In Leegin Creative Leather Products v. PSKS, the Supreme Court was asked to review a multi-million-dollar judgment against a manufacturer of Brighton branded leather goods. The dispute arose after Leegin discovered that PSKS (d.b.a. Kay’s Kloset) was discounting the entire Brighton line by 20%, requested that Kay’s Kloset cease discounting, and stopped selling the retailer when its request was refused. The Court of Appeals affirmed the judgment, holding that it was bound by the holding in Dr. Miles. The Supreme Court took up the case “to determine whether vertical minimum resale price maintenance agreements should continue to be treated as per se unlawful.” The court was interested in revisiting Dr. Miles for a number of reasons including that, over time, favorable treatment of many price and non-price vertical restraints had eroded the holding, cases like Colgate had provided effective workarounds, and the modern differential treatment provided to vertical and horizontal agreements. But, more important, I think, was a well-developed economics-rooted metanarrative that undermined the reasoning of the Dr. Miles majority—and validated that of Holmes in dissent: “Minimum resale price maintenance can stimulate interbrand competition—the competition among manufacturers selling different brands of the same type of product—by reducing intrabrand competition—the competition among retailers selling the same brand. The promotion of interbrand competition is important because the primary purpose of the antitrust laws is to protect [this type of] competition.”

With this new explanatory scheme in place, it was short work for the court to declare “it is a flawed antitrust doctrine that serves the interests of lawyers—by creating legal distinctions that operate as traps for the unwary—more than the interests of consumers—by requiring manufacturers to choose second-best options to achieve sound business objectives.” It was even shorter work for the court to then overrule Dr. Miles and hold that vertical price fixing is to be evaluated under the rule of reason, which allows a defendant to justify its price restraints with difficult-to-overcome evidence of pro-competitive effects.