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Restoring American Finacial Stability Act of 2010 - Continued

Floor Speech

Location: Washington, DC


Mr. KOHL. Madam President, I rise today to speak about amendment No. 3788, an amendment essential to protecting consumers. As we work to rein in the excesses of Wall Street and shore up our economy, we must do all that we can to ensure consumers can get discount prices from retail stores at the very time when they need them the most.

My amendment will restore the nearly century old rule that made it illegal under antitrust law for a manufacturer to set a price below which a retailer could not sell a product--a practice known as ``resale price maintenance'' or ``vertical price fixing.'' This rule was overturned in June 2007 by a narrow 5-4 majority of the Supreme Court in the Leegin case. My amendment is
identical to the Discount Pricing Consumer Act--a bill which has 10 cosponsors and passed the Judiciary Committee last month. Our bill has been endorsed by 39 State attorneys general, the leading consumer groups, as well as numerous antitrust experts, including former FTC Chairman Pitofsky.

For 96 years until the Leegin decision the rules were clear. Manufacturers could not set a retail price, and retailers could not be prevented from discounting. Millions of consumers saw the benefits of discount prices every day. Thousands of retailers all across the country were able to discount their products and sell their goods at the most competitive prices. Many credit the ban on vertical price fixing with the rise of today's low price, discount retail giants--stores like Target, Best Buy, Walmart, and the Internet sites Amazon and EBay, which offer consumers a wide array of highly desired products at discount prices.

But the consequences of the Leegin decision should worry all of us. Allowing manufacturers to set retail prices threatens the very existence of discounting and discount stores, and leads to higher prices for consumers. In his dissenting opinion in Leegin, Justice Breyer cited economic studies that estimated that if only 10 percent of manufacturers engaged in vertical price fixing, retail bills would average $750 to $1,000 higher for the average family of four every year.

And the experience of the last 3 years since the Leegin decision is beginning to confirm our fears regarding the dangers of permitting vertical price fixing. The Wall Street Journal has reported that more than 5,000 companies have implemented minimum pricing policies. Internet monitors scour the Web at the behest of manufacturers to prevent discounting. And there have been many reports of everything from consumer electronics and video games to baby products and toys, rental cars and bathtubs being subject to minimum retail pricing policies.

My amendment is quite simple and direct--it merely returns us to the state of the law the day before Leegin was decided. It would simply add one sentence to section 1 of the Sherman Act--a statement that any agreement with a retailer, wholesaler or distributor setting a price below which a product or service cannot be sold violates the law. No balancing or protracted legal proceedings will be necessary. Should a manufacturer enter into such an agreement it will unquestionably violate antitrust law. Instead of the complexity of the ``rule of reason'' announced by Leegin, we will once again have a simple and clear legal rule banning vertical price fixing--a legal rule that will promote low prices and discount competition to the benefit of consumers every day.

In the last 50 years, 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. My amendment will correct the Supreme Court's abrupt change to antitrust law, and will ensure that today's vibrant competitive retail marketplace and the savings gained by American consumers from discounting will not be jeopardized by the abolition of the ban on vertical price fixing. I urge my colleagues to support this amendment.

I suggest the absence of a quorum.


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