Internet discounters, beware.
The Supreme Court’s ruling in Leegin Creative Leather Products vs. PSKS may just end the reign of web retailers who slash prices to undercut brick-and-mortar stores.
In Leegin, the court said that lower courts may use a “rule of reason” in anti-trust cases: If a manufacturer pressures a deep-discounting retailer to raise their price to a minimum level, that may be OK.
The case in question pitted a brick-and-mortar retailer against a leather goods maker. But the real winners here may be full-service retailers and manufacturers who, until now, had to let internet retailers charge far, far less than their brick-and-mortar counterparts.
The free rider problem – where consumers go to full service retailers to tap their expertise, and then buy the product online for far less – has taxed luxury goods and fashion industries ever since wonks coined the term ‘e-commerce’. Leegin means that manufacturers can push internet retailers to charge prices more in line with their offline competitors.
We’ll see how this all shakes out – a 5-4 decision is hardly rock-solid. But Leegin is a major shift in anti-trust law.