In Sharp Contrast to the Past: The Demise of the Per Se Rule against Vertical Price Fixing.

Actions by the Department of Justice and the Supreme Court lessening vertical pricing protections under the Sherman Antitrust Act require Congressional intervention. By enacting the Sherman Antitrust Act, Congress intended agreements fixing vertical prices or having the ultimate effect of fixing vertical prices at any level be illegal per se. Vertical pricing agreements set, maintain, stabilize, raise, or depress prices of goods or services among the different levels of the product distribution chain. The Department of Justice (DOJ) has taken positive steps in limiting the per se rule of illegality by failing to pursue allegations of vertical price fixing and supporting manufacturers accused of vertical price fixing.

The Court’s rulings in Monsanto Company v. Spray-Rite Service Corporation and Business Electronics Corp. v. Sharp Electronics Corp. also had significant negative impacts on vertical price fixing being illegal per se. Monsanto increases the plaintiff’s burden by requiring evidence of an actual price fixing conspiracy and disproving all possible reasons a manufacturer might have for vertical price fixing. Sharp limits the application of per se illegal vertical price fixing to only agreements which explicitly fix prices excluding agreements only affect price. These actions frustrate Congressional intent and essentially abandon the legally per se rule for vertical price fixing.

The Price Fixing Prevention Act of 1991 is Congress’s solution to resurrecting the per se rule. While the Act will limit actions by the Department of Justice and statutorily overturn portions of the Court’s rulings it does not go far enough. To fully counteract the demise of the per se rule, Congress must further limit DOJ interference as well as include language in the Act limiting the Monsanto decision, including maximum vertical price fixing as a potential cause of action, and statutorily defining agreements merely effecting the fixing of price as illegal per se.