[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2261 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2261

     To restore the rule that agreements between manufacturers and 
retailers, distributors, or wholesalers to set the minimum price below 
which the manufacturer's product or service cannot be sold violates the 
                              Sherman Act.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 30, 2007

  Mr. Kohl (for himself, Mr. Biden, and Mrs. Clinton) introduced the 
 following bill; which was read twice and referred to the Committee on 
                             the Judiciary

_______________________________________________________________________

                                 A BILL


 
     To restore the rule that agreements between manufacturers and 
retailers, distributors, or wholesalers to set the minimum price below 
which the manufacturer's product or service cannot be sold violates the 
                              Sherman Act.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Discount Pricing Consumer Protection 
Act''.

SEC. 2. STATEMENT OF FINDINGS AND DECLARATION OF PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) From 1911 in the Dr. Miles decision until June 2007 in 
        the Leegin decision, the Supreme Court had ruled that the 
        Sherman Act forbid in all circumstances the practice of a 
        manufacturer setting a minimum price below which any retailer, 
        wholesaler or distributor could not sell the manufacturer's 
        product (the practice of ``resale price maintenance'' or 
        ``vertical price fixing'').
            (2) The rule of per se illegality forbidding resale price 
        maintenance promoted price competition and the practice of 
        discounting all to the substantial benefit of consumers and the 
        health of the economy.
            (3) Many economic studies showed that the rule against 
        resale price maintenance led to lower prices and promoted 
        consumer welfare.
            (4) Abandoning the rule against resale price maintenance 
        will likely lead to higher prices paid by consumers and 
        substantially harms the ability of discount retail stores to 
        compete. For 40 years prior to 1975, Federal law permitted 
        states to enact so-called ``fair trade'' laws allowing vertical 
        price fixing. Studies conducted by the Department of Justice in 
        the late 1960s indicated that retail prices were between 18 and 
        27 percent higher in states that allowed vertical price fixing 
        than those that did not. Likewise, a 1983 study by the Bureau 
        of Economics of the Federal Trade Commission found that, in 
        most cases, resale price maintenance increased the prices of 
        products sold.
            (5) The 5-4 decision of the Supreme Court majority in 
        Leegin incorrectly interpreted the Sherman Act and improperly 
        disregarded 96 years of antitrust law precedent in overturning 
        the per se rule against resale price maintenance.
    (b) Purposes.--The purposes of this Act are--
            (1) to correct the Supreme Court's mistaken interpretation 
        of the Sherman Act in the Leegin decision; and
            (2) to restore the rule that agreements between 
        manufacturers and retailers, distributors or wholesalers to set 
        the minimum price below which the manufacturer's product or 
        service cannot be sold violates the Sherman Act.

SEC. 3. PROHIBITION ON VERTICAL PRICE FIXING.

    (a) Amendment to the Sherman Act.--Section 1 of the Sherman Act (15 
U.S.C. 1) is amended by adding after the first sentence the following: 
``Any contract, combination, conspiracy or agreement setting a minimum 
price below which a product or service cannot be sold by a retailer, 
wholesaler, or distributor shall violate this Act.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect 90 days after the date of enactment of this Act.
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