(Slip Opinion) OCTOBER TERM, 2006 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC., DBA KAY’S KLOSET . . . KAY’S SHOES
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FIFTH CIRCUIT
No. 06–480. Argued March 26, 2007—Decided June 28, 2007
Given its policy of refusing to sell to retailers that discount its goods
below suggested prices, petitioner (Leegin) stopped selling to respon
dent’s (PSKS) store. PSKS filed suit, alleging, inter alia, that Leegin
violated the antitrust laws by entering into vertical agreements with
its retailers to set minimum resale prices. The District Court ex
cluded expert testimony about Leegin’s pricing policy’s procompeti
tive effects on the ground that Dr. Miles Medical Co. v. John D. Park
& Sons Co., 220 U. S. 373, makes it per se illegal under §1 of the
Sherman Act for a manufacturer and its distributor to agree on the
minimum price the distributor can charge for the manufacturer’s
goods. At trial, PSKS alleged that Leegin and its retailers had
agreed to fix prices, but Leegin argued that its pricing policy was law
ful under §1. The jury found for PSKS. On appeal, the Fifth Circuit
declined to apply the rule of reason to Leegin’s vertical price-fixing
agreements and affirmed, finding that Dr. Miles’ per se rule rendered
irrelevant any procompetitive justifications for Leegin’s policy.
Held: Dr. Miles is overruled and vertical price restraints are to be
judged by the rule of reason. Pp. 5–28.
(a) The accepted standard for testing whether a practice restrains
trade in violation of §1 is the rule of reason, which requires the fact-
finder to weigh “all of the circumstances,” Continental T. V., Inc. v.
GTE Sylvania Inc., 433 U. S. 36, 49, including “specific information
about the relevant business” and “the restraint’s history, nature, and
effect,” State Oil Co. v. Khan, 522 U. S. 3, 10. The rule distinguishes
between restraints with anticompetitive effect that are harmful to
the consumer and those with procompetitive effect that are in the
consumer’s best interest. However, when a restraint is deemed
2 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Syllabus
“unlawful per se,” ibid., the need to study an individual restraint’s
reasonableness in light of real market forces is eliminated, Business
Electronics Corp. v. Sharp Electronics Corp., 485 U. S. 717, 723. Re
sort to per se rules is confined to restraints “that would always or al
most always tend to restrict competition and decrease output.” Ibid.
Thus, a per se rule is appropriate only after courts have had consid
erable experience with the type of restraint at issue, see Broadcast
Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 9, and
only if they can predict with confidence that the restraint would be
invalidated in all or almost all instances under the rule of reason, see
Arizona v. Maricopa County Medical Soc., 457 U. S. 332, 344. Pp. 5–
7.
(b) Because the reasons upon which Dr. Miles relied do not justify a
per se rule, it is necessary to examine, in the first instance, the eco
nomic effects of vertical agreements to fix minimum resale prices and
to determine whether the per se rule is nonetheless appropriate.
Were this Court considering the issue as an original matter, the rule
of reason, not a per se rule of unlawfulness, would be the appropriate
standard to judge vertical price restraints. Pp. 7–19.
(1) Economics literature is replete with procompetitive justifica
tions for a manufacturer’s use of resale price maintenance, and the
few recent studies on the subject also cast doubt on the conclusion
that the practice meets the criteria for a per se rule. The justifica
tions for vertical price restraints are similar to those for other verti
cal restraints. Minimum resale price maintenance can stimulate in
terbrand competition among manufacturers selling different brands
of the same type of product by reducing intrabrand competition
among retailers selling the same brand. This is important because
the antitrust laws’ “primary purpose . . . is to protect interbrand
competition,” Khan, supra, at 15. A single manufacturer’s use of ver
tical price restraints tends to eliminate intrabrand price competition;
this in turn encourages retailers to invest in services or promotional
efforts that aid the manufacturer’s position as against rival manufac
turers. Resale price maintenance may also give consumers more op
tions to choose among low-price, low-service brands; high-price, high-
service brands; and brands falling in between. Absent vertical price
restraints, retail services that enhance interbrand competition might
be underprovided because discounting retailers can free ride on re
tailers who furnish services and then capture some of the demand
those services generate. Retail price maintenance can also increase
interbrand competition by facilitating market entry for new firms
and brands and by encouraging retailer services that would not be
provided even absent free riding. Pp. 9–12.
(2) Setting minimum resale prices may also have anticompetitive
Cite as: 551 U. S. ____ (2007) 3
Syllabus
effects; and unlawful price fixing, designed solely to obtain monopoly
profits, is an ever present temptation. Resale price maintenance
may, for example, facilitate a manufacturer cartel or be used to or
ganize retail cartels. It can also be abused by a powerful manufac
turer or retailer. Thus, the potential anticompetitive consequences of
vertical price restraints must not be ignored or underestimated.
Pp. 12–14.
(3) Notwithstanding the risks of unlawful conduct, it cannot be
stated with any degree of confidence that retail price maintenance
“always or almost always tend[s] to restrict competition and decrease
output,” Business Electronics, supra, at 723. Vertical retail-price
agreements have either procompetitive or anticompetitive effects, de
pending on the circumstances in which they were formed; and the
limited empirical evidence available does not suggest efficient uses of
the agreements are infrequent or hypothetical. A per se rule should
not be adopted for administrative convenience alone. Such rules can
be counterproductive, increasing the antitrust system’s total cost by
prohibiting procompetitive conduct the antitrust laws should encour
age. And a per se rule cannot be justified by the possibility of higher
prices absent a further showing of anticompetitive conduct. The anti
trust laws primarily are designed to protect interbrand competition
from which lower prices can later result. Respondent’s argument
overlooks that, in general, the interests of manufacturers and con
sumers are aligned with respect to retailer profit margins. Resale
price maintenance has economic dangers. If the rule of reason were
to apply, courts would have to be diligent in eliminating their anti-
competitive uses from the market. Factors relevant to the inquiry
are the number of manufacturers using the practice, the restraint’s
source, and a manufacturer’s market power. The rule of reason is de
signed and used to ascertain whether transactions are anticompeti
tive or procompetitive. This standard principle applies to vertical
price restraints. As courts gain experience with these restraints by
applying the rule of reason over the course of decisions, they can es
tablish the litigation structure to ensure the rule operates to elimi
nate anticompetitive restraints from the market and to provide more
guidance to businesses. Pp. 14–19.
(c) Stare decisis does not compel continued adherence to the per se
rule here. Because the Sherman Act is treated as a common-law
statute, its prohibition on “restraint[s] of trade” evolves to meet the
dynamics of present economic conditions. The rule of reason’s case-
by-case adjudication implements this common-law approach. Here,
respected economics authorities suggest that the per se rule is inap
propriate. And both the Department of Justice and the Federal
Trade Commission recommend replacing the per se rule with the rule
4 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Syllabus
of reason. In addition, this Court has “overruled [its] precedents
when subsequent cases have undermined their doctrinal underpin
nings.” Dickerson v. United States, 530 U. S. 428, 443. It is not sur
prising that the Court has distanced itself from Dr. Miles’ rationales,
for the case was decided not long after the Sherman Act was enacted,
when the Court had little experience with antitrust analysis. Only
eight years after Dr. Miles, the Court reined in the decision, holding
that a manufacturer can suggest resale prices and refuse to deal with
distributors who do not follow them, United States v. Colgate & Co.,
250 U. S. 300, 307–308; and more recently the Court has tempered,
limited, or overruled once strict vertical restraint prohibitions, see,
e.g., GTE Sylvania, supra, at 57–59. The Dr. Miles rule is also incon
sistent with a principled framework, for it makes little economic
sense when analyzed with the Court’s other vertical restraint cases.
Deciding that procompetitive effects of resale price maintenance are
insufficient to overrule Dr. Miles would call into question cases such
as Colgate and GTE Sylvania. Respondent’s arguments for reaffirm
ing Dr. Miles based on stare decisis do not require a different result.
Pp. 19–28.
171 Fed. Appx. 464, reversed and remanded.
KENNEDY, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and SCALIA, THOMAS, and ALITO, JJ., joined. BREYER, J., filed a
dissenting opinion, in which STEVENS, SOUTER, and GINSBURG, JJ.,
joined.
Cite as: 551 U. S. ____ (2007) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 06–480
_________________
LEEGIN CREATIVE LEATHER PRODUCTS, INC.,
PETITIONER v. PSKS, INC., DBA KAY’S
KLOSET . . . KAY’S SHOES
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT
[June 28, 2007]
JUSTICE KENNEDY delivered the opinion of the Court.
In Dr. Miles Medical Co. v. John D. Park & Sons Co.,
220 U. S. 373 (1911), the Court established the rule that it
is per se illegal under §1 of the Sherman Act, 15 U. S. C.
