufacturer in order to evoke point-of-sale services
or by the dealers in order to obtain monopoly profits”). A
manufacturer also has an incentive to protest inefficient
retailer-induced price restraints because they can harm itscompetitive position.

As a final matter, that a dominant manufacturer or
retailer can abuse resale price maintenance for anticompetitive purposes may not be a serious concern unless therelevant entity has market power. If a retailer lacks
market power, manufacturers likely can sell their goods
through rival retailers. See also Business Electronics,
supra, at 727, n. 2 (noting “[r]etail market power is rare,
because of the usual presence of interbrand competitionand other dealers”). And if a manufacturer lacks market
power, there is less likelihood it can use the practice tokeep competitors away from distribution outlets.
The rule of reason is designed and used to eliminateanticompetitive transactions from the market. This standard principle applies to vertical price restraints. A partyalleging injury from a vertical agreement setting minimum resale prices will have, as a general matter, theinformation and resources available to show the existence
of the agreement and its scope of operation. As courts
gain experience considering the effects of these restraintsby applying the rule of reason over the course of decisions,
they can establish the litigation structure to ensure therule operates to eliminate anticompetitive restraints fromthe market and to provide more guidance to businesses.
Courts can, for example, devise rules over time for offering
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.

For all of the foregoing reasons, we think that were theCourt considering the issue as an original matter, the ruleof reason, not a per se rule of unlawfulness, would be the
appropriate standard to judge vertical price restraints.

IV
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.
Miles established an erroneous rule, “[s]tare decisis reflects a policy judgment that in most matters it is moreimportant that the applicable rule of law be settled thanthat it be settled right.” Khan, 522 U. S., at 20 (internal
quotation marks omitted). And concerns about maintaining settled law are strong when the question is one ofstatutory interpretation. See, e.g., Hohn v. United States,
524 U. S. 236, 251 (1998).
Stare decisis is not as significant in this case, however,
because the issue before us is the scope of the Sherman
Act. Khan, supra, at 20 (“[T]he general presumption that
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legislative changes should be left to Congress has lessforce with respect to the Sherman Act”). From the beginning the Court has treated the Sherman Act as a common-
law statute. See National Soc. of Professional Engineers v.
United States, 435 U. S. 679, 688 (1978); see also Northwest Airlines, Inc. v. Transport Workers, 451 U. S. 77, 98,

n. 42 (1981) (“In antitrust, the federal courts . . . act moreas common-law courts than in other areas governed byfederal statute”). Just as the common law adapts to modern understanding and greater experience, so too does theSherman Act’s prohibition on “restraint[s] of trade” evolve
to meet the dynamics of present economic conditions. The
case-by-case adjudication contemplated by the rule of
reason has implemented this common-law approach. See
National Soc. of Professional Engineers, supra, at 688.
Likewise, the boundaries of the doctrine of per se illegality
should not be immovable. For “[i]t would make no sense
to create out of the single term ‘restraint of trade’ achronologically schizoid statute, in which a ‘rule of reason’
evolves with new circumstance and new wisdom, but a line
of per se illegality remains forever fixed where it was.”
Business Electronics, 485 U. S., at 732.

A
Stare decisis, we conclude, does not compel our continued adherence to the per se rule against vertical price
restraints. As discussed earlier, respected authorities in
the economics literature suggest the per se rule is inappropriate, and there is now widespread agreement thatresale price maintenance can have procompetitive effects.
See, e.g., Brief for Economists as Amici Curiae 16. It is
also significant that both the Department of Justice andthe Federal Trade Commission—the antitrust enforcement agencies with the ability to assess the long-termimpacts of resale price maintenance—have recommendedthat this Court replace the per se rule with the traditional
rule of reason. See Brief for United States as Amicus
Curiae 6. In the antitrust context the fact that a decision
has been “called into serious question” justifies our reevaluation of it. Khan, supra, at 21.

Other considerations reinforce the conclusion that Dr.
Miles should be overturned. Of most relevance, “we have
overruled our precedents when subsequent cases have
undermined their doctrinal underpinnings.” Dickerson v.
United States, 530 U. S. 428, 443 (2000). The Court’s
treatment of vertical restraints has progressed away from
Dr. Miles’ strict approach. We have distanced ourselves
from the opinion’s rationales. See supra, at 7–8; see also
Khan, supra, at 21 (overruling a case when “the viewsunderlying [it had been] eroded by this Court’s precedent”); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U. S. 477, 480–481 (1989) (same). This is
unsurprising, for the case was decided not long after enactment of the Sherman Act when the Court had little
experience with antitrust analysis. Only eight years after
Dr. Miles, moreover, the Court reined in the decision by
holding that a manufacturer can announce suggested
resale prices and refuse to deal with distributors who donot follow them. Colgate, 250 U. S., at 307–308.

In more recent cases the Court, following a common-lawapproach, has continued to temper, limit, or overrule oncestrict prohibitions on vertical restraints. In 1977, the
Court overturned the per se rule for vertical nonpricerestraints, adopting the rule of reason in its stead. GTE
Sylvania, 433 U. S., at 57–59 (overruling United States v.
Arnold, Schwinn & Co., 388 U. S. 365 (1967)); see also 433

U. S., at 58, n. 29 (noting “that the advantages of vertical
restrictions should not be limited to the categories of newentrants and failing firms”). While the Court in a footnote
in GTE Sylvania suggested that differences between
vertical price and nonprice restraints could support different legal treatment, see 433 U. S., at 51, n. 18, the central
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part of the opinion relied on authorities and argumentsthat find unequal treatment “difficult to justify,” id., at
69–70 (White, J., concurring in judgment).

Continuing in this direction, in two cases in the 1980’sthe Court defined legal rules to limit the reach of Dr. Miles
and to accommodate the doctrines enunciated in GTE
Sylvania and Colgate. See Business Electronics, supra, at
726–728; Monsanto, 465 U. S., at 763–764. In Monsanto,
the Court required that antitrust plaintiffs alleging a §1
price-fixing conspiracy must present evidence tending to
exclude the possibility a manufacturer and its distributorsacted in an independent manner. Id., at 764. Unlike
Justice Brennan’s concurrence, which rejected argumentsthat Dr. Miles should be overruled, see 465 U. S., at 769,
the Court “decline[d] to reach the question” whether vertical agreements fixing resale prices always should beunlawful because neither party suggested otherwise, id.,
at 761–762, n. 7. In Business Electronics the Court further narrowed the scope of Dr. Miles. It held that the per
se rule applied only to specific agreements over price levels
and not to an agreement between a manufacturer and adistributor to terminate a price-cutting distributor. 485

U. S., at 726–727, 735–736.

Most recently, in 1997, after examining the issue of
vertical maximum price-fixing agreements in light ofcommentary and real experience, the Court overruled a29-year-old precedent treating those agreements as per se
illegal. Khan, 522 U. S., at 22 (overruling Albrecht v.
Herald Co., 390 U. S. 145 (1968)). It held instead that
they should be evaluated under the traditional rule of
reason. 522 U. S., at 22. Our continued limiting of thereach of the decision in Dr. Miles and our recent treatment
of other vertical restraints justify the conclusion that Dr.
Miles should not be retained.

