Comments on: Babies-R-Us and the Case Against a Presumption of Illegality for Retailer-Initiated RPM

By: TRUTH ON THE MARKET » Varney Gets It Right on RPM

TRUTH ON THE MARKET » Varney Gets It Right on RPM — Fri, 29 Jan 2010 02:53:06 +0000

[...] deems any retailer-initiated RPM to be illegal. That’s troubling because, as I explained in this post, retailers have an incentive (and are particularly well-poised) to seek RPM for procompetitive [...]

By: TRUTH ON THE MARKET » A Decision-Theoretic Rule of Reason for Minimum Resale Price Maintenance

Wed, 18 Nov 2009 23:22:08 +0000

[...] whether an instance of RPM has raised consumer prices. Others, like that set forth in the pending Toys-R-Us case, focus on the identity of the party initiating the RPM (manufacturer or retailer(s)?). Some, like [...]

By: Thom

Thom — Wed, 21 Oct 2009 02:54:28 +0000

Thanks for clarifying the nature of the original order, Gleklen. I didn’t look at it and should have before assuming it was aimed at RPM. (That wasn’t really the main point of my post, but I should have checked anyway.)

Yes, Toys-R-Us — and everyone else subject to pre-Leegin consent orders on RPM — could seek modification in light of the changed legal rule. Parties bound by such orders should do so. And the FTC should grant the requested modification without attempting, as it did in the Nine West case, to treat RPM as though it’s presumptively illegal.

By: Gleklen

Gleklen — Wed, 21 Oct 2009 00:55:46 +0000

The Toys “R” Us case was not a RPM case, and it’s not clear to me that RPM would violate the order in that case (available here: http://www.ftc.gov/os/1998/10/toysrsinord.htm). The order bars TRU from inducing or pressuring a supplier to “limit supply” to a discounter. One wouldn’t normally consider RPM as “limiting supply” given that the context of the order was about exclusive dealing.

But, assuming that the order actually reaches RPM, you write that “[g]iven the sea change wrought by Leegin, any consent order entered 11 years ago would rest on shaky footing indeed.” I’m not sure whether you mean shaky analytical footing or whether you’re suggesting that there’s a question as to whether the decree binds TRU. Regardless of whether the decree is justified given the state of the law, it’s clear that TRU is bound by it and that if it didn’t like it TRU could, like Nine West, have sought modification.

DOJ got a $750K civil penalty against Rolex for violating a 46 year old decree that prohibited conduct that is now clearly lawful. Simultaneously with seeking the civil penalty, DOJ asked the court to modify the decree.
http://www.usdoj.gov/atr/public/press_releases/2006/214821.htm