§1, for a manufacturer to agree with its distributor to set
the minimum price the distributor can charge for the
manufacturer’s goods. The question presented by the
instant case is whether the Court should overrule the per
se rule and allow resale price maintenance agreements to
be judged by the rule of reason, the usual standard applied
to determine if there is a violation of §1. The Court has
abandoned the rule of per se illegality for other vertical
restraints a manufacturer imposes on its distributors.
Respected economic analysts, furthermore, conclude that
vertical price restraints can have procompetitive effects.
We now hold that Dr. Miles should be overruled and that
vertical price restraints are to be judged by the rule of
reason.
I
Petitioner, Leegin Creative Leather Products, Inc.
2 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
(Leegin), designs, manufactures, and distributes leather
goods and accessories. In 1991, Leegin began to sell belts
under the brand name “Brighton.” The Brighton brand
has now expanded into a variety of women’s fashion acces
sories. It is sold across the United States in over 5,000
retail establishments, for the most part independent,
small boutiques and specialty stores. Leegin’s president,
Jerry Kohl, also has an interest in about 70 stores that sell
Brighton products. Leegin asserts that, at least for its
products, small retailers treat customers better, provide
customers more services, and make their shopping experi
ence more satisfactory than do larger, often impersonal
retailers. Kohl explained: “[W]e want the consumers to
get a different experience than they get in Sam’s Club or
in Wal-Mart. And you can’t get that kind of experience or
support or customer service from a store like Wal-Mart.” 5
Record 127.
Respondent, PSKS, Inc. (PSKS), operates Kay’s Kloset,
a women’s apparel store in Lewisville, Texas. Kay’s Kloset
buys from about 75 different manufacturers and at one
time sold the Brighton brand. It first started purchasing
Brighton goods from Leegin in 1995. Once it began selling
the brand, the store promoted Brighton. For example, it
ran Brighton advertisements and had Brighton days in
the store. Kay’s Kloset became the destination retailer in
the area to buy Brighton products. Brighton was the
store’s most important brand and once accounted for 40 to
50 percent of its profits.
In 1997, Leegin instituted the “Brighton Retail Pricing
and Promotion Policy.” 4 id., at 939. Following the policy,
Leegin refused to sell to retailers that discounted Brighton
goods below suggested prices. The policy contained an
exception for products not selling well that the retailer did
not plan on reordering. In the letter to retailers establish
ing the policy, Leegin stated:
Cite as: 551 U. S. ____ (2007) 3
Opinion of the Court
“In this age of mega stores like Macy’s, Blooming-
dales, May Co. and others, consumers are perplexed
by promises of product quality and support of product
which we believe is lacking in these large stores.
Consumers are further confused by the ever popular
sale, sale, sale, etc.
“We, at Leegin, choose to break away from the pack
by selling [at] specialty stores; specialty stores that
can offer the customer great quality merchandise, su
perb service, and support the Brighton product 365
days a year on a consistent basis.
“We realize that half the equation is Leegin produc
ing great Brighton product and the other half is you,
our retailer, creating great looking stores selling our
products in a quality manner.” Ibid.
Leegin adopted the policy to give its retailers sufficient
margins to provide customers the service central to its
distribution strategy. It also expressed concern that dis
counting harmed Brighton’s brand image and reputation.
A year after instituting the pricing policy Leegin intro
duced a marketing strategy known as the “Heart Store
Program.” See id., at 962–972. It offered retailers incen
tives to become Heart Stores, and, in exchange, retailers
pledged, among other things, to sell at Leegin’s suggested
prices. Kay’s Kloset became a Heart Store soon after
Leegin created the program. After a Leegin employee
visited the store and found it unattractive, the parties
appear to have agreed that Kay’s Kloset would not be a
Heart Store beyond 1998. Despite losing this status, Kay’s
Kloset continued to increase its Brighton sales.
In December 2002, Leegin discovered Kay’s Kloset had
been marking down Brighton’s entire line by 20 percent.
Kay’s Kloset contended it placed Brighton products on sale
to compete with nearby retailers who also were undercut
ting Leegin’s suggested prices. Leegin, nonetheless, re
4 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
quested that Kay’s Kloset cease discounting. Its request
refused, Leegin stopped selling to the store. The loss of
the Brighton brand had a considerable negative impact on
the store’s revenue from sales.
PSKS sued Leegin in the United States District Court
for the Eastern District of Texas. It alleged, among other
claims, that Leegin had violated the antitrust laws by
“enter[ing] into agreements with retailers to charge only
those prices fixed by Leegin.” Id., at 1236. Leegin
planned to introduce expert testimony describing the
procompetitive effects of its pricing policy. The District
Court excluded the testimony, relying on the per se rule
established by Dr. Miles. At trial PSKS argued that the
Heart Store program, among other things, demonstrated
Leegin and its retailers had agreed to fix prices. Leegin
responded that it had established a unilateral pricing
policy lawful under §1, which applies only to concerted
action. See United States v. Colgate & Co., 250 U. S. 300,
307 (1919). The jury agreed with PSKS and awarded it
$1.2 million. Pursuant to 15 U. S. C. §15(a), the District
Court trebled the damages and reimbursed PSKS for its
attorney’s fees and costs. It entered judgment against
Leegin in the amount of $3,975,000.80.
The Court of Appeals for the Fifth Circuit affirmed. 171
Fed. Appx. 464 (2006) (per curiam). On appeal Leegin did
not dispute that it had entered into vertical price-fixing
agreements with its retailers. Rather, it contended that
the rule of reason should have applied to those agree
ments. The Court of Appeals rejected this argument. Id.,
at 466–467. It was correct to explain that it remained
bound by Dr. Miles “[b]ecause [the Supreme] Court has
consistently applied the per se rule to [vertical minimum
price-fixing] agreements.” 171 Fed. Appx., at 466. On this
premise the Court of Appeals held that the District Court
did not abuse its discretion in excluding the testimony of
Leegin’s economic expert, for the per se rule rendered
Cite as: 551 U. S. ____ (2007) 5
Opinion of the Court
irrelevant any procompetitive justifications for Leegin’s
pricing policy. Id., at 467. We granted certiorari to de
termine whether vertical minimum resale price mainte
nance agreements should continue to be treated as per se
unlawful. 549 U. S. ___ (2006).
II
Section 1 of the Sherman Act prohibits “[e]very contract,
combination in the form of trust or otherwise, or conspir
acy, in restraint of trade or commerce among the several
States.” Ch. 647, 26 Stat. 209, as amended, 15 U. S. C. §1.
While §1 could be interpreted to proscribe all contracts,
see, e.g., Board of Trade of Chicago v. United States, 246
U. S. 231, 238 (1918), the Court has never “taken a literal
approach to [its] language,” Texaco Inc. v. Dagher, 547
U. S. 1, 5 (2006). Rather, the Court has repeated time and
again that §1 “outlaw[s] only unreasonable restraints.”
State Oil Co. v. Khan, 522 U. S. 3, 10 (1997).
The rule of reason is the accepted standard for testing
whether a practice restrains trade in violation of §1. See
Texaco, supra, at 5. “Under this rule, the factfinder
weighs all of the circumstances of a case in deciding
whether a restrictive practice should be prohibited as
imposing an unreasonable restraint on competition.”
Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36,
49 (1977). Appropriate factors to take into account include
“specific information about the relevant business” and “the
restraint’s history, nature, and effect.” Khan, supra, at 10.
Whether the businesses involved have market power is a
further, significant consideration. See, e.g., Copperweld
Corp. v. Independence Tube Corp., 467 U. S. 752, 768
(1984) (equating the rule of reason with “an inquiry into
market power and market structure designed to assess [a
restraint’s] actual effect”); see also Illinois Tool Works Inc.
v. Independent Ink, Inc., 547 U. S. 28, 45–46 (2006). In its
design and function the rule distinguishes between re
6 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
straints with anticompetitive effect that are harmful to
the consumer and restraints stimulating competition that
are in the consumer’s best interest.
The rule of reason does not govern all restraints. Some
types “are deemed unlawful per se.” Khan, supra, at 10.
The per se rule, treating categories of restraints as neces
sarily illegal, eliminates the need to study the reasonable
ness of an individual restraint in light of the real market
forces at work, Business Electronics Corp. v. Sharp Elec
tronics Corp., 485 U. S. 717, 723 (1988); and, it must be
acknowledged, the per se rule can give clear guidance for
certain conduct. Restraints that are per se unlawful in
clude horizontal agreements among competitors to fix
prices, see Texaco, supra, at 5, or to divide markets, see
Palmer v. BRG of Ga., Inc., 498 U. S. 46, 49–50 (1990) (per
curiam).
