Jury awarded Kay’s $1.2 million damages – tripled punitive damages. Appeals court affirmed. Leegin’s appealed to Supreme Court. Held: Reversed and remanded. Promotion of interbrand competition is important because antitrust laws want to protect this competition. Single manufacturer’s use of vertical price restraints eliminates intrabrand price competition. Also has potential to give consumers more options so they can choose among low-price low, service brands; high-price, high-service brands; and brands that fall in between. Absent vertical price restraints, retail services that enhance interbrand competition might be under-provided. This is because discounting retailers can free ride on retailers who furnish services and capture increased demand those services generate. Resale price maintenance, also can increase interbrand competition by facilitating market entry for new firms and brands. Vertical price restraints are to be judged according to the rule of reason. C ASE C ASE L EEGIN C REATIVE L EATHER P RODUCTS VS. PSKS
I NTERNATIONAL P ERSPECTIVE I NTERNATIONAL P ERSPECTIVE “CHINA’S ANTI-MONOPOLY LAW” People Republic of China enacted an Anti-Monopoly Law (AML) (2008). [Supervised by Anti-Monopoly Commission (AMC)] More like antitrust law in EU than in the U.S. AML can be applied to both horizontal and vertical agreements. Less concern about vertical arrangements than horizontal agreements among competitors. Violators face civil and administrative penalties, but not criminal penalties. Antitrust enforcement can affect decisions of multinational firms. InBev of Belgium merged with Anheuser-Busch (U.S.) to create world’s largest beer company. AMC placed restrictions of ownership share the new company could have in Chinese breweries. Surprising blockage of Coca-Cola attempted purchase of Huiyuan Juice group. AMC rejected the move, saying it would hurt small competitors in the market. Potential mergers are also reviewed for national security issues.