Skip to main content

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?


Year-End Tax Planning Guidance

These tips can help employers maximize cash savings, minimize tax exposure and more

Mercury Marine to Open Ind. Distribution Center

The new 512,000-square-foot facility will help the manufacturer meet record consumer demand for parts and accessories. The company is also expanding production at its main campus in Wisconsin.

GM Invests $150 Million in Pure Watercraft

An interview with Pure founder and CEO Andy Rebele.

Sea Tow, Southport Boats Form “Peace of Mind” Partnership

Sea Tow’s Gold Card, which includes two years of coverage, will now come standard with new Southport models.

Yamaha Rightwaters Goes International

The conservation initiative becomes an international effort as Yamaha Motor Australia joins a cleaner-ocean campaign.

Perfect Timing

With all the new boats sold recently, it’s inevitable that a good percentage will wind up on the used market. MRAA has launched a Certified Pre-Owned Boat Program to help dealers strengthen this profit center.

A Boatbuilder in Congress?

Robert Healey Jr., of Viking Yacht Co., is running for a U.S. House of Representatives seat in New Jersey.

Monterey and Blackfin to Expand Operations

The company will add 50,000 square feet of manufacturing space to meet increased demand, creating 150 job opportunities.