Resort to per se rules is confined to restraints, like those
mentioned, “that would always or almost always tend to
restrict competition and decrease output.” Business Elec
tronics, supra, at 723 (internal quotation marks omitted).
To justify a per se prohibition a restraint must have
“manifestly anticompetitive” effects, GTE Sylvania, supra,
at 50, and “lack . . . any redeeming virtue,” Northwest
Wholesale Stationers, Inc. v. Pacific Stationery & Printing
Co., 472 U. S. 284, 289 (1985) (internal quotation marks
omitted).
As a consequence, the per se rule is appropriate only
after courts have had considerable experience with the
type of restraint at issue, see Broadcast Music, Inc. v.
Columbia Broadcasting System, Inc., 441 U. S. 1, 9 (1979),
and only if courts can predict with confidence that it would
be invalidated in all or almost all instances under the rule
of reason, see Arizona v. Maricopa County Medical Soc.,
457 U. S. 332, 344 (1982). It should come as no surprise,
then, that “we have expressed reluctance to adopt per se
rules with regard to restraints imposed in the context of
Cite as: 551 U. S. ____ (2007) 7
Opinion of the Court
business relationships where the economic impact of
certain practices is not immediately obvious.” Khan,
supra, at 10 (internal quotation marks omitted); see also
White Motor Co. v. United States, 372 U. S. 253, 263 (1963)
(refusing to adopt a per se rule for a vertical nonprice
restraint because of the uncertainty concerning whether
this type of restraint satisfied the demanding standards
necessary to apply a per se rule). And, as we have stated,
a “departure from the rule-of-reason standard must be
based upon demonstrable economic effect rather than . . .
upon formalistic line drawing.” GTE Sylvania, supra, at
58–59.
III
The Court has interpreted Dr. Miles Medical Co. v. John
D. Park & Sons Co., 220 U. S. 373 (1911), as establishing a
per se rule against a vertical agreement between a manu
facturer and its distributor to set minimum resale prices.
See, e.g., Monsanto Co. v. Spray-Rite Service Corp., 465
U. S. 752, 761 (1984). In Dr. Miles the plaintiff, a manu
facturer of medicines, sold its products only to distributors
who agreed to resell them at set prices. The Court found
the manufacturer’s control of resale prices to be unlawful.
It relied on the common-law rule that “a general restraint
upon alienation is ordinarily invalid.” 220 U. S., at 404–
405. The Court then explained that the agreements would
advantage the distributors, not the manufacturer, and
were analogous to a combination among competing dis
tributors, which the law treated as void. Id., at 407–408.
The reasoning of the Court’s more recent jurisprudence
has rejected the rationales on which Dr. Miles was based.
By relying on the common-law rule against restraints on
alienation, id., at 404–405, the Court justified its decision
based on “formalistic” legal doctrine rather than “demon
strable economic effect,” GTE Sylvania, supra, at 58–59.
The Court in Dr. Miles relied on a treatise published in
8 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
1628, but failed to discuss in detail the business reasons
that would motivate a manufacturer situated in 1911 to
make use of vertical price restraints. Yet the Sherman
Act’s use of “restraint of trade” “invokes the common law
itself, . . . not merely the static content that the common
law had assigned to the term in 1890.” Business Electron
ics, supra, at 732. The general restraint on alienation,
especially in the age when then-Justice Hughes used the
term, tended to evoke policy concerns extraneous to the
question that controls here. Usually associated with land,
not chattels, the rule arose from restrictions removing real
property from the stream of commerce for generations.
The Court should be cautious about putting dispositive
weight on doctrines from antiquity but of slight relevance.
We reaffirm that “the state of the common law 400 or even
100 years ago is irrelevant to the issue before us: the effect
of the antitrust laws upon vertical distributional re
straints in the American economy today.” GTE Sylvania,
433 U. S., at 53, n. 21 (internal quotation marks omitted).
Dr. Miles, furthermore, treated vertical agreements a
manufacturer makes with its distributors as analogous to
a horizontal combination among competing distributors.
See 220 U. S., at 407–408. In later cases, however, the
Court rejected the approach of reliance on rules governing
horizontal restraints when defining rules applicable to
vertical ones. See, e.g., Business Electronics, supra, at 734
(disclaiming the “notion of equivalence between the scope
of horizontal per se illegality and that of vertical per se
illegality”); Maricopa County, supra, at 348, n. 18 (noting
that “horizontal restraints are generally less defensible
than vertical restraints”). Our recent cases formulate
antitrust principles in accordance with the appreciated
differences in economic effect between vertical and hori
zontal agreements, differences the Dr. Miles Court failed
to consider.
The reasons upon which Dr. Miles relied do not justify a
Cite as: 551 U. S. ____ (2007) 9
Opinion of the Court
per se rule. As a consequence, it is necessary to examine,
in the first instance, the economic effects of vertical
agreements to fix minimum resale prices, and to deter
mine whether the per se rule is nonetheless appropriate.
See Business Electronics, 485 U. S., at 726.
A
Though each side of the debate can find sources to sup
port its position, it suffices to say here that economics
literature is replete with procompetitive justifications for a
manufacturer’s use of resale price maintenance. See, e.g.,
Brief for Economists as Amici Curiae 16 (“In the theoreti
cal literature, it is essentially undisputed that minimum
[resale price maintenance] can have procompetitive effects
and that under a variety of market conditions it is
unlikely to have anticompetitive effects”); Brief for United
States as Amicus Curiae 9 (“[T]here is a widespread con
sensus that permitting a manufacturer to control the price
at which its goods are sold may promote interbrand com
petition and consumer welfare in a variety of ways”); ABA
Section of Antitrust Law, Antitrust Law and Economics of
Product Distribution 76 (2006) (“[T]he bulk of the eco
nomic literature on [resale price maintenance] suggests
that [it] is more likely to be used to enhance efficiency
than for anticompetitive purposes”); see also H. Hovenk
amp, The Antitrust Enterprise: Principle and Execution
184–191 (2005) (hereinafter Hovenkamp); R. Bork, The
Antitrust Paradox 288–291 (1978) (hereinafter Bork).
Even those more skeptical of resale price maintenance
acknowledge it can have procompetitive effects. See, e.g.,
Brief for William S. Comanor et al. as Amici Curiae 3
(“[G]iven [the] diversity of effects [of resale price mainte
nance], one could reasonably take the position that a rule
of reason rather than a per se approach is warranted”);
F.M. Scherer & D. Ross, Industrial Market Structure and
Economic Performance 558 (3d ed. 1990) (hereinafter
10 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
Scherer & Ross) (“The overall balance between benefits
and costs [of resale price maintenance] is probably close”).
The few recent studies documenting the competitive
effects of resale price maintenance also cast doubt on the
conclusion that the practice meets the criteria for a per se
rule. See T. Overstreet, Resale Price Maintenance: Eco
nomic Theories and Empirical Evidence 170 (1983) (here
inafter Overstreet) (noting that “[e]fficient uses of [resale
price maintenance] are evidently not unusual or rare”); see
also Ippolito, Resale Price Maintenance: Empirical Evi
dence From Litigation, 34 J. Law & Econ. 263, 292–293
(1991) (hereinafter Ippolito).
The justifications for vertical price restraints are similar
to those for other vertical restraints. See GTE Sylvania,
433 U. S., at 54–57. Minimum resale price maintenance
can stimulate interbrand competition—the competition
among manufacturers selling different brands of the same
type of product—by reducing intrabrand competition—the
competition among retailers selling the same brand. See
id., at 51–52. The promotion of interbrand competition is
important because “the primary purpose of the antitrust
laws is to protect [this type of] competition.” Khan, 522
U. S., at 15. A single manufacturer’s use of vertical price
restraints tends to eliminate intrabrand price competition;
this in turn encourages retailers to invest in tangible or
intangible services or promotional efforts that aid the
manufacturer’s position as against rival manufacturers.
Resale price maintenance also has the potential to give
consumers more options so that they can choose among
low-price, low-service brands; high-price, high-service
brands; and brands that fall in between.
Absent vertical price restraints, the retail services that
enhance interbrand competition might be underprovided.
This is because discounting retailers can free ride on
retailers who furnish services and then capture some of
the increased demand those services generate. GTE Syl
Cite as: 551 U. S. ____ (2007) 11
Opinion of the Court
vania, supra, at 55. Consumers might learn, for example,
about the benefits of a manufacturer’s product from a
retailer that invests in fine showrooms, offers product
demonstrations, or hires and trains knowledgeable em
ployees. R. Posner, Antitrust Law 172–173 (2d ed. 2001)
(hereinafter Posner). Or consumers might decide to buy
the product because they see it in a retail establishment
that has a reputation for selling high-quality merchandise.