The Dr. Miles rule is also inconsistent with a principled
framework, for it makes little economic sense when ana
Opinion of the Court

lyzed with our other cases on vertical restraints. If we
were to decide the procompetitive effects of resale pricemaintenance were insufficient to overrule Dr. Miles, then
cases such as Colgate and GTE Sylvania themselves
would be called into question. These later decisions, while
they may result in less intrabrand competition, can be
justified because they permit manufacturers to secure the
procompetitive benefits associated with vertical pricerestraints through other methods. The other methods,
however, could be less efficient for a particular manufacturer to establish and sustain. The end result hinders
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.

The manufacturer has a number of legitimate options to
achieve benefits similar to those provided by vertical pricerestraints. A manufacturer can exercise its Colgate rightto refuse to deal with retailers that do not follow its suggested prices. See 250 U. S., at 307. The economic effects
of unilateral and concerted price setting are in general the
same. See, e.g., Monsanto, 465 U. S., at 762–764. The
problem for the manufacturer is that a jury might conclude its unilateral policy was really a vertical agreement,
subjecting it to treble damages and potential criminal
liability. Ibid.; Business Electronics, supra, at 728. Even
with the stringent standards in Monsanto and Business
Electronics, this danger can lead, and has led, rationalmanufacturers to take wasteful measures. See, e.g., Brief
for PING, Inc., as Amicus Curiae 9–18. A manufacturer
might refuse to discuss its pricing policy with its distributors except through counsel knowledgeable of the subtle
intricacies of the law. Or it might terminate longstandingdistributors for minor violations without seeking an explanation. See ibid. The increased costs these burdensome measures generate flow to consumers in the form of
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higher prices.

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.
Miles tilts the relative costs of vertical integration andvertical agreement by making the former more attractive
based on the per se rule, not on real market conditions.
See Business Electronics, supra, at 725; see generally
Coase, The Nature of the Firm, 4 Economica, New Series
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.

There is yet another consideration. A manufacturer can
impose territorial restrictions on distributors and allowonly one distributor to sell its goods in a given region. Our
cases have recognized, and the economics literature confirms, that these vertical nonprice restraints have impactssimilar to those of vertical price restraints; both reduceintrabrand competition and can stimulate retailer services. See, e.g., Business Electronics, supra, at 728; Monsanto, supra, at 762–763; see also Brief for Economists as
Amici Curiae 17–18. Cf. Scherer & Ross 560 (noting that
vertical nonprice restraints “can engender inefficiencies at
least as serious as those imposed upon the consumer by
resale price maintenance”); Steiner, How ManufacturersDeal with the Price-Cutting Retailer: When Are VerticalRestraints Efficient?, 65 Antitrust L. J. 407, 446–447
(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”).
The same legal standard (per se unlawfulness) applies to
Opinion of the Court

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.
Furthermore, vertical nonprice restraints may prove less
efficient for inducing desired services, and they reduceintrabrand competition more than vertical price restraintsby eliminating both price and service competition. See
Brief for Economists as Amici Curiae 17–18.

In sum, it is a flawed antitrust doctrine that serves the
interests of lawyers—by creating legal distinctions thatoperate as traps for the unwary—more than the interests
of consumers—by requiring manufacturers to choose
second-best options to achieve sound business objectives.

B
Respondent’s arguments for reaffirming Dr. Miles on the
basis of stare decisis do not require a different result.
Respondent looks to congressional action concerning vertical price restraints. In 1937, Congress passed the Miller-
Tydings Fair Trade Act, 50 Stat. 693, which made vertical
price restraints legal if authorized by a fair trade law
enacted by a State. Fifteen years later, Congress expanded the exemption to permit vertical price-settingagreements between a manufacturer and a distributor to
be enforced against other distributors not involved in the
agreement. McGuire Act, 66 Stat. 632. In 1975, however,
Congress repealed both Acts. Consumer Goods PricingAct, 89 Stat. 801. That the Dr. Miles rule applied to vertical price restraints in 1975, according to respondent,
shows Congress ratified the rule.
This is not so. The text of the Consumer Goods PricingAct did not codify the rule of per se illegality for vertical
price restraints. It rescinded statutory provisions that
made them per se legal. Congress once again placed these
restraints within the ambit of §1 of the Sherman Act.
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And, as has been discussed, Congress intended §1 to give
courts the ability “to develop governing principles of law”
in the common-law tradition. Texas Industries, Inc. v.
Radcliff Materials, Inc., 451 U. S. 630, 643 (1981); see
Business Electronics, 485 U. S., at 731 (“The changing
content of the term ‘restraint of trade’ was well recognized
at the time the Sherman Act was enacted”). Congress
could have set the Dr. Miles rule in stone, but it chose a
more flexible option. We respect its decision by analyzing
vertical price restraints, like all restraints, in conformance
with traditional §1 principles, including the principle that
our antitrust doctrines “evolv[e] with new circumstancesand new wisdom.” Business Electronics, supra, at 732; see
also Easterbrook 139.

The rule of reason, furthermore, is not inconsistent with
the Consumer Goods Pricing Act. Unlike the earlier congressional exemption, it does not treat vertical price restraints as per se legal. In this respect, the justificationsfor the prior exemption are illuminating. Its goal “was to
allow the States to protect small retail establishmentsthat Congress thought might otherwise be driven from the
marketplace by large-volume discounters.” California
Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445

U. S. 97, 102 (1980). The state fair trade laws also appearto have been justified on similar grounds. See Areeda &
Hovenkamp 298. The rationales for these provisions areforeign to the Sherman Act. Divorced from competitionand consumer welfare, they were designed to save inefficient small retailers from their inability to compete. The
purpose of the antitrust laws, by contrast, is “the protection of competition, not competitors.” Atlantic Richfield
Co. v. USA Petroleum Co., 495 U. S. 328, 338 (1990) (internal quotation marks omitted). To the extent Congressrepealed the exemption for some vertical price restraints
to end its prior practice of encouraging anticompetitive
conduct, the rule of reason promotes the same objective.
Opinion of the Court

Respondent also relies on several congressional appropriations in the mid-1980’s in which Congress did not
permit the Department of Justice or the Federal TradeCommission to use funds to advocate overturning Dr.
Miles. See, e.g., 97 Stat. 1071. We need not pause long in
addressing this argument. The conditions on funding are
no longer in place, see, e.g., Brief for United States as
Amicus Curiae 21, and they were ambiguous at best. As
much as they might show congressional approval for Dr.
Miles, they might demonstrate a different proposition:
that Congress could not pass legislation codifying the rule
and reached a short-term compromise instead.

