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Kohl Examines The Legality Of Manufactureers Barring Discount Prices

Press Release

Location: Washington, DC

U.S. Senator Herb Kohl examined today the impact of the Supreme Court's Leegin decision on the prices consumers may pay during a Congressional hearing in the Senate Judiciary Antitrust, Competition Policy and Consumer Rights subcommittee. The hearing included testimony from Pamela Jones Harbour, Commissioner of the Federal Trade Commission; Tod Cohen, Vice President and Deputy General Counsel of eBay; James Wilson, Partner at Vorys, Sater, Seymour and Pease LLP and Chair, Section of Antitrust Law at the American Bar Association; and Stacy Haigney, General Attorney at Burlington Coat Factory

"In the last few decades, millions of consumers have benefited from an explosion of retail competition from new large discounters in virtually every product, from clothing to electronics to groceries, in both ‘big box' stores and on the internet," Kohl said. "We have all taken for granted our ability to walk into discount retailers and buy brand name products at sharply discounted prices. It is essential that Congress act swiftly to enact the Discount Pricing Consumer Protection Act to once again make the setting of minimum retail prices illegal."

In the Leegin decision, the Supreme Court overturned a nearly century old antitrust rule forbidding vertical price fixing -- the practice of a manufacturer setting a minimum price below which a retailer cannot sell the manufacturer's product. 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. Consumer rights advocates fear that allowing manufacturers to set retail prices will threaten discount stores, and lead to higher prices for consumers.

In January, Kohl introduced the "Discount Pricing Consumer Protection Act" to ensure that consumers will be able to continue discount shopping despite the Supreme Court's decision to overturn the ban on vertical price fixing. The Court's decision in the Leegin case 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 would restore the ban on vertical price fixing.

The "Discount Pricing Consumer Protection Act" is co-sponsored by Senator Sheldon Whitehouse (D-RI).

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