Marvel & McCafferty, Resale Price Maintenance and
Quality Certification, 15 Rand J. Econ. 346, 347–349
(1984) (hereinafter Marvel & McCafferty). If the con
sumer can then buy the product from a retailer that dis
counts because it has not spent capital providing services
or developing a quality reputation, the high-service re
tailer will lose sales to the discounter, forcing it to cut
back its services to a level lower than consumers would
otherwise prefer. Minimum resale price maintenance
alleviates the problem because it prevents the discounter
from undercutting the service provider. With price compe
tition decreased, the manufacturer’s retailers compete
among themselves over services.
Resale price maintenance, in addition, can increase
interbrand competition by facilitating market entry for
new firms and brands. “[N]ew manufacturers and manu
facturers entering new markets can use the restrictions in
order to induce competent and aggressive retailers to
make the kind of investment of capital and labor that is
often required in the distribution of products unknown to
the consumer.” GTE Sylvania, supra, at 55; see Marvel &
McCafferty 349 (noting that reliance on a retailer’s repu
tation “will decline as the manufacturer’s brand becomes
better known, so that [resale price maintenance] may be
particularly important as a competitive device for new
entrants”). New products and new brands are essential to
a dynamic economy, and if markets can be penetrated by
using resale price maintenance there is a procompetitive
12 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
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Opinion of the Court
effect.
Resale price maintenance can also increase interbrand
competition by encouraging retailer services that would
not be provided even absent free riding. It may be difficult
and inefficient for a manufacturer to make and enforce a
contract with a retailer specifying the different services
the retailer must perform. Offering the retailer a guaran
teed margin and threatening termination if it does not live
up to expectations may be the most efficient way to ex
pand the manufacturer’s market share by inducing the
retailer’s performance and allowing it to use its own initia
tive and experience in providing valuable services. See
Mathewson & Winter, The Law and Economics of Resale
Price Maintenance, 13 Rev. Indus. Org. 57, 74–75 (1998)
(hereinafter Mathewson & Winter); Klein & Murphy,
Vertical Restraints as Contract Enforcement Mechanisms,
31 J. Law & Econ. 265, 295 (1988); see also Deneckere,
Marvel, & Peck, Demand Uncertainty, Inventories, and
Resale Price Maintenance, 111 Q. J. Econ. 885, 911 (1996)
(noting that resale price maintenance may be beneficial to
motivate retailers to stock adequate inventories of a
manufacturer’s goods in the face of uncertain consumer
demand).
B
While vertical agreements setting minimum resale
prices can have procompetitive justifications, they may
have anticompetitive effects in other cases; and unlawful
price fixing, designed solely to obtain monopoly profits, is
an ever present temptation. Resale price maintenance
may, for example, facilitate a manufacturer cartel. See
Business Electronics, 485 U. S., at 725. An unlawful cartel
will seek to discover if some manufacturers are undercut
ting the cartel’s fixed prices. Resale price maintenance
could assist the cartel in identifying price-cutting manu
facturers who benefit from the lower prices they offer.
Cite as: 551 U. S. ____ (2007) 13
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Resale price maintenance, furthermore, could discourage a
manufacturer from cutting prices to retailers with the
concomitant benefit of cheaper prices to consumers. See
ibid.; see also Posner 172; Overstreet 19–23.
Vertical price restraints also “might be used to organize
cartels at the retailer level.” Business Electronics, supra,
at 725–726. A group of retailers might collude to fix prices
to consumers and then compel a manufacturer to aid the
unlawful arrangement with resale price maintenance. In
that instance the manufacturer does not establish the
practice to stimulate services or to promote its brand but
to give inefficient retailers higher profits. Retailers with
better distribution systems and lower cost structures
would be prevented from charging lower prices by the
agreement. See Posner 172; Overstreet 13–19. Historical
examples suggest this possibility is a legitimate concern.
See, e.g., Marvel & McCafferty, The Welfare Effects of
Resale Price Maintenance, 28 J. Law & Econ. 363, 373
(1985) (hereinafter Marvel) (providing an example of the
power of the National Association of Retail Druggists to
compel manufacturers to use resale price maintenance);
Hovenkamp 186 (suggesting that the retail druggists in
Dr. Miles formed a cartel and used manufacturers to
enforce it).
A horizontal cartel among competing manufacturers or
competing retailers that decreases output or reduces
competition in order to increase price is, and ought to be,
per se unlawful. See Texaco, 547 U. S., at 5; GTE Sylva
nia, 433 U. S., at 58, n. 28. To the extent a vertical
agreement setting minimum resale prices is entered upon
to facilitate either type of cartel, it, too, would need to be
held unlawful under the rule of reason. This type of
agreement may also be useful evidence for a plaintiff
attempting to prove the existence of a horizontal cartel.
Resale price maintenance, furthermore, can be abused
by a powerful manufacturer or retailer. A dominant re
14 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
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Opinion of the Court
tailer, for example, might request resale price mainte
nance to forestall innovation in distribution that decreases
costs. A manufacturer might consider it has little choice
but to accommodate the retailer’s demands for vertical
price restraints if the manufacturer believes it needs
access to the retailer’s distribution network. See
Overstreet 31; 8 P. Areeda & H. Hovenkamp, Antitrust
Law 47 (2d ed. 2004) (hereinafter Areeda & Hovenkamp);
cf. Toys “R” Us, Inc. v. FTC, 221 F. 3d 928, 937–938 (CA7
2000). A manufacturer with market power, by compari
son, might use resale price maintenance to give retailers
an incentive not to sell the products of smaller rivals or
new entrants. See, e.g., Marvel 366–368. As should
be evident, the potential anticompetitive consequences
of vertical price restraints must not be ignored or
underestimated.
C
Notwithstanding the risks of unlawful conduct, it cannot
be stated with any degree of confidence that resale price
maintenance “always or almost always tend[s] to restrict
competition and decrease output.” Business Electronics,
supra, at 723 (internal quotation marks omitted). Vertical
agreements establishing minimum resale prices can have
either procompetitive or anticompetitive effects, depending
upon the circumstances in which they are formed. And
although the empirical evidence on the topic is limited, it
does not suggest efficient uses of the agreements are
infrequent or hypothetical. See Overstreet 170; see also
id., at 80 (noting that for the majority of enforcement
actions brought by the Federal Trade Commission be
tween 1965 and 1982, “the use of [resale price mainte
nance] was not likely motivated by collusive dealers who
had successfully coerced their suppliers”); Ippolito 292
(reaching a similar conclusion). As the rule would pro
scribe a significant amount of procompetitive conduct,
Cite as: 551 U. S. ____ (2007) 15
Opinion of the Court
these agreements appear ill suited for per se condemna
tion.
Respondent contends, nonetheless, that vertical price
restraints should be per se unlawful because of the admin
istrative convenience of per se rules. See, e.g., GTE Sylva
nia, supra, at 50, n. 16 (noting “per se rules tend to provide
guidance to the business community and to minimize the
burdens on litigants and the judicial system”). That ar
gument suggests per se illegality is the rule rather than
the exception. This misinterprets our antitrust law. Per
se rules may decrease administrative costs, but that is
only part of the equation. Those rules can be counterpro
ductive. They can increase the total cost of the antitrust
system by prohibiting procompetitive conduct the anti
trust laws should encourage. See Easterbrook, Vertical
Arrangements and the Rule of Reason, 53 Antitrust L. J.
135, 158 (1984) (hereinafter Easterbrook). They also may
increase litigation costs by promoting frivolous suits
against legitimate practices. The Court has thus ex
plained that administrative “advantages are not sufficient
in themselves to justify the creation of per se rules,” GTE
Sylvania, 433 U. S., at 50, n. 16, and has relegated their
use to restraints that are “manifestly anticompetitive,” id.,
at 49–50. Were the Court now to conclude that vertical
price restraints should be per se illegal based on adminis
trative costs, we would undermine, if not overrule, the
traditional “demanding standards” for adopting per se
rules. Id., at 50. Any possible reduction in administrative
costs cannot alone justify the Dr. Miles rule.
Respondent also argues the per se rule is justified be
cause a vertical price restraint can lead to higher prices
for the manufacturer’s goods. See also Overstreet 160
(noting that “price surveys indicate that [resale price
maintenance] in most cases increased the prices of prod
ucts sold”). Respondent is mistaken in relying on pricing
effects absent a further showing of anticompetitive con
16 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
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Opinion of the Court
duct. Cf. id., at 106 (explaining that price surveys “do not
necessarily tell us anything conclusive about the welfare
effects of [resale price maintenance] because the results
are generally consistent with both procompetitive and
anticompetitive theories”). For, as has been indicated
already, the antitrust laws are designed primarily to
protect interbrand competition, from which lower prices
can later result. See Khan, 522 U. S., at 15. The Court,
moreover, has evaluated other vertical restraints under
the rule of reason even though prices can be increased in
the course of promoting procompetitive effects. See, e.g.,
Business Electronics, 485 U. S., at 728. And resale price
maintenance may reduce prices if manufacturers have
resorted to costlier alternatives of controlling resale prices
that are not per se unlawful. See infra, at 22–25; see also
Marvel 371.
Respondent’s argument, furthermore, overlooks that, in
general, the interests of manufacturers and consumers are
aligned with respect to retailer profit margins. The differ
ence between the price a manufacturer charges retailers
and the price retailers charge consumers represents part
of the manufacturer’s cost of distribution, which, like any
other cost, the manufacturer usually desires to minimize.
See GTE Sylvania, 433 U. S., at 56, n. 24; see also id., at
56 (“Economists . . . have argued that manufacturers have
an economic interest in maintaining as much intrabrand
competition as is consistent with the efficient distribution
of their products”). A manufacturer has no incentive to
overcompensate retailers with unjustified margins. The
retailers, not the manufacturer, gain from higher retail
prices. The manufacturer often loses; interbrand competi
tion reduces its competitiveness and market share because
consumers will “substitute a different brand of the same
product.” Id., at 52, n. 19; see Business Electronics, supra,
at 725. As a general matter, therefore, a single manufac
turer will desire to set minimum resale prices only if the
Cite as: 551 U. S. ____ (2007) 17
Opinion of the Court
“increase in demand resulting from enhanced service . . .
will more than offset a negative impact on demand of a
higher retail price.” Mathewson & Winter 67.
The implications of respondent’s position are far reach
ing. Many decisions a manufacturer makes and carries
out through concerted action can lead to higher prices. A
manufacturer might, for example, contract with different
suppliers to obtain better inputs that improve product
quality. Or it might hire an advertising agency to promote
awareness of its goods. Yet no one would think these
actions violate the Sherman Act because they lead to
higher prices. The antitrust laws do not require manufac
turers to produce generic goods that consumers do not
know about or want. The manufacturer strives to improve
its product quality or to promote its brand because it
believes this conduct will lead to increased demand de
spite higher prices. The same can hold true for resale
price maintenance.
Resale price maintenance, it is true, does have economic
dangers. If the rule of reason were to apply to vertical
price restraints, courts would have to be diligent in elimi
nating their anticompetitive uses from the market. This is
a realistic objective, and certain factors are relevant to the
inquiry. For example, the number of manufacturers that
make use of the practice in a given industry can provide
important instruction. When only a few manufacturers
lacking market power adopt the practice, there is little
likelihood it is facilitating a manufacturer cartel, for a
cartel then can be undercut by rival manufacturers. See
Overstreet 22; Bork 294. Likewise, a retailer cartel is
unlikely when only a single manufacturer in a competitive
market uses resale price maintenance. Interbrand compe
tition would divert consumers to lower priced substitutes
and eliminate any gains to retailers from their price-fixing
agreement over a single brand. See Posner 172; Bork 292.
Resale price maintenance should be subject to more care
18 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
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Opinion of the Court
ful scrutiny, by contrast, if many competing manufactur
ers adopt the practice. Cf. Scherer & Ross 558 (noting
that “except when [resale price maintenance] spreads to
cover the bulk of an industry’s output, depriving consum
ers of a meaningful choice between high-service and low-
price outlets, most [resale price maintenance arrange
ments] are probably innocuous”); Easterbrook 162 (sug
gesting that “every one of the potentially-anticompetitive
outcomes of vertical arrangements depends on the uni
formity of the practice”).
The source of the restraint may also be an important
consideration. If there is evidence retailers were the
impetus for a vertical price restraint, there is a greater
likelihood that the restraint facilitates a retailer cartel or
supports a dominant, inefficient retailer. See Brief for
William S. Comanor et al. as Amici Curiae 7–8. If, by
contrast, a manufacturer adopted the policy independent
of retailer pressure, the restraint is less likely to promote
anticompetitive conduct. Cf. Posner 177 (“It makes all the
difference whether minimum retail prices are imposed by
the manufacturer in order to evoke point-of-sale services
or by the dealers in order to obtain monopoly profits”). A
manufacturer also has an incentive to protest inefficient
retailer-induced price restraints because they can harm its
competitive position.
As a final matter, that a dominant manufacturer or
retailer can abuse resale price maintenance for anticom
petitive purposes may not be a serious concern unless the
relevant entity has market power. If a retailer lacks
market power, manufacturers likely can sell their goods
through rival retailers. See also Business Electronics,
supra, at 727, n. 2 (noting “[r]etail market power is rare,
because of the usual presence of interbrand competition
and other dealers”). And if a manufacturer lacks market
power, there is less likelihood it can use the practice to
keep competitors away from distribution outlets.
Cite as: 551 U. S. ____ (2007) 19
Opinion of the Court
The rule of reason is designed and used to eliminate
anticompetitive transactions from the market. This stan
dard principle applies to vertical price restraints. A party
alleging injury from a vertical agreement setting mini
mum resale prices will have, as a general matter, the
information and resources available to show the existence
of the agreement and its scope of operation. As courts
gain experience considering the effects of these restraints
by applying the rule of reason over the course of decisions,
they can establish the litigation structure to ensure the
rule operates to eliminate anticompetitive restraints from
the market and to provide more guidance to businesses.
Courts can, for example, devise rules over time for offering
proof, or even presumptions where justified, to make the
rule of reason a fair and efficient way to prohibit anticom
petitive restraints and to promote procompetitive ones.
For all of the foregoing reasons, we think that were the
Court considering the issue as an original matter, the rule
of reason, not a per se rule of unlawfulness, would be the
appropriate standard to judge vertical price restraints.
IV
We do not write on a clean slate, for the decision in Dr.
Miles is almost a century old. So there is an argument for
its retention on the basis of stare decisis alone. Even if Dr.
Miles established an erroneous rule, “[s]tare decisis re
flects a policy judgment that in most matters it is more
important that the applicable rule of law be settled than
that it be settled right.” Khan, 522 U. S., at 20 (internal
quotation marks omitted). And concerns about maintain
ing settled law are strong when the question is one of
statutory interpretation. See, e.g., Hohn v. United States,
524 U. S. 236, 251 (1998).
Stare decisis is not as significant in this case, however,
because the issue before us is the scope of the Sherman
Act. Khan, supra, at 20 (“[T]he general presumption that
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Opinion of the Court
legislative changes should be left to Congress has less
force with respect to the Sherman Act”). From the begin
ning the Court has treated the Sherman Act as a common-
law statute. See National Soc. of Professional Engineers v.
United States, 435 U. S. 679, 688 (1978); see also North
west Airlines, Inc. v. Transport Workers, 451 U. S. 77, 98,
n. 42 (1981) (“In antitrust, the federal courts . . . act more
as common-law courts than in other areas governed by
federal statute”). Just as the common law adapts to mod
ern understanding and greater experience, so too does the
Sherman Act’s prohibition on “restraint[s] of trade” evolve
to meet the dynamics of present economic conditions. The
case-by-case adjudication contemplated by the rule of
reason has implemented this common-law approach. See
National Soc. of Professional Engineers, supra, at 688.
Likewise, the boundaries of the doctrine of per se illegality
should not be immovable. For “[i]t would make no sense
to create out of the single term ‘restraint of trade’ a
chronologically schizoid statute, in which a ‘rule of reason’
evolves with new circumstance and new wisdom, but a line
of per se illegality remains forever fixed where it was.”
Business Electronics, 485 U. S., at 732.
A
Stare decisis, we conclude, does not compel our contin
ued adherence to the per se rule against vertical price
restraints. As discussed earlier, respected authorities in
the economics literature suggest the per se rule is inap
propriate, and there is now widespread agreement that
resale price maintenance can have procompetitive effects.
See, e.g., Brief for Economists as Amici Curiae 16. It is
also significant that both the Department of Justice and
the Federal Trade Commission—the antitrust enforce
ment agencies with the ability to assess the long-term
impacts of resale price maintenance—have recommended
that this Court replace the per se rule with the traditional
Cite as: 551 U. S. ____ (2007) 21
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rule of reason. See Brief for United States as Amicus
Curiae 6. In the antitrust context the fact that a decision
has been “called into serious question” justifies our re
evaluation of it. Khan, supra, at 21.
Other considerations reinforce the conclusion that Dr.
Miles should be overturned. Of most relevance, “we have
overruled our precedents when subsequent cases have
undermined their doctrinal underpinnings.” Dickerson v.