Reliance interests do not require us to reaffirm Dr.
Miles. To be sure, reliance on a judicial opinion is a significant reason to adhere to it, Payne v. Tennessee, 501

U. S. 808, 828 (1991), especially “in cases involving property and contract rights,” Khan, 522 U. S., at 20. The
reliance interests here, however, like the reliance interests
in Khan, cannot justify an inefficient rule, especiallybecause the narrowness of the rule has allowed manufacturers to set minimum resale prices in other ways. And
while the Dr. Miles rule is longstanding, resale price
maintenance was legal under fair trade laws in a majorityof States for a large part of the past century up until 1975.

It is also of note that during this time “when the legalenvironment in the [United States] was most favorable for
[resale price maintenance], no more than a tiny fraction of
manufacturers ever employed [resale price maintenance]
contracts.” Overstreet 6; see also id., at 169 (noting that
“no more than one percent of manufacturers, accounting
for no more than ten percent of consumer goods purchases,
ever employed [resale price maintenance] in any singleyear in the [United States]”); Scherer & Ross 549 (noting
that “[t]he fraction of U.S. retail sales covered by [resale
price maintenance] in its heyday has been variously estimated at from 4 to 10 percent”). To the extent consumers
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
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Opinion of the Court
demand cheap goods, judging vertical price restraintsunder the rule of reason will not prevent the market fromproviding them. Cf. Easterbrook 152–153 (noting that
“S.S. Kresge (the old K-Mart) flourished during the days ofmanufacturers’ greatest freedom” because “discount stores
offer a combination of price and service that many customers value” and that “[n]othing in restricted dealingthreatens the ability of consumers to find low prices”);
Scherer & Ross 557 (noting that “for the most part, the
effects of the [Consumer Goods Pricing Act] were imperceptible because the forces of competition had already
repealed the [previous antitrust exemption] in their own
quiet way”).

For these reasons the Court’s decision in Dr. Miles
Medical Co. v. John D. Park & Sons Co., 220 U. S. 373
(1911), is now overruled. Vertical price restraints are tobe judged according to the rule of reason.

V
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.
The judgment of the Court of Appeals is reversed, andthe case is remanded for proceedings consistent with this
opinion.

It is so ordered.
BREYER, J., dissenting

SUPREME COURT OF THE UNITED STATES

No. 06–480

LEEGIN CREATIVE LEATHER PRODUCTS, INC.,
PETITIONER v. PSKS, INC., DBA KAY’S
KLOSET . . . KAY’S SHOES
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT
[June 28, 2007]
JUSTICE BREYER, with whom JUSTICE STEVENS, JUSTICE
SOUTER, and JUSTICE GINSBURG join, dissenting.

In Dr. Miles Medical Co. v. John D. Park & Sons Co.,
220 U. S. 373, 394, 408–409 (1911), this Court held that
an agreement between a manufacturer of proprietary
medicines and its dealers to fix the minimum price at
which its medicines could be sold was “invalid . . . under
the [Sherman Act, 15 U. S. C. §1].” This Court has consistently read Dr. Miles as establishing a bright-line rule
that agreements fixing minimum resale prices are per se
illegal. See, e.g., United States v. Trenton Potteries Co.,
273 U. S. 392, 399–401 (1927); NYNEX Corp. v. Discon,
Inc., 525 U. S. 128, 133 (1998). That per se rule is one
upon which the legal profession, business, and the public
have relied for close to a century. Today the Court holds
that courts must determine the lawfulness of minimum
resale price maintenance by applying, not a bright-line per
se rule, but a circumstance-specific “rule of reason.” Ante,
at 28. And in doing so it overturns Dr. Miles.

The Court justifies its departure from ordinary considerations of stare decisis by pointing to a set of arguments
well known in the antitrust literature for close to half a
century. See ante, at 10–12. Congress has repeatedly
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BREYER, J., dissenting
found in these arguments insufficient grounds for overturning the per se rule. See, e.g., Hearings on H. R. 10527
et al. before the Subcommittee on Commerce and Finance
of the House Committee on Interstate and Foreign Commerce, 85th Cong., 2d Sess., 74–76, 89, 99, 101–102, 192–
195, 261–262 (1958). And, in my view, they do not warrant the Court’s now overturning so well-established a
legal precedent.

I
The Sherman Act seeks to maintain a marketplace freeof anticompetitive practices, in particular those enforcedby agreement among private firms. The law assumes that
such a marketplace, free of private restrictions, will tendto bring about the lower prices, better products, and more
efficient production processes that consumers typicallydesire. In determining the lawfulness of particular practices, courts often apply a “rule of reason.” They examineboth a practice’s likely anticompetitive effects and itsbeneficial business justifications. See, e.g., National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla.,
468 U. S. 85, 109–110, and n. 39 (1984); National Soc. of
Professional Engineers v. United States, 435 U. S. 679,
688–691 (1978); Board of Trade of Chicago v. United
States, 246 U. S. 231, 238 (1918).
Nonetheless, sometimes the likely anticompetitiveconsequences of a particular practice are so serious and
the potential justifications so few (or, e.g., so difficult to
prove) that courts have departed from a pure “rule of
reason” approach. And sometimes this Court has imposed
a rule of per se unlawfulness—a rule that instructs courts
to find the practice unlawful all (or nearly all) the time.
See, e.g., NYNEX, supra, at 133; Arizona v. Maricopa
County Medical Soc., 457 U. S. 332, 343–344, and n. 16
(1982); Continental T. V., Inc. v. GTE Sylvania Inc., 433

U. S. 36, 50, n. 16 (1977); United States v. Topco Associ
BREYER, J., dissenting

ates, Inc., 405 U. S. 596, 609–611 (1972); United States v.
Socony-Vacuum Oil Co., 310 U. S. 150, 213–214 (1940)
(citing and quoting Trenton Potteries, supra, at 397–398).

The case before us asks which kind of approach thecourts should follow where minimum resale price maintenance is at issue. Should they apply a per se rule (or avariation) that would make minimum resale price maintenance always (or almost always) unlawful? Should they
apply a “rule of reason”? Were the Court writing on ablank slate, I would find these questions difficult. But, of
course, the Court is not writing on a blank slate, and thatfact makes a considerable legal difference.

