WASHINGTON — The leverage in pricing power would shift back to retailers if a bill approved by the Senate Judiciary Committee Thursday becomes law.
Sponsored by Sen. Herb Kohl (D., Wis.), the legislation would supersede a 2007 landmark Supreme Court decision that gave apparel brands the upper hand in pricing by allowing them to set minimum prices.
Kohl and eight other Democratic co-sponsors of the bill in the Senate are seeking to reinstate an almost century-old ban on minimum pricing agreements and shift power on setting prices from apparel brands back to retailers.
“Allowing manufacturers to set minimum retail prices threatens the very existence of discounting and discount stores, and causes higher prices for consumers,” Kohl said. “This legislation will ensure that stores can sell products at a discounted rate, helping consumers to save more of their hard-earned money.”
The legislative measure would negate a 5-to-4 Supreme Court decision in 2007 that struck down a 96-year-old legislative ban on minimum pricing agreements, giving apparel brands the ability to enforce the lowest price at which their products could be sold.
The case pitted Leegin Creative Leather Products against PSKS Inc., which operated the now-defunct 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. Leegin appealed the decision.
The Supreme Court ruling essentially allowed manufacturers to restrict how much a retailer can discount a product, creating challenges for off-pricers, Internet retailers and discounters. The decision gave lower courts the flexibility to determine, on a case-by-case basis, whether minimum pricing agreements were anticompetitive based on several factors.
The bill will next go to the Senate where its prospects are unclear. Both the Senate and House Judiciary committees passed the bill last year but it was never taken up for a vote in either chamber.
Kohl comes from a retailing background, helping to build the family-owned business, the predecessor of Kohl’s Corp., and serving as its president from 1970 until 1979.