United States, 530 U. S. 428, 443 (2000). The Court’s
treatment of vertical restraints has progressed away from
Dr. Miles’ strict approach. We have distanced ourselves
from the opinion’s rationales. See supra, at 7–8; see also
Khan, supra, at 21 (overruling a case when “the views
underlying [it had been] eroded by this Court’s prece
dent”); Rodriguez de Quijas v. Shearson/American Ex
press, Inc., 490 U. S. 477, 480–481 (1989) (same). This is
unsurprising, for the case was decided not long after en
actment of the Sherman Act when the Court had little
experience with antitrust analysis. Only eight years after
Dr. Miles, moreover, the Court reined in the decision by
holding that a manufacturer can announce suggested
resale prices and refuse to deal with distributors who do
not follow them. Colgate, 250 U. S., at 307–308.
In more recent cases the Court, following a common-law
approach, has continued to temper, limit, or overrule once
strict prohibitions on vertical restraints. In 1977, the
Court overturned the per se rule for vertical nonprice
restraints, adopting the rule of reason in its stead. GTE
Sylvania, 433 U. S., at 57–59 (overruling United States v.
Arnold, Schwinn & Co., 388 U. S. 365 (1967)); see also 433
U. S., at 58, n. 29 (noting “that the advantages of vertical
restrictions should not be limited to the categories of new
entrants and failing firms”). While the Court in a footnote
in GTE Sylvania suggested that differences between
vertical price and nonprice restraints could support differ
ent legal treatment, see 433 U. S., at 51, n. 18, the central
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Opinion of the Court
part of the opinion relied on authorities and arguments
that find unequal treatment “difficult to justify,” id., at
69–70 (White, J., concurring in judgment).
Continuing in this direction, in two cases in the 1980’s
the Court defined legal rules to limit the reach of Dr. Miles
and to accommodate the doctrines enunciated in GTE
Sylvania and Colgate. See Business Electronics, supra, at
726–728; Monsanto, 465 U. S., at 763–764. In Monsanto,
the Court required that antitrust plaintiffs alleging a §1
price-fixing conspiracy must present evidence tending to
exclude the possibility a manufacturer and its distributors
acted in an independent manner. Id., at 764. Unlike
Justice Brennan’s concurrence, which rejected arguments
that Dr. Miles should be overruled, see 465 U. S., at 769,
the Court “decline[d] to reach the question” whether verti
cal agreements fixing resale prices always should be
unlawful because neither party suggested otherwise, id.,
at 761–762, n. 7. In Business Electronics the Court fur
ther narrowed the scope of Dr. Miles. It held that the per
se rule applied only to specific agreements over price levels
and not to an agreement between a manufacturer and a
distributor to terminate a price-cutting distributor. 485
U. S., at 726–727, 735–736.
Most recently, in 1997, after examining the issue of
vertical maximum price-fixing agreements in light of
commentary and real experience, the Court overruled a
29-year-old precedent treating those agreements as per se
illegal. Khan, 522 U. S., at 22 (overruling Albrecht v.
Herald Co., 390 U. S. 145 (1968)). It held instead that
they should be evaluated under the traditional rule of
reason. 522 U. S., at 22. Our continued limiting of the
reach of the decision in Dr. Miles and our recent treatment
of other vertical restraints justify the conclusion that Dr.
Miles should not be retained.
The Dr. Miles rule is also inconsistent with a principled
framework, for it makes little economic sense when ana
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Opinion of the Court
lyzed with our other cases on vertical restraints. If we
were to decide the procompetitive effects of resale price
maintenance were insufficient to overrule Dr. Miles, then
cases such as Colgate and GTE Sylvania themselves
would be called into question. These later decisions, while
they may result in less intrabrand competition, can be
justified because they permit manufacturers to secure the
procompetitive benefits associated with vertical price
restraints through other methods. The other methods,
however, could be less efficient for a particular manufac
turer to establish and sustain. The end result hinders
competition and consumer welfare because manufacturers
are forced to engage in second-best alternatives and be
cause consumers are required to shoulder the increased
expense of the inferior practices.
The manufacturer has a number of legitimate options to
achieve benefits similar to those provided by vertical price
restraints. A manufacturer can exercise its Colgate right
to refuse to deal with retailers that do not follow its sug
gested prices. See 250 U. S., at 307. The economic effects
of unilateral and concerted price setting are in general the
same. See, e.g., Monsanto, 465 U. S., at 762–764. The
problem for the manufacturer is that a jury might con
clude its unilateral policy was really a vertical agreement,
subjecting it to treble damages and potential criminal
liability. Ibid.; Business Electronics, supra, at 728. Even
with the stringent standards in Monsanto and Business
Electronics, this danger can lead, and has led, rational
manufacturers to take wasteful measures. See, e.g., Brief
for PING, Inc., as Amicus Curiae 9–18. A manufacturer
might refuse to discuss its pricing policy with its distribu
tors except through counsel knowledgeable of the subtle
intricacies of the law. Or it might terminate longstanding
distributors for minor violations without seeking an ex
planation. See ibid. The increased costs these burden
some measures generate flow to consumers in the form of
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Opinion of the Court
higher prices.
Furthermore, depending on the type of product it sells, a
manufacturer might be able to achieve the procompetitive
benefits of resale price maintenance by integrating down
stream and selling its products directly to consumers. Dr.
Miles tilts the relative costs of vertical integration and
vertical agreement by making the former more attractive
based on the per se rule, not on real market conditions.
See Business Electronics, supra, at 725; see generally
Coase, The Nature of the Firm, 4 Economica, New Series
386 (1937). This distortion might lead to inefficient inte
gration that would not otherwise take place, so that con
sumers must again suffer the consequences of the subop
timal distribution strategy. And integration, unlike
vertical price restraints, eliminates all intrabrand compe
tition. See, e.g., GTE Sylvania, 433 U. S., at 57, n. 26.
There is yet another consideration. A manufacturer can
impose territorial restrictions on distributors and allow
only one distributor to sell its goods in a given region. Our
cases have recognized, and the economics literature con
firms, that these vertical nonprice restraints have impacts
similar to those of vertical price restraints; both reduce
intrabrand competition and can stimulate retailer ser
vices. See, e.g., Business Electronics, supra, at 728; Mon
santo, supra, at 762–763; see also Brief for Economists as
Amici Curiae 17–18. Cf. Scherer & Ross 560 (noting that
vertical nonprice restraints “can engender inefficiencies at
least as serious as those imposed upon the consumer by
resale price maintenance”); Steiner, How Manufacturers
Deal with the Price-Cutting Retailer: When Are Vertical
Restraints Efficient?, 65 Antitrust L. J. 407, 446–447
(1997) (indicating that “antitrust law should recognize
that the consumer interest is often better served by [resale
price maintenance]—contrary to its per se illegality and
the rule-of-reason status of vertical nonprice restraints”).
The same legal standard (per se unlawfulness) applies to
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Opinion of the Court
horizontal market division and horizontal price fixing
because both have similar economic effect. There is like
wise little economic justification for the current differen
tial treatment of vertical price and nonprice restraints.
Furthermore, vertical nonprice restraints may prove less
efficient for inducing desired services, and they reduce
intrabrand competition more than vertical price restraints
by eliminating both price and service competition. See
Brief for Economists as Amici Curiae 17–18.
In sum, it is a flawed antitrust doctrine that serves the
interests of lawyers—by creating legal distinctions that
operate as traps for the unwary—more than the interests
of consumers—by requiring manufacturers to choose
second-best options to achieve sound business objectives.
B
Respondent’s arguments for reaffirming Dr. Miles on the
basis of stare decisis do not require a different result.
Respondent looks to congressional action concerning verti
cal price restraints. In 1937, Congress passed the Miller-
Tydings Fair Trade Act, 50 Stat. 693, which made vertical
price restraints legal if authorized by a fair trade law
enacted by a State. Fifteen years later, Congress ex
panded the exemption to permit vertical price-setting
agreements between a manufacturer and a distributor to
be enforced against other distributors not involved in the
agreement. McGuire Act, 66 Stat. 632. In 1975, however,
Congress repealed both Acts. Consumer Goods Pricing
Act, 89 Stat. 801. That the Dr. Miles rule applied to verti
cal price restraints in 1975, according to respondent,
shows Congress ratified the rule.
This is not so. The text of the Consumer Goods Pricing
Act did not codify the rule of per se illegality for vertical
price restraints. It rescinded statutory provisions that
made them per se legal. Congress once again placed these
restraints within the ambit of §1 of the Sherman Act.
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Opinion of the Court
And, as has been discussed, Congress intended §1 to give
courts the ability “to develop governing principles of law”
in the common-law tradition. Texas Industries, Inc. v.
Radcliff Materials, Inc., 451 U. S. 630, 643 (1981); see
Business Electronics, 485 U. S., at 731 (“The changing
content of the term ‘restraint of trade’ was well recognized
at the time the Sherman Act was enacted”). Congress
could have set the Dr. Miles rule in stone, but it chose a
more flexible option. We respect its decision by analyzing
vertical price restraints, like all restraints, in conformance
with traditional §1 principles, including the principle that
our antitrust doctrines “evolv[e] with new circumstances
and new wisdom.” Business Electronics, supra, at 732; see
also Easterbrook 139.
The rule of reason, furthermore, is not inconsistent with
the Consumer Goods Pricing Act. Unlike the earlier con
gressional exemption, it does not treat vertical price re
straints as per se legal. In this respect, the justifications
for the prior exemption are illuminating. Its goal “was to
allow the States to protect small retail establishments
that Congress thought might otherwise be driven from the
marketplace by large-volume discounters.” California
Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445
U. S. 97, 102 (1980). The state fair trade laws also appear
to have been justified on similar grounds. See Areeda &
Hovenkamp 298. The rationales for these provisions are
foreign to the Sherman Act. Divorced from competition
and consumer welfare, they were designed to save ineffi
cient small retailers from their inability to compete. The
purpose of the antitrust laws, by contrast, is “the protec
tion of competition, not competitors.” Atlantic Richfield
Co. v. USA Petroleum Co., 495 U. S. 328, 338 (1990) (in
ternal quotation marks omitted). To the extent Congress
repealed the exemption for some vertical price restraints
to end its prior practice of encouraging anticompetitive
conduct, the rule of reason promotes the same objective.
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Opinion of the Court
Respondent also relies on several congressional appro
priations in the mid-1980’s in which Congress did not
permit the Department of Justice or the Federal Trade
Commission to use funds to advocate overturning Dr.
Miles. See, e.g., 97 Stat. 1071. We need not pause long in
addressing this argument. The conditions on funding are
no longer in place, see, e.g., Brief for United States as
Amicus Curiae 21, and they were ambiguous at best. As
much as they might show congressional approval for Dr.
Miles, they might demonstrate a different proposition:
that Congress could not pass legislation codifying the rule
and reached a short-term compromise instead.
Reliance interests do not require us to reaffirm Dr.
Miles. To be sure, reliance on a judicial opinion is a sig
nificant reason to adhere to it, Payne v. Tennessee, 501
U. S. 808, 828 (1991), especially “in cases involving prop
erty and contract rights,” Khan, 522 U. S., at 20. The
reliance interests here, however, like the reliance interests
in Khan, cannot justify an inefficient rule, especially
because the narrowness of the rule has allowed manufac
turers to set minimum resale prices in other ways. And
while the Dr. Miles rule is longstanding, resale price
maintenance was legal under fair trade laws in a majority
of States for a large part of the past century up until 1975.
It is also of note that during this time “when the legal
environment in the [United States] was most favorable for
[resale price maintenance], no more than a tiny fraction of
manufacturers ever employed [resale price maintenance]
contracts.” Overstreet 6; see also id., at 169 (noting that
“no more than one percent of manufacturers, accounting
for no more than ten percent of consumer goods purchases,
ever employed [resale price maintenance] in any single
year in the [United States]”); Scherer & Ross 549 (noting
that “[t]he fraction of U.S. retail sales covered by [resale
price maintenance] in its heyday has been variously esti
mated at from 4 to 10 percent”). To the extent consumers
28 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
Opinion of the Court
demand cheap goods, judging vertical price restraints
under the rule of reason will not prevent the market from
providing them. Cf. Easterbrook 152–153 (noting that
“S.S. Kresge (the old K-Mart) flourished during the days of
manufacturers’ greatest freedom” because “discount stores
offer a combination of price and service that many cus
tomers value” and that “[n]othing in restricted dealing
threatens the ability of consumers to find low prices”);
Scherer & Ross 557 (noting that “for the most part, the
effects of the [Consumer Goods Pricing Act] were imper
ceptible because the forces of competition had already
repealed the [previous antitrust exemption] in their own
quiet way”).
For these reasons the Court’s decision in Dr. Miles
Medical Co. v. John D. Park & Sons Co., 220 U. S. 373
(1911), is now overruled. Vertical price restraints are to
be judged according to the rule of reason.
V
Noting that Leegin’s president has an ownership inter
est in retail stores that sell Brighton, respondent claims
Leegin participated in an unlawful horizontal cartel with
competing retailers. Respondent did not make this allega
tion in the lower courts, and we do not consider it here.
The judgment of the Court of Appeals is reversed, and
the case is remanded for proceedings consistent with this
opinion.
It is so ordered.
Cite as: 551 U. S. ____ (2007) 1
BREYER, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 06–480
_________________
LEEGIN CREATIVE LEATHER PRODUCTS, INC.,
PETITIONER v. PSKS, INC., DBA KAY’S
KLOSET . . . KAY’S SHOES
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT
[June 28, 2007]
JUSTICE BREYER, with whom JUSTICE STEVENS, JUSTICE
SOUTER, and JUSTICE GINSBURG join, dissenting.
In Dr. Miles Medical Co. v. John D. Park & Sons Co.,
220 U. S. 373, 394, 408–409 (1911), this Court held that
an agreement between a manufacturer of proprietary
medicines and its dealers to fix the minimum price at
which its medicines could be sold was “invalid . . . under
the [Sherman Act, 15 U. S. C. §1].” This Court has consis
tently read Dr. Miles as establishing a bright-line rule
that agreements fixing minimum resale prices are per se
illegal. See, e.g., United States v. Trenton Potteries Co.,
273 U. S. 392, 399–401 (1927); NYNEX Corp. v. Discon,
Inc., 525 U. S. 128, 133 (1998). That per se rule is one
upon which the legal profession, business, and the public
have relied for close to a century. Today the Court holds
that courts must determine the lawfulness of minimum
resale price maintenance by applying, not a bright-line per
se rule, but a circumstance-specific “rule of reason.” Ante,
at 28. And in doing so it overturns Dr. Miles.
The Court justifies its departure from ordinary consid
erations of stare decisis by pointing to a set of arguments
well known in the antitrust literature for close to half a
century. See ante, at 10–12. Congress has repeatedly
2 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
found in these arguments insufficient grounds for over
turning the per se rule. See, e.g., Hearings on H. R. 10527
et al. before the Subcommittee on Commerce and Finance
of the House Committee on Interstate and Foreign Com
merce, 85th Cong., 2d Sess., 74–76, 89, 99, 101–102, 192–
195, 261–262 (1958). And, in my view, they do not war
rant the Court’s now overturning so well-established a
legal precedent.
I
The Sherman Act seeks to maintain a marketplace free
of anticompetitive practices, in particular those enforced
by agreement among private firms. The law assumes that
such a marketplace, free of private restrictions, will tend
to bring about the lower prices, better products, and more
efficient production processes that consumers typically
desire. In determining the lawfulness of particular prac
tices, courts often apply a “rule of reason.” They examine
both a practice’s likely anticompetitive effects and its
beneficial business justifications. See, e.g., National Col
legiate Athletic Assn. v. Board of Regents of Univ. of Okla.,
468 U. S. 85, 109–110, and n. 39 (1984); National Soc. of
Professional Engineers v. United States, 435 U. S. 679,
688–691 (1978); Board of Trade of Chicago v. United
States, 246 U. S. 231, 238 (1918).
Nonetheless, sometimes the likely anticompetitive
consequences of a particular practice are so serious and
the potential justifications so few (or, e.g., so difficult to
prove) that courts have departed from a pure “rule of
reason” approach. And sometimes this Court has imposed
a rule of per se unlawfulness—a rule that instructs courts
to find the practice unlawful all (or nearly all) the time.
See, e.g., NYNEX, supra, at 133; Arizona v. Maricopa
County Medical Soc., 457 U. S. 332, 343–344, and n. 16
(1982); Continental T. V., Inc. v. GTE Sylvania Inc., 433
U. S. 36, 50, n. 16 (1977); United States v. Topco Associ
Cite as: 551 U. S. ____ (2007) 3
BREYER, J., dissenting
ates, Inc., 405 U. S. 596, 609–611 (1972); United States v.
Socony-Vacuum Oil Co., 310 U. S. 150, 213–214 (1940)
(citing and quoting Trenton Potteries, supra, at 397–398).
The case before us asks which kind of approach the
courts should follow where minimum resale price mainte
nance is at issue. Should they apply a per se rule (or a
variation) that would make minimum resale price mainte
nance always (or almost always) unlawful? Should they
apply a “rule of reason”? Were the Court writing on a
blank slate, I would find these questions difficult. But, of
course, the Court is not writing on a blank slate, and that
fact makes a considerable legal difference.