To best explain why the question would be difficult werewe deciding it afresh, I briefly summarize several classical
arguments for and against the use of a per se rule. The
arguments focus on three sets of considerations, thoseinvolving: (1) potential anticompetitive effects, (2) potential benefits, and (3) administration. The difficulty arisesout of the fact that the different sets of considerations
point in different directions. See, e.g., 8 P. Areeda, Antitrust Law ¶¶1628–1633, pp. 330–392 (1st ed. 1989) (hereinafter Areeda); 8 P. Areeda & H. Hovenkamp, Antitrust
Law ¶¶1628–1633, pp. 288–339 (2d ed. 2004) (hereinafter
Areeda & Hovenkamp); Easterbrook, Vertical Arrangements and the Rule of Reason, 53 Antitrust L. J. 135, 146–
152 (1984) (hereinafter Easterbrook); Pitofsky, In Defense
of Discounters: The No-Frills Case for a Per Se Rule
Against Vertical Price Fixing, 71 Geo. L. J. 1487 (1983)
(hereinafter Pitofsky); Scherer, The Economics of VerticalRestraints, 52 Antitrust L. J. 687, 706–707 (1983) (hereinafter Scherer); Posner, The Next Step in the Antitrust
Treatment of Restricted Distribution: Per Se Legality, 48

U. Chi. L. Rev. 6, 22–26 (1981); Brief for William S. Comanor and Frederic M. Scherer as Amici Curiae 7–10.

On the one hand, agreements setting minimum resaleprices may have serious anticompetitive consequences. In
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BREYER, J., dissenting
respect to dealers: Resale price maintenance agreements,
rather like horizontal price agreements, can diminish or
eliminate price competition among dealers of a singlebrand or (if practiced generally by manufacturers) among
multibrand dealers. In doing so, they can prevent dealersfrom offering customers the lower prices that many customers prefer; they can prevent dealers from responding tochanges in demand, say falling demand, by cutting prices;
they can encourage dealers to substitute service, for price,
competition, thereby threatening wastefully to attract too
many resources into that portion of the industry; they caninhibit expansion by more efficient dealers whose lower
prices might otherwise attract more customers, stifling the
development of new, more efficient modes of retailing; and
so forth. See, e.g., 8 Areeda & Hovenkamp ¶1632c, at319–321; Steiner, The Evolution and Applications of Dual-
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).

In respect to producers: Resale price maintenance agreements can help to reinforce the competition-inhibitingbehavior of firms in concentrated industries. In such
industries firms may tacitly collude, i.e., observe each
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.
Where that is so, resale price maintenance can make it
easier for each producer to identify (by observing retailmarkets) when a competitor has begun to cut prices. And
a producer who cuts wholesale prices without lowering the
minimum resale price will stand to gain little, if anything,
in increased profits, because the dealer will be unable to
stimulate increased consumer demand by passing along
the producer’s price cut to consumers. In either case,
resale price maintenance agreements will tend to prevent
price competition from “breaking out”; and they will
thereby tend to stabilize producer prices. See Pitofsky
1490–1491. Cf., e.g., Container Corp., supra, at 336–337.

Those who express concern about the potential anticompetitive effects find empirical support in the behavior ofprices before, and then after, Congress in 1975 repealed
the Miller-Tydings Fair Trade Act, 50 Stat. 693, and the
McGuire Act, 66 Stat. 631. Those Acts had permitted (butnot required) individual States to enact “fair trade” lawsauthorizing minimum resale price maintenance. At the
time of repeal minimum resale price maintenance waslawful in 36 States; it was unlawful in 14 States. See
Hearings on S. 408 before the Subcommittee on Antitrust
and Monopoly of the Senate Committee on the Judiciary,
94th Cong., 1st Sess., 173 (1975) (hereinafter Hearings on

S. 408) (statement of Thomas E. Kauper, Assistant Attorney General, Antitrust Division). Comparing prices in the
former States with prices in the latter States, the Department of Justice argued that minimum resale price maintenance had raised prices by 19% to 27%. See Hearings on

H. R. 2384 before the Subcommittee on Monopolies and
Commercial Law of the House Committee on the Judiciary, 94th Cong., 1st Sess., 122 (1975) (hereinafter Hearings on H. R. 2384) (statement of Keith I. Clearwaters,
Deputy Assistant Attorney General, Antitrust Division).

After repeal, minimum resale price maintenance agreements were unlawful per se in every State. The Federal
Trade Commission (FTC) staff, after studying numerousprice surveys, wrote that collectively the surveys “indicate[d] that [resale price maintenance] in most casesincreased the prices of products sold with [resale price
maintenance].” Bureau of Economics Staff Report to the
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BREYER, J., dissenting
FTC, T. Overstreet, Resale Price Maintenance: Economic
Theories and Empirical Evidence, 160 (1983) (hereinafter
Overstreet). Most economists today agree that, in the
words of a prominent antitrust treatise, “resale pricemaintenance tends to produce higher consumer pricesthan would otherwise be the case.” 8 Areeda & Hovenkamp ¶1604b, at 40 (finding “[t]he evidence . . . persuasive
on this point”). See also Brief for William S. Comanor and
Frederic M. Scherer as Amici Curiae 4 (“It is uniformly
acknowledged that [resale price maintenance] and other
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.
The majority lists two: First, such agreements can facilitate new entry. Ante, at 11–12. For example, a newly
entering producer wishing to build a product name might
be able to convince dealers to help it do so—if, but only if,
the producer can assure those dealers that they will later
recoup their investment. Without resale price maintenance, late-entering dealers might take advantage of the
earlier investment and, through price competition, driveprices down to the point where the early dealers cannot
recover what they spent. By assuring the initial dealersthat such later price competition will not occur, resaleprice maintenance can encourage them to carry the new
product, thereby helping the new producer succeed. See 8
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.

Second, without resale price maintenance a producermight find its efforts to sell a product undermined by whatresale price maintenance advocates call “free riding.”
Ante, at 10–11. Suppose a producer concludes that it can
succeed only if dealers provide certain services, say, prod
uct demonstrations, high quality shops, advertising thatcreates a certain product image, and so forth. Without
resale price maintenance, some dealers might take a “free
ride” on the investment that others make in providingthose services. Such a dealer would save money by not
paying for those services and could consequently cut its
own price and increase its own sales. Under these circumstances, dealers might prove unwilling to invest in the
provision of necessary services. See, e.g., 8 Areeda &
Hovenkamp ¶¶1611–1613, 1631c, at 126–165, 309–313; R.
Posner, Antitrust Law 172–173 (2d ed. 2001); R. Bork, The
Antitrust Paradox 290–291 (1978) (hereinafter Bork);
Easterbrook 146–149.

Moreover, where a producer and not a group of dealersseeks a resale price maintenance agreement, there is a
special reason to believe some such benefits exist. That is
because, other things being equal, producers should want
to encourage price competition among their dealers. Bydoing so they will often increase profits by selling more oftheir product. See Sylvania, 433 U. S., at 56, n. 24; Bork

290. And that is so, even if the producer possesses sufficient market power to earn a super-normal profit. That is
to say, other things being equal, the producer will benefit
by charging his dealers a competitive (or even a higher-
than-competitive) wholesale price while encouraging pricecompetition among them. Hence, if the producer is the
moving force, the producer must have some special reason
for wanting resale price maintenance; and in the absenceof, say, concentrated producer markets (where that specialreason might consist of a desire to stabilize wholesale
prices), that special reason may well reflect the special
circumstances just described: new entry, “free riding,” orvariations on those themes.

The upshot is, as many economists suggest, sometimesresale price maintenance can prove harmful; sometimes itcan bring benefits. See, e.g., Brief for Economists as Amici
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
Curiae 16; 8 Areeda & Hovenkamp ¶¶1631–1632, at 306–
328; Pitofsky 1495; Scherer 706–707. But before concluding that courts should consequently apply a rule of reason,
I would ask such questions as, how often are harms or
benefits likely to occur? How easy is it to separate the
beneficial sheep from the antitrust goats?

Economic discussion, such as the studies the Court
relies upon, can help provide answers to these questions,
and in doing so, economics can, and should, inform antitrust law. But antitrust law cannot, and should not,
precisely replicate economists’ (sometimes conflicting)
views. That is because law, unlike economics, is an administrative system the effects of which depend upon the
content of rules and precedents only as they are applied by
judges and juries in courts and by lawyers advising their
clients. And that fact means that courts will often bring
their own administrative judgment to bear, sometimesapplying rules of per se unlawfulness to business practiceseven when those practices sometimes produce benefits.
See, e.g., F.M. Scherer & D. Ross, Industrial Market
Structure and Economic Performance 335–339 (3d ed.
1990) (hereinafter Scherer & Ross) (describing some circumstances under which price-fixing agreements could bemore beneficial than “unfettered competition,” but also
noting potential costs of moving from a per se ban to a rule
of reasonableness assessment of such agreements).

I have already described studies and analyses that
suggest (though they cannot prove) that resale price maintenance can cause harms with some regularity—andcertainly when dealers are the driving force. But what
about benefits? How often, for example, will the benefits
to which the Court points occur in practice? I can find no
economic consensus on this point. There is a consensus in
the literature that “free riding” takes place. But “free
riding” often takes place in the economy without any legal
effort to stop it. Many visitors to California take free rides
BREYER, J., dissenting

on the Pacific Coast Highway. We all benefit freely fromideas, such as that of creating the first supermarket.
Dealers often take a “free ride” on investments that others
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.

To be more specific, one can easily imagine a dealer who
refuses to provide important presale services, say a detailed explanation of how a product works (or who fails to
provide a proper atmosphere in which to sell expensive
perfume or alligator billfolds), lest customers use that
“free” service (or enjoy the psychological benefit arising
when a high-priced retailer stocks a particular brand ofbillfold or handbag) and then buy from another dealer at a
lower price. Sometimes this must happen in reality. But
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.

All this is to say that the ultimate question is notwhether, but how much, “free riding” of this sort takesplace. And, after reading the briefs, I must answer thatquestion with an uncertain “sometimes.” See, e.g., Brief
for William S. Comanor and Frederic M. Scherer as Amici
Curiae 6–7 (noting “skepticism in the economic literatureabout how often [free riding] actually occurs”); Scherer &
Ross 551–555 (explaining the “severe limitations” of the
free-rider justification for resale price maintenance);
Pitofsky, Why Dr. Miles Was Right, 8 Regulation, No. 1,
pp. 27, 29–30 (Jan./Feb. 1984) (similar analysis).

How easily can courts identify instances in which thebenefits are likely to outweigh potential harms? My ownanswer is, not very easily. For one thing, it is often difficult to identify who—producer or dealer—is the movingforce behind any given resale price maintenance agreement. Suppose, for example, several large multibrand
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PSKS, INC.
BREYER, J., dissenting
retailers all sell resale-price-maintained products. Suppose further that small producers set retail prices because
they fear that, otherwise, the large retailers will favor
(say, by allocating better shelf-space) the goods of otherproducers who practice resale price maintenance. Who
“initiated” this practice, the retailers hoping for considerable insulation from retail competition, or the producers,
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.

I recognize that scholars have sought to develop checklists and sets of questions that will help courts separate
instances where anticompetitive harms are more likely
from instances where only benefits are likely to be found.
See, e.g., 8 Areeda & Hovenkamp ¶¶1633c–1633e, at 330–

339. See also Brief for William S. Comanor and Frederic

M. Scherer as Amici Curiae 8–10. But applying these
criteria in court is often easier said than done. The
Court’s invitation to consider the existence of “market
power,” for example, ante, at 18, invites lengthy time-
consuming argument among competing experts, as theyseek to apply abstract, highly technical, criteria to often
ill-defined markets. And resale price maintenance cases,
unlike a major merger or monopoly case, are likely to
prove numerous and involve only private parties. One
cannot fairly expect judges and juries in such cases toapply complex economic criteria without making a considerable number of mistakes, which themselves may imposeserious costs. See, e.g., H. Hovenkamp, The Antitrust
Enterprise 105 (2005) (litigating a rule of reason case is“one of the most costly procedures in antitrust practice”).
See also Bok, Section 7 of the Clayton Act and the Merging of Law and Economics, 74 Harv. L. Rev. 226, 238–247
(1960) (describing lengthy FTC efforts to apply complex
criteria in a merger case).
BREYER, J., dissenting

Are there special advantages to a bright-line rule?
Without such a rule, it is often unfair, and consequentlyimpractical, for enforcement officials to bring criminal
proceedings. And since enforcement resources are limited,
that loss may tempt some producers or dealers to enter
into agreements that are, on balance, anticompetitive.

Given the uncertainties that surround key items in theoverall balance sheet, particularly in respect to the “administrative” questions, I can concede to the majority thatthe problem is difficult. And, if forced to decide now, at
most I might agree that the per se rule should be slightly
modified to allow an exception for the more easily identifiable and temporary condition of “new entry.” See Pitofsky
1495. But I am not now forced to decide this question.
The question before us is not what should be the rule,
starting from scratch. We here must decide whether to
change a clear and simple price-related antitrust rule that
the courts have applied for nearly a century.

