WASHINGTON — Retailers lobbied federal officials for help Thursday to remedy the impact of a U.S. Supreme Court decision that gave manufacturers the ability to set minimum prices.
Consumer groups and retailers, including eBay and the now defunct Kay’s Kloset, which was the plaintiff in the landmark 2007 case, said the decision had damaged their ability to do business and hurt the consumer. In the 18 months since the 5-4 court ruling, retailers and industry groups alleged some unidentified large brands have used the precedent to target companies offering discounts or low prices to consumers.
The Supreme Court decision came in a case that pitted accessories firm Leegin Creative Leather Products against PSKS Inc., which operated the Kay’s Kloset boutique in a Dallas suburb. Kay’s Kloset took Leegin to court when it disagreed with a policy that required adherence to a minimum price, and won the original case. But Leegin appealed to the High Court, which overturned the lower court decision and ruled the leather goods company could dictate a minimum price to retailers selling its brands.
The decision struck down a 96-year-old ban on minimum pricing agreements, giving brands the potential to enforce the lowest price at which their products can be sold. The court said setting a base price was no longer automatically against the law, and gave lower courts the leeway to determine, on a case-by-case basis, whether minimum pricing agreements were anticompetitive. In effect, the ruling allowed manufacturers to restrict how much a retailer can discount a product, creating challenges for off-pricers, Internet retailers and other discounters.
“The interests of manufacturers…have been deemed more important than the interests of consumers and that is not right,” said Pamela Jones Harbour, a member of the Federal Trade Commission. “Consumers deserve the benefits of competition at every level of distribution, not just at the level of competition among manufacturers.”
Jones Harbour testified during Senate hearings last year in favor of Congress taking action that would effectively reinstate the minimum pricing ban. She said the commission early next year would explore the impact of the case.
“The nature of the fashion industry is that it suffers a short shelf life,” said Phil Smith, who owned Kay’s Kloset. “The supply of most everything in the fashion industry is finite, only so much is ever produced each season. The fact is most everything in the fashion industry is marked down at the end of each selling season to make room for the next season’s styles. Allowing manufacturers to fix prices will force the American retailers to hold on to poor performing inventory and operate contrary to their own economic self interest. It is an insult to my status as an independent retailer to have my prices dictated by a manufacturer.”
After the decision, Kay’s Kloset lost a substantial portion of its sales when Leegin ended its relationship with the retailer. The independent boutique closed in October.
Smith spoke as part of a panel of consumer advocates, retailers and government officials that called for lawmakers and regulators to address the “anticompetitive and anticonsumer” impact of the court ruling.
“EBay wants to serve both buyers and sellers throughout the United States and around the world, and we are convinced that, post-Leegin, our buyers and sellers are suffering,” said Tod Cohen, vice president and deputy general counsel of government relations for eBay Inc.
Cohen alleged that manufacturers’ pricing in the wake of the court decision is aimed particularly at online sellers who pose a threat through better pricing and the ability to deliver goods anytime and anywhere.
“Entrepreneurs want to serve customers as best they can, that means offering them competitive prices,” he said. “This is especially important for the vast majority of [eBay] sellers who are small and medium-size enterprisers.”
Online sellers and retailers aren’t the only parties who bear the brunt of the Leegin case, panelists said. The issue also pits brick-and-mortar retailers against manufacturers.
The majority opinion in the Leegin-Kay’s Kloset decision acknowledged that minimum pricing agreements could be abused by powerful manufacturers or retailers, but said such arrangements also could spur competition.
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye