“I’m not going to praise the Leegin decision”

Josh Wright —  30 June 2010

Compared to the nominations of Justices Alito, Roberts and Sotomayor, there has been little excitement for the antitrust community on the most recent Supreme Court nomination of Elena Kagan.  But there is something.   The WSJ Law Blog reports that while Kagan refused to “praise the Leegin decision.”   Legal Times reports that in response to Senator Kohl’s questions about recent Supreme Court antitrust activity, including Leegin Creative Leather Products v. PSKS and Bell Atlantic v. Twombly, Kagan offered some thoughts on the manner in which economic theory should be incorporated into antitrust doctrine:

“There’s some question, to be sure, about how new economic understandings should be incorporated into precedent,” she said. “On the one hand, it’s clear that antitrust law needs to take account of economic theory and economic understandings, but it needs to do so in a thoughtful way.”

Thoughtfully.  Can’t argue with that.  Well, I guess you can.  For example, one sensible reading of Leegin is precisely that it is a perfect example of how the Supreme Court can go about thoughtfully updating antitrust doctrine with new economic learning and empirical evidence and is thus worthy of the praise Kagan refuses.  In the RPM context, Leegin updated an area of the antitrust law that had become an economic backwater by reflecting more modern economic thinking (and by more modern, I mean, around for 20 years) about the economics of vertical restraints and RPM specifically.  Legal Times also reports that when “pressed by Kohl to give a view on the Leegin decision, Kagan said she would not “grade” the ruling and she did not elaborate on how the Court should determine a proper balance in antitrust cases.”  So, lukewarm on Leegin at best, and some recognition that economic learning should be incorporated into antitrust doctrine.

Thanks to Jan Rybnicek for the pointer.

3 responses to “I’m not going to praise the Leegin decision”

  1. 

    It’s truly a shame. A collateral consequence of the Dr. Miles decision has been the chilling of the development of a law of equitable servitudes on personal property, such as patents and copyrights. My sense is that many commentators have read the Leegin decision too narrowly as a rejection of resale price maintenance, rather than more broadly as permission for entering into creative vertical collaborations.

  2. 

    Ted: colorable perhaps. And certainly the strongest of the arguments. But correctly rejected. Congress did not choose “to extend the per se rule” with the repeal of McGuire and Miller-Tydings. The 1975 statute repealed a 1937 statute permitting states to authorize RPM as per se legal. Repealing the Consumer Goods Pricing Act did not mandate a particular mode of antitrust analysis — it simply subjected RPM to antitrust scrutiny. As Thom noted in his excellent prior post on the topic, the House Report on the legislation described it as “a simple repealer of the Miller-Tydings and McGuire exemptions.” The most reasonable inference to be made from the repeal of the exemption without specifying a per se rule against RPM is that the law of RPM would be developed by the courts, with economic experience and judicial learning, over time. Thus, I think the argument that RPM has a special exemption from developing economic coherence fails.

    See also Areeda-Hovenkamp (paragraph 1629c):

    Neither the hearings nor the reports [on the 1975 statute] address the distinct issue of whether the courts that created the Dr. Miles rule should or should not be free to alter it. There certainly was no indication that even the proponents of repeal meant to single out Dr. Miles from all other judge-made antitrust rules to freeze it or any related rules in place. With the issue not posed as such, repeal of fair trade reflected no legislative consensus that the process by which judges make and revise antitrust rules should thereafter be constricted, either generally or for resale price maintenance alone. The 1975 statute neither says nor implies that the courts will thereafter be less free to alter Dr. Miles than they are to alter any other judicially created antitrust rule.

  3. 

    I’m obviously all for updating antitrust law to reflect economic theory, but there is a colorable argument that RPM is different than the bulk of antitrust law because of the statutory history. The Sherman Act gives a lot of discretion to the judiciary, but the fact that Congress chose to extend the per se rule when it repealed the McGuire and Miller-Tydings Acts in 1975 suggests that the judicial role should be more constrained in the case of RPM–even though Congress’s decision was a bad one economically.