II
We write, not on a blank slate, but on a slate that beginswith Dr. Miles and goes on to list a century’s worth ofsimilar cases, massive amounts of advice that lawyers
have provided their clients, and untold numbers of business decisions those clients have taken in reliance uponthat advice. See, e.g., United States v. Bausch & Lomb
Optical Co., 321 U. S. 707, 721 (1944); Sylvania, 433 U. S.,
at 51, n. 18 (“The per se illegality of [vertical] price restrictions has been established firmly for many years . . .”).
Indeed a Westlaw search shows that Dr. Miles itself has
been cited dozens of times in this Court and hundreds of
times in lower courts. Those who wish this Court to
change so well-established a legal precedent bear a heavy
burden of proof. See Illinois Brick Co. v. Illinois, 431 U. S.
720, 736 (1977) (noting, in declining to overrule an earlier
case interpreting §4 of the Clayton Act, that “considera
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BREYER, J., dissenting
tions of stare decisis weigh heavily in the area of statutory
construction, where Congress is free to change this Court’s
interpretation of its legislation”). I am not aware of any
case in which this Court has overturned so well-
established a statutory precedent. Regardless, I do not see
how the Court can claim that ordinary criteria for overruling an earlier case have been met. See, e.g., Planned
Parenthood of Southeastern Pa. v. Casey, 505 U. S. 833,
854–855 (1992). See also Federal Election Comm’n v.
Wisconsin Right to Life, Inc., ante, at 19–21 (SCALIA, J.,
concurring in part and concurring in judgment).

A
I can find no change in circumstances in the past severaldecades that helps the majority’s position. In fact, there
has been one important change that argues strongly to the
contrary. In 1975, Congress repealed the McGuire and
Miller-Tydings Acts. See Consumer Goods Pricing Act of
1975, 89 Stat. 801. And it thereby consciously extended
Dr. Miles’ per se rule. Indeed, at that time the Department of Justice and the FTC, then urging application ofthe per se rule, discussed virtually every argument presented now to this Court as well as others not here presented. And they explained to Congress why Congressshould reject them. See Hearings on S. 408, at 176–177
(statement of Thomas E. Kauper, Assistant AttorneyGeneral, Antitrust Division); id., at 170–172 (testimony of
Lewis A. Engman, Chairman of the FTC); Hearings on

H. R. 2384, at 113–114 (testimony of Keith I. Clearwaters,
Deputy Assistant Attorney General, Antitrust Division).
Congress fully understood, and consequently intended,
that the result of its repeal of McGuire and Miller-Tydingswould be to make minimum resale price maintenance per
se unlawful. See, e.g., S. Rep. No. 94–466, pp. 1–3 (1975)
(“Without [the exemptions authorized by the Miller-
Tydings and McGuire Acts,] the agreements they author
BREYER, J., dissenting

ize would violate the antitrust laws. . . . [R]epeal of the fairtrade laws generally will prohibit manufacturers fromenforcing resale prices”). See also Sylvania, supra, at 51,

n. 18 (“Congress recently has expressed its approval of a
per se analysis of vertical price restrictions by repealing
those provisions of the Miller-Tydings and McGuire Actsallowing fair-trade pricing at the option of the individual
States”).

Congress did not prohibit this Court from reconsidering
the per se rule. But enacting major legislation premised
upon the existence of that rule constitutes importantpublic reliance upon that rule. And doing so aware of the
relevant arguments constitutes even stronger relianceupon the Court’s keeping the rule, at least in the absence
of some significant change in respect to those arguments.

Have there been any such changes? There have been a
few economic studies, described in some of the briefs, that
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.
See Ippolito, Resale Price Maintenance: Empirical Evidence from Litigation, 34 J. Law & Econ. 263, 281–282,
292 (1991). But this study equates the failure of plaintiffs
to allege collusion with the absence of collusion—an equation that overlooks the superfluous nature of allegations ofhorizontal collusion in a resale price maintenance case
and the tacit form that such collusion might take. See H.
Hovenkamp, Federal Antitrust Policy §11.3c, p. 464, n. 19
(3d ed. 2005); supra, at 4–5.

The other study provides a theoretical basis for concluding that resale price maintenance “need not lead to higher
retail prices.” Marvel & McCafferty, The Political Economy of Resale Price Maintenance, 94 J. Pol. Econ. 1074,
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BREYER, J., dissenting
1075 (1986). But this study develops a theoretical model
“under the assumption that [resale price maintenance] is
efficiency-enhancing.” Ibid. Its only empirical support is a 1940 study that the authors acknowledge is much criticized. See id., at 1091. And many other economists take a different view. See Brief for William S. Comanor and
Frederic M. Scherer as Amici Curiae 4.

Regardless, taken together, these studies at most may offer some mild support for the majority’s position. But
they cannot constitute a major change in circumstances.

Petitioner and some amici have also presented us withnewer studies that show that resale price maintenance
sometimes brings consumer benefits. Overstreet 119–129
(describing numerous case studies). But the proponents of
a per se rule have always conceded as much. What is
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.
Miles have abandoned a host of other not-very-persuasivearguments upon which prior resale price maintenance
proponents used to rely. See, e.g., 8 Areeda ¶1631a, at
350–352 (listing “‘[t]raditional’ justifications” for resaleprice maintenance).

The one arguable exception consists of the majority’sclaim that “even absent free riding,” resale price maintenance “may be the most efficient way to expand the manufacturer’s market share by inducing the retailer’s performance and allowing it to use its own initiative and
experience in providing valuable services.” Ante, at 12. I
cannot count this as an exception, however, because I do
not understand how, in the absence of free-riding (and
assuming competitiveness), an established producer would
need resale price maintenance. Why, on these assumptions, would a dealer not “expand” its “market share” as
best that dealer sees fit, obtaining appropriate payment
from consumers in the process? There may be an answerto this question. But I have not seen it. And I do not
think that we should place significant weight upon justifications that the parties do not explain with sufficientclarity for a generalist judge to understand.

