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CWAG 2014 Annual meeting. The Future of Resale Price Fixing Bob Hubbard NY Assistant Attorney General 212 416-8267 [email protected] Caveats. I speak only for myself I make recommendations My recommendations are sometimes rejected

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Cwag 2014 annual meeting
CWAG 2014 Annual meeting

The Future of Resale Price Fixing

Bob Hubbard

NY Assistant Attorney General

212 416-8267

[email protected]

Bob Hubbard


Caveats
Caveats

  • I speak only for myself

  • I make recommendations

    • My recommendations are sometimes rejected

    • Consideration of my recommendations improves future recommendations

    • Multistate enforcement emphasizes merits, more than hierarchy

      • I don’t instruct other states either

Bob Hubbard


Some success in recommending
Some success in recommending

  • I’ve led many multistate efforts

  • I chaired the Multistate Antitrust Task Force for 4 years

  • Resale price fixing is an area of interest for me

Bob Hubbard


My perspective
My perspective

  • My job is to represent consumers (and the state)

    • Others ably represent other interests

  • My job is to push for competition

    • The Magna Carta of the free enterprise system

    • A public policy of the first magnitude

Bob Hubbard


Higher prices for consumers are good
Higher prices for consumers are good?

  • Skeptical that consumers benefit from being forced to pay more

    • Price better set by consumers able to choose among alternatives and businesses able to present alternatives

    • If more value is being provided:

      • consumers will willingly pay more or

      • supplier will compensate the retailer

    • Retailing innovations include charging consumers for fewer ancillary services

Bob Hubbard


Consumers benefit by paying more for the same thing
Consumers benefit by paying more for the same thing?

  • The very purpose of the restraint is to have consumers pay more

  • I’ve been unable to convince non-antitrust lawyers that paying more is good for them

  • A.G. skepticism is widespread and bipartisan

    • Not the best campaign slogan: I’m working hard so you will be charged more

Bob Hubbard


State views have had an effect
State views have had an effect

  • Leegin: 5-4 decision on federal antitrust law

  • State law constrains the formal use of resale price restraints

    • CA enforcement

    • MD legislation

    • NY (and NJ) statute: “This statutory language makes clear than an action may not be maintained in a court of law to enforce such a provision.”

Bob Hubbard


Government won t help enforcement
Government won’t help enforcement

  • Haven’t seen judicial enforcement

    • No return to the Fair Trade Laws, during which courts were clogged with litigations against businesses who wanted to sell to consumers at less than prices set by the manufacturers

  • Haven’t seen contracts that would support such litigations

Bob Hubbard


Illustration of antitrust federalism
Illustration of antitrust federalism

  • Federal law is not the only antitrust law

  • Antitrust federalism

    • State law can be different

    • Different enforcers can reach different conclusions

    • State enforcers have different views and now

      • Antitrust less divorced from how voters think

      • Resale price restraints are more restrained

Bob Hubbard


The beauty of antitrust federalism
The Beauty of Antitrust Federalism

  • Laboratories of democracy have an effect

    • Closer to the people

    • Makes antitrust less something only for experts

      • Less technocratic

      • More something voters can understand

Bob Hubbard


Resale price restraints endure
Resale price restraints endure

  • Setting resale prices without an “agreement”

    • Making supply contingent on resale price

      • Unilateral pricing policy (UPP)

      • Disclaiming an agreement in the distribution contract

    • Making discounts hard to find

      • Minimum advertised price (MAP)

      • Manufacturer/supplier restrains the price shown in advertisements of its products generally when manufacturer pays in part for the advertising

Bob Hubbard


Upp and map effects
UPP and MAP effects

  • Usually focused on new high end products

  • Often luxury brands for which the higher price is part of the cachet consumers want

    • Hard to justify using enforcement resources

    • Minimal impact

    • New York v. Tempur-Pedic: unsuccessful effort to challenge a policy set up to avoid agreement

Bob Hubbard


Often applies to just right brands
Often applies to “just right” brands

  • Strong brands have strong demand and can charge high wholesale prices

  • Weak brands aren’t strong enough to make the resale price stick

Bob Hubbard


Retailing dynamics
Retailing dynamics

  • Internet sales and other forces make restraining a resale price harder and harder

    • Alternatives more visible and more available

    • Fewer intermediaries; direct connections between producer and user

    • Fewer capacity constraints, like shelf space

Bob Hubbard


Establishing an agreement
Establishing an “agreement”

  • Pre-Leegin case law: “conscious commitment to a common scheme”

  • Barnacles connected to the per se rule that went down with the per se ship in Leegin?

  • American Needle expresses functional, not formalistic, test

Bob Hubbard


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