Leegin vs. PSKS Has Major E-commerce Implications
Ian Lurie Jun 28 2007
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.
Ian Lurie is CEO and founder of Portent Inc. He's recorded training for Lynda.com, writes regularly for the Portent Blog and has been published on AllThingsD, Forbes.com and TechCrunch. Ian speaks at conferences around the world, including SearchLove, MozCon, SIC and ad:Tech. Follow him on Twitter at portentint. He also just published a book about strategy for services businesses: One Trick Ponies Get Shot, available on Kindle. Read More