No one claims that the American economy has changed
in ways that might support the majority. Concentration in
retailing has increased. See, e.g., Brief for Respondent 18(since minimum resale price maintenance was banned
nationwide in 1975, the total number of retailers has
dropped while the growth in sales per store has risen);
Brief for American Antitrust Institute as Amicus Curiae
17, n. 20 (citing private study reporting that the combined
sales of the 10 largest retailers worldwide has grown tonearly 30% of total retail sales of top 250 retailers; alsoquoting 1999 Organisation for Economic Co-operation andDevelopment report stating that the “‘last twenty yearshave seen momentous changes in retail distribution including significant increases in concentration’”); Mamen,
Facing Goliath: Challenging the Impacts of Supermarket
Consolidation on our Local Economies, Communities, and
Food Security, The Oakland Institute, 1 Policy Brief, No.
3, pp. 1, 2 (Spring 2007), http://www.oaklandinstitute.org/pdfs/facing_goliath.pdf (as visited June 25, 2007,
and available in Clerks of Court’s case file) (noting that
“[f]or many decades, the top five food retail firms in the

U. S. controlled less than 20 percent of the market”; from1997 to 2000, “the top five firms increased their marketshare from 24 to 42 percent of all retail sales”; and “[b]y
2003, they controlled over half of all grocery sales”). That
change, other things being equal, may enable (and motivate) more retailers, accounting for a greater percentage of
total retail sales volume, to seek resale price maintenance,
thereby making it more difficult for price-cutting competitors (perhaps internet retailers) to obtain market share.
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
Nor has anyone argued that concentration among manufacturers that might use resale price maintenance hasdiminished significantly. And as far as I can tell, it has
not. Consider household electrical appliances, which astudy from the late 1950’s suggests constituted a significant portion of those products subject to resale price maintenance at that time. See Hollander, United States of
America, in Resale Price Maintenance 67, 80–81 (B.
Yamey ed. 1966). Although it is somewhat difficult to
compare census data from 2002 with that from several
decades ago (because of changes in the classification system), it is clear that at least some subsets of the household
electrical appliance industry are more concentrated, in
terms of manufacturer market power, now than they werethen. For instance, the top eight domestic manufacturers
of household cooking appliances accounted for 68% of the
domestic market (measured by value of shipments) in
1963 (the earliest date for which I was able to find data),
compared with 77% in 2002. See Dept. of Commerce,
Bureau of Census, 1972 Census of Manufacturers, Special
Report Series, Concentration Ratios in Manufacturing, No.
MC72(SR)–2, p. SR2–38 (1975) (hereinafter 1972 Census);
Dept. of Commerce, Bureau of Census, 2002 Economic
Census, Concentration Ratios: 2002, No. EC02–31SR–1,

p. 55 (2006) (hereinafter 2002 Census). The top eight
domestic manufacturers of household laundry equipment
accounted for 95% of the domestic market in 1963 (90% in1958), compared with 99% in 2002. 1972 Census, at SR2–
38; 2002 Census, at 55. And the top eight domestic manufacturers of household refrigerators and freezers accounted for 91% of the domestic market in 1963, compared
with 95% in 2002. 1972 Census, at SR2–38; 2002 Census,
at 55. Increased concentration among manufacturers
increases the likelihood that producer-originated resale
price maintenance will prove more prevalent today than inyears past, and more harmful. At the very least, the
majority has not explained how these, or other changes in
the economy could help support its position.

In sum, there is no relevant change. And without some
such change, there is no ground for abandoning a well-
established antitrust rule.

B
With the preceding discussion in mind, I would consultthe list of factors that our case law indicates are relevant
when we consider overruling an earlier case. JUSTICE
SCALIA, writing separately in another of our cases thisTerm, well summarizes that law. See Wisconsin Right to
Life, Inc., ante, at 19–21. (opinion concurring in part and
concurring in judgment). And every relevant factor hementions argues against overruling Dr. Miles here.
First, the Court applies stare decisis more “rigidly” in
statutory than in constitutional cases. See Glidden Co. v.
Zdanok, 370 U. S. 530, 543 (1962); Illinois Brick Co., 431

U. S., at 736. This is a statutory case.

Second, the Court does sometimes overrule cases that it
decided wrongly only a reasonably short time ago. As
JUSTICE SCALIA put it, “[o]verruling a constitutional case
decided just a few years earlier is far from unprecedented.” Wisconsin Right to Life, ante, at 19 (emphasis
added). We here overrule one statutory case, Dr. Miles,
decided 100 years ago, and we overrule the cases that
reaffirmed its per se rule in the intervening years. See,
e.g., Trenton Potteries, 273 U. S., at 399–401; Bausch &
Lomb, 321 U. S., at 721; United States v. Parke, Davis &
Co., 362 U. S. 29, 45–47 (1960); Simpson v. Union Oil Co.
of Cal., 377 U. S. 13, 16–17 (1964).

Third, the fact that a decision creates an “unworkable”
legal regime argues in favor of overruling. See Payne v.
Tennessee, 501 U. S. 808, 827–828 (1991); Swift & Co. v.
Wickham, 382 U. S. 111, 116 (1965). Implementation of
the per se rule, even with the complications attendant the
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
exception allowed for in United States v. Colgate & Co.,
250 U. S. 300 (1919), has proved practical over the course
of the last century, particularly when compared with themany complexities of litigating a case under the “rule of
reason” regime. No one has shown how moving from the
Dr. Miles regime to “rule of reason” analysis would make
the legal regime governing minimum resale price maintenance more “administrable,” Wisconsin Right to Life, ante,
at 20 (opinion of SCALIA, J.), particularly since Colgatewould remain good law with respect to unreasonable pricemaintenance.

Fourth, the fact that a decision “unsettles” the law mayargue in favor of overruling. See Sylvania, 433 U. S., at
47; Wisconsin Right to Life, ante, at 20–21 (opinion of
SCALIA, J.). The per se rule is well-settled law, as the
Court itself has previously recognized. Sylvania, supra, at
51, n. 18. It is the majority’s change here that will unsettle the law.

Fifth, the fact that a case involves property rights or
contract rights, where reliance interests are involved,
argues against overruling. Payne, supra, at 828. This
case involves contract rights and perhaps property rights(consider shopping malls). And there has been considerable reliance upon the per se rule. As I have said, Congress relied upon the continued vitality of Dr. Miles when
it repealed Miller-Tydings and McGuire. Supra, at 12–13.
The Executive Branch argued for repeal on the assumption that Dr. Miles stated the law. Ibid. Moreover, whole
sectors of the economy have come to rely upon the per se
rule. A factory outlet store tells us that the rule “form[s]
an essential part of the regulatory background against
which [that firm] and many other discount retailers have
financed, structured, and operated their businesses.”
Brief for Burlington Coat Factory Warehouse Corp. as
Amicus Curiae 5. The Consumer Federation of America
tells us that large low-price retailers would not exist with
out Dr. Miles; minimum resale price maintenance, “by
stabilizing price levels and preventing low-price competition, erects a potentially insurmountable barrier to entryfor such low-price innovators.” Brief for Consumer Federation of America as Amicus Curiae 5, 7–9 (discussing,
inter alia, comments by Wal-Mart’s founder 25 years agothat relaxation of the per se ban on minimum resale pricemaintenance would be a “‘great danger’” to Wal-Mart’sthen-relatively-nascent business). See also Brief for
American Antitrust Institute as Amicus Curiae 14–15, and
sources cited therein (making the same point). New distributors, including internet distributors, have similarly
invested time, money, and labor in an effort to bring yet
lower cost goods to Americans.

