Leegin Creative Leather Products v. PSKS
: Should the Per Se Rule Against Minimum Resale Price Maintenance Be Abandoned?Leegin
presents the Court with the opportunity to reconsider its long-standing per se rule against vertical minimum price-fixing. In the case, PSKS, a retailer of Brighton brand products manufactured by Leegin, claimed that Leegin violated Section 1 of the Sherman Act by entering into illegal agreements with retailers to fix the price of Brighton products. The jury found for the plaintiff, and the Fifth Circuit upheld the verdict based on the per se rule against vertical minimum price fixing.The rule of per se illegality was announced in 1911 in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911). Economists and antitrust theorists alike have argued that the per se rule of Dr. Miles is inconsistent with modern antitrust analysis. In recent years, the Court has overturned other precedents that applied the per se rule to vertical restraints. In Continental TV v. GTE Sylvania, 433 U.S. 36 (1977), the Court reversed the per se rule against vertical non-price restraints, such as territorial restrictions on dealers, and in State Oil v. Khan, 522 U.S. 3 (1997), the Court overturned the per se rule against maximum resale prices. The Court’s reasoning in GTE Sylvania and Khan is based on the economic learning that vertical maximum-price and non-price restraints tend to have pro-competitive effects on inter-brand competition (which directly benefits consumers), and therefore the restraints should be judged under the "rule of reason" rather than being condemned outright under the per se rule. Most antitrust experts believe that the same rationale should be applied to vertical minimum price restraints.
Credit Suisse First Boston Ltd. v. Billing
: Is There Implied Immunity from the Antitrust Laws for Conduct Permitted by the Federal Securities Laws?Credit Suisse First Boston
asks the Court to decide whether certain collaborative conduct that is authorized under the securities laws is impliedly immune from the antitrust laws.In the case, the plaintiff filed a class action against several investment banks that had underwritten initial public offerings (IPOs) of securities, alleging that they had violated Section 1 of the Sherman Act by agreeing to require consideration from their customers in addition to the underwriters’ discount in exchange for allocations of shares of IPOs of certain high-technology companies. The plaintiffs also alleged an agreement among the defendants to inflate the aftermarket prices of those securities. The district court dismissed the plaintiffs’ complaint on the grounds that the defendants had implied immunity from the antitrust laws by virtue of the Securities and Exchange Commission’s (SEC) authority to regulate IPO allocation and underwriter commission practices, and that the SEC permitted much of the conduct alleged in the complaint. The Second Circuit vacated the district court’s decision, and concluded that implied immunity may be found only if the activities of a self-regulatory organization that is regulated by the SEC are challenged as anticompetitive, and there is a specific conflict between the antitrust laws and another regulatory regime that permits or compels those activities. The court of appeals’ decision has been challenged on the ground that its holding threatens to undermine the SEC’s regulatory regime and interfere with the capital formation process.
Credit Suisse First Boston
is a different action from In re Initial Public Offering Securities Litigation, No. 05-3349-cv, which was discussed in a Morrison & Foerster Legal Update on December 7, 2006 (see Second Circuit Decision Clarifies the Standards for Class Certification). In the latter case, on Tuesday, December 5, the Second Circuit reversed a lower court decision granting class certification in six "focus cases" out of 310 consolidated class actions alleging securities law violations.In the In re Initial Public Offering Securities Litigation action, Morrison & Foerster LLP represents more than 30 issuers of securities and their executives who are co-defendants of the underwriters in the cases before the District Court, and serves as liaison counsel for all issuer defendants in that matter. These entities were not parties to the Initial Public Offerings appeal recently decided by the Second Circuit, and are not parties to the Credit Suisse First Boston action or appeal.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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