The Senate Judiciary Committee today approved legislation sponsored by U.S. Senator Herb Kohl by voice vote to protect discount shopping for consumers. The "Discount Pricing Consumer Protection Act" (S. 75) would restore the century-old ban on vertical price fixing which was abolished by a 2007 Supreme Court decision in the Leegin case. The Court's ruling allows manufacturers to set a minimum price below which a retailer cannot sell the manufacturer's product, threatening the existence of discounting and discount stores and leading to higher prices for consumers. Kohl's legislation overturns the Court's decision.
"Allowing manufacturers to set minimum retail prices threatens the very existence of discounting and discount stores, and causes higher prices for consumers. This legislation will ensure that stores can sell products at a discounted rate, helping consumers to save more of their hard earned money." Kohl said.
Kohl is the chairman of the Senate Antitrust, Competition Policy and Consumer Rights panel, which conducted an extensive hearing into the Leegin decision and the likely effects of abolishing the ban on vertical price fixing.
In June 2007, a narrow 5-4 Supreme Court majority in the Leegin case interpreted the Sherman Act to overturn the ban on vertical price fixing. In his dissenting opinion in the Leegin case, Justice Breyer estimated that if only 10 % of manufacturers engaged in vertical price fixing, the volume of commerce affected today would be $300 billion dollars, translating into retail bills that would average $750 to $1,000 dollars higher for the average family of four every year.
The "Discount Pricing Consumer Protection Act" is co-sponsored by Dianne Feinstein (D-CA), Charles Schumer (D-NY), Richard Durbin (D-IL), Sheldon Whitehouse (D-RI), Amy Klobuchar (D-MN), Al Franken (D-MN), Ron Wyden (D-OR), and Richard Blumenthal (D-CT).
Kohl's bill was also endorsed by 38 of the nation's state attorneys general, numerous large and small businesses, consumer groups and antitrust experts.