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Fixing retail prices - legally

The price we can sell our boats, motors and accessories in our dealerships may well become restricted because the U.S. Supreme Court is, again, shaking things up with its often unexpected decisions. This time, the Court has stuck down an antitrust rule that has stood for 96 years. The Court said it’s not automatically unlawful for manufacturers and distributors to fix a minimum retail price (Resale Maintenance Agreement). In effect, a century’s worth of Supreme Court decisions that had affirmed the prohibition on resale maintenance agreements is overturned, wrote dissenting Justice Stephen Breyer, for no compelling reason.

The Court decision, which was split 5-4, reportedly appears to be giving manufacturers a much wider berth to restrict retail prices. Major manufacturers said the new rule could lead to more competition and better service. Five justices agreed with them. Four dissenting justices, however, sided with consumer organizations, which argued that abandoning the old rule could force higher prices from less competition.

As a sidebar, 37 states have similar rules which will now, presumably, be trumped by the Supreme Court’s decision. The old rule asserted that resale price maintenance agreements (price setting) were an automatic violation of the 1890 Sherman Antitrust Act. Now, the Court said judges considering antitrust cases of this nature should apply “a rule of reason” on a case-by-case basis in assessing any anti-competitive impact. No question this new directive is much more favorable to the defendant.

Specifically, the case was an appeal of a $1.2 million judgment against manufacturer Leegin Creative Leather Products for cutting off retailer Kay's Kloset for refusing to honor Leegin's no-discount policy. Moreover, because it was under antitrust law the judgment had been tripled.

The case raises some interesting questions for our industry and it could be viewed as a double edged sword. For example, does it end marine manufacturer’s long-standing insistence that having resale maintenance agreements violates anti-trust laws? What impact could this have on a discounter down the street from an independent dealer who offers the same products? On the other hand, could it put limits on the independent dealer that he does not want?

In a nutshell, within certain limits of the Court’s decision, it’s a new day when it comes to fixing the retail prices of products. But is it good or bad for boat dealers? I confess I’m not sure. But it should make for some interesting opinions in our industry. How about sharing your thoughts right here? Would resale maintenance agreements work for or against the marine dealer?

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