This Court’s overruling of the per se rule jeopardizesthis reliance, and more. What about malls built on the
assumption that a discount distributor will remain ananchor tenant? What about home buyers who have taken
a home’s distance from such a mall into account? What
about Americans, producers, distributors, and consumers,
who have understandably assumed, at least for the last 30years, that price competition is a legally guaranteed way
of life? The majority denies none of this. It simply saysthat these “reliance interests . . . , like the reliance interests in Khan, cannot justify an inefficient rule.” Ante, at

27.

The Court minimizes the importance of this reliance,
adding that it “is also of note” that at the time resale price
maintenance contracts were lawful “‘no more than a tiny
fraction of manufacturers ever employed’” the practice.
Ibid. (quoting Overstreet 6). By “tiny” the Court meansmanufacturers that accounted for up to “‘ten percent of
consumer goods purchases’” annually. Ibid.. That figurein today’s economy equals just over $300 billion. See
Dept. of Commerce, Bureau of Census, Statistical Abstractof the United States: 2007, p. 649 (126th ed.) (over $3
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
trillion in U. S. retail sales in 2002). Putting the Court’sestimate together with the Justice Department’s early1970’s study translates a legal regime that permits allresale price maintenance into retail bills that are higherby an average of roughly $750 to $1000 annually for anAmerican family of four. Just how much higher retail bills
will be after the Court’s decision today, of course, dependsupon what is now unknown, namely how courts will decide
future cases under a “rule of reason.” But these figuresindicate that the amounts involved are important toAmerican families and cannot be dismissed as “tiny.”

Sixth, the fact that a rule of law has become “embedded”
in our “national culture” argues strongly against overruling. Dickerson v. United States, 530 U. S. 428, 443–444
(2000). The per se rule forbidding minimum resale pricemaintenance agreements has long been “embedded” in the
law of antitrust. It involves price, the economy’s “‘central
nervous system.’” National Soc. of Professional Engineers,
435 U. S., at 692 (quoting Socony-Vacuum Oil, 310 U. S.,
at 226, n. 59). It reflects a basic antitrust assumption(that consumers often prefer lower prices to more service).
It embodies a basic antitrust objective (providing consumers with a free choice about such matters). And it creates
an easily administered and enforceable bright line, “Donot agree about price,” that businesses as well as lawyershave long understood.

The only contrary stare decisis factor that the majoritymentions consists of its claim that this Court has “[f]romthe beginning . . . treated the Sherman Act as a common-
law statute,” and has previously overruled antitrust precedent. Ante, at 20, 21–22. It points in support to State Oil
Co. v. Khan, 522 U. S. 3 (1997), overruling Albrecht v.
Herald Co., 390 U. S. 145 (1968), in which this Court had
held that maximum resale price agreements were unlawful per se, and to Sylvania, overruling United States v.
Arnold, Schwinn & Co., 388 U. S. 365 (1967), in which this
BREYER, J., dissenting

Court had held that producer-imposed territorial limitswere unlawful per se.

The Court decided Khan, however, 29 years after
Albrecht—still a significant period, but nowhere close to
the century Dr. Miles has stood. The Court specifically
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”).
Albrecht had far less support in traditional antitrustprinciples than did Dr. Miles. Compare, e.g., 8 Areeda &
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.
And Congress had nowhere expressed support for
Albrecht’s rule. Khan, supra, at 19.

In Sylvania, the Court, in overruling Schwinn, explicitlydistinguished Dr. Miles on the ground that while Congresshad “recently . . . expressed its approval of a per se analysis of vertical price restrictions” by repealing the Miller-
Tydings and McGuire Acts, “[n]o similar expression ofcongressional intent exists for nonprice restrictions.” 433

U. S., at 51, n. 18. Moreover, the Court decided Sylvaniaonly a decade after Schwinn. And it based its overruling
on a generally perceived need to avoid “confusion” in the
law, 433 U. S., at 47–49, a factor totally absent here.

The Court suggests that it is following “the common-lawtradition.” Ante at 26. But the common law would not
have permitted overruling Dr. Miles in these circumstances. Common-law courts rarely overruled well-
established earlier rules outright. Rather, they wouldover time issue decisions that gradually eroded the scope
and effect of the rule in question, which might eventuallylead the courts to put the rule to rest. One can argue that
modifying the per se rule to make an exception, say, for
new entry, see Pitofsky 1495, could prove consistent with
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
this approach. To swallow up a century-old precedent,
potentially affecting many billions of dollars of sales, is
not. The reader should compare today’s “common-law”
decision with Justice Cardozo’s decision in Allegheny
College v. National Chautauqua Cty. Bank of Jamestown,
246 N. Y. 369, 159 N. E. 173 (1927), and note a gradualism
that does not characterize today’s decision.

Moreover, a Court that rests its decision upon economists’ views of the economic merits should also take account of legal scholars’ views about common-law overruling. Professors Hart and Sacks list 12 factors (similar to
those I have mentioned) that support judicial “adherence
to prior holdings.” They all support adherence to Dr. Miles
here. See H. Hart & A. Sacks, The Legal Process 568–569

(W. Eskridge & P. Frickey eds. 1994). Karl Llewellyn haswritten that the common-law judge’s “conscious reshaping” of prior law “must so move as to hold the degree of
movement down to the degree to which need truly
presses.” The Bramble Bush 156 (1960). Where here is
the pressing need? The Court notes that the FTC argues
here in favor of a rule of reason. See ante, at 20–21. But
both Congress and the FTC, unlike courts, are well-
equipped to gather empirical evidence outside the contextof a single case. As neither has done so, we cannot conclude with confidence that the gains from eliminating the
per se rule will outweigh the costs.

In sum, every stare decisis concern this Court has ever
mentioned counsels against overruling here. It is difficult
for me to understand how one can believe both that (1)
satisfying a set of stare decisis concerns justifies overruling a recent constitutional decision, Wisconsin Right to
Life, Inc., ante, at 19–21 (SCALIA, J., joined by KENNEDY
and THOMAS, JJ., concurring in part and concurring in
judgment), but (2) failing to satisfy any of those same
concerns nonetheless permits overruling a longstanding
statutory decision. Either those concerns are relevant or
BREYER, J., dissenting

they are not.

* * *
The only safe predictions to make about today’s decision
are that it will likely raise the price of goods at retail and
that it will create considerable legal turbulence as lower
courts seek to develop workable principles. I do not believe that the majority has shown new or changed conditions sufficient to warrant overruling a decision of suchlong standing. All ordinary stare decisis considerations
indicate the contrary. For these reasons, with respect, I
dissent.


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