To best explain why the question would be difficult were
we deciding it afresh, I briefly summarize several classical
arguments for and against the use of a per se rule. The
arguments focus on three sets of considerations, those
involving: (1) potential anticompetitive effects, (2) poten
tial benefits, and (3) administration. The difficulty arises
out of the fact that the different sets of considerations
point in different directions. See, e.g., 8 P. Areeda, Anti
trust Law ¶¶1628–1633, pp. 330–392 (1st ed. 1989) (here
inafter Areeda); 8 P. Areeda & H. Hovenkamp, Antitrust
Law ¶¶1628–1633, pp. 288–339 (2d ed. 2004) (hereinafter
Areeda & Hovenkamp); Easterbrook, Vertical Arrange
ments and the Rule of Reason, 53 Antitrust L. J. 135, 146–
152 (1984) (hereinafter Easterbrook); Pitofsky, In Defense
of Discounters: The No-Frills Case for a Per Se Rule
Against Vertical Price Fixing, 71 Geo. L. J. 1487 (1983)
(hereinafter Pitofsky); Scherer, The Economics of Vertical
Restraints, 52 Antitrust L. J. 687, 706–707 (1983) (herein
after Scherer); Posner, The Next Step in the Antitrust
Treatment of Restricted Distribution: Per Se Legality, 48
U. Chi. L. Rev. 6, 22–26 (1981); Brief for William S. Co
manor and Frederic M. Scherer as Amici Curiae 7–10.
On the one hand, agreements setting minimum resale
prices may have serious anticompetitive consequences. In
4 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
respect to dealers: Resale price maintenance agreements,
rather like horizontal price agreements, can diminish or
eliminate price competition among dealers of a single
brand or (if practiced generally by manufacturers) among
multibrand dealers. In doing so, they can prevent dealers
from offering customers the lower prices that many cus
tomers prefer; they can prevent dealers from responding to
changes in demand, say falling demand, by cutting prices;
they can encourage dealers to substitute service, for price,
competition, thereby threatening wastefully to attract too
many resources into that portion of the industry; they can
inhibit expansion by more efficient dealers whose lower
prices might otherwise attract more customers, stifling the
development of new, more efficient modes of retailing; and
so forth. See, e.g., 8 Areeda & Hovenkamp ¶1632c, at
319–321; Steiner, The Evolution and Applications of Dual-
Stage Thinking, 49 The Antitrust Bulletin 877, 899–900
(2004); Comanor, Vertical Price-Fixing, Vertical Market
Restrictions, and the New Antitrust Policy, 98 Harv.
L. Rev. 983, 990–1000 (1985).
In respect to producers: Resale price maintenance agree
ments can help to reinforce the competition-inhibiting
behavior of firms in concentrated industries. In such
industries firms may tacitly collude, i.e., observe each
other’s pricing behavior, each understanding that price
cutting by one firm is likely to trigger price competition by
all. See 8 Areeda & Hovenkamp ¶1632d, at 321–323; P.
Areeda & L. Kaplow, Antitrust Analysis ¶¶231–233, pp.
276–283 (4th ed. 1988) (hereinafter Areeda & Kaplow).
Cf. United States v. Container Corp. of America, 393 U. S.
333 (1969); Areeda & Kaplow ¶¶247–253, at 327–348.
Where that is so, resale price maintenance can make it
easier for each producer to identify (by observing retail
markets) when a competitor has begun to cut prices. And
a producer who cuts wholesale prices without lowering the
minimum resale price will stand to gain little, if anything,
Cite as: 551 U. S. ____ (2007) 5
BREYER, J., dissenting
in increased profits, because the dealer will be unable to
stimulate increased consumer demand by passing along
the producer’s price cut to consumers. In either case,
resale price maintenance agreements will tend to prevent
price competition from “breaking out”; and they will
thereby tend to stabilize producer prices. See Pitofsky
1490–1491. Cf., e.g., Container Corp., supra, at 336–337.
Those who express concern about the potential anticom
petitive effects find empirical support in the behavior of
prices before, and then after, Congress in 1975 repealed
the Miller-Tydings Fair Trade Act, 50 Stat. 693, and the
McGuire Act, 66 Stat. 631. Those Acts had permitted (but
not required) individual States to enact “fair trade” laws
authorizing minimum resale price maintenance. At the
time of repeal minimum resale price maintenance was
lawful in 36 States; it was unlawful in 14 States. See
Hearings on S. 408 before the Subcommittee on Antitrust
and Monopoly of the Senate Committee on the Judiciary,
94th Cong., 1st Sess., 173 (1975) (hereinafter Hearings on
S. 408) (statement of Thomas E. Kauper, Assistant Attor
ney General, Antitrust Division). Comparing prices in the
former States with prices in the latter States, the Depart
ment of Justice argued that minimum resale price main
tenance had raised prices by 19% to 27%. See Hearings on
H. R. 2384 before the Subcommittee on Monopolies and
Commercial Law of the House Committee on the Judici
ary, 94th Cong., 1st Sess., 122 (1975) (hereinafter Hear
ings on H. R. 2384) (statement of Keith I. Clearwaters,
Deputy Assistant Attorney General, Antitrust Division).
After repeal, minimum resale price maintenance agree
ments were unlawful per se in every State. The Federal
Trade Commission (FTC) staff, after studying numerous
price surveys, wrote that collectively the surveys “indi
cate[d] that [resale price maintenance] in most cases
increased the prices of products sold with [resale price
maintenance].” Bureau of Economics Staff Report to the
6 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
FTC, T. Overstreet, Resale Price Maintenance: Economic
Theories and Empirical Evidence, 160 (1983) (hereinafter
Overstreet). Most economists today agree that, in the
words of a prominent antitrust treatise, “resale price
maintenance tends to produce higher consumer prices
than would otherwise be the case.” 8 Areeda & Hovenk
amp ¶1604b, at 40 (finding “[t]he evidence . . . persuasive
on this point”). See also Brief for William S. Comanor and
Frederic M. Scherer as Amici Curiae 4 (“It is uniformly
acknowledged that [resale price maintenance] and other
vertical restraints lead to higher consumer prices”).
On the other hand, those favoring resale price mainte
nance have long argued that resale price maintenance
agreements can provide important consumer benefits.
The majority lists two: First, such agreements can facili
tate new entry. Ante, at 11–12. For example, a newly
entering producer wishing to build a product name might
be able to convince dealers to help it do so—if, but only if,
the producer can assure those dealers that they will later
recoup their investment. Without resale price mainte
nance, late-entering dealers might take advantage of the
earlier investment and, through price competition, drive
prices down to the point where the early dealers cannot
recover what they spent. By assuring the initial dealers
that such later price competition will not occur, resale
price maintenance can encourage them to carry the new
product, thereby helping the new producer succeed. See 8
Areeda & Hovenkamp ¶¶1617a, 1631b, at 193–196, 308.
The result might be increased competition at the producer
level, i.e., greater inter-brand competition, that brings
with it net consumer benefits.
Second, without resale price maintenance a producer
might find its efforts to sell a product undermined by what
resale price maintenance advocates call “free riding.”
Ante, at 10–11. Suppose a producer concludes that it can
succeed only if dealers provide certain services, say, prod
Cite as: 551 U. S. ____ (2007) 7
BREYER, J., dissenting
uct demonstrations, high quality shops, advertising that
creates a certain product image, and so forth. Without
resale price maintenance, some dealers might take a “free
ride” on the investment that others make in providing
those services. Such a dealer would save money by not
paying for those services and could consequently cut its
own price and increase its own sales. Under these circum
stances, dealers might prove unwilling to invest in the
provision of necessary services. See, e.g., 8 Areeda &
Hovenkamp ¶¶1611–1613, 1631c, at 126–165, 309–313; R.
Posner, Antitrust Law 172–173 (2d ed. 2001); R. Bork, The
Antitrust Paradox 290–291 (1978) (hereinafter Bork);
Easterbrook 146–149.
Moreover, where a producer and not a group of dealers
seeks a resale price maintenance agreement, there is a
special reason to believe some such benefits exist. That is
because, other things being equal, producers should want
to encourage price competition among their dealers. By
doing so they will often increase profits by selling more of
their product. See Sylvania, 433 U. S., at 56, n. 24; Bork
290. And that is so, even if the producer possesses suffi
cient market power to earn a super-normal profit. That is
to say, other things being equal, the producer will benefit
by charging his dealers a competitive (or even a higher-
than-competitive) wholesale price while encouraging price
competition among them. Hence, if the producer is the
moving force, the producer must have some special reason
for wanting resale price maintenance; and in the absence
of, say, concentrated producer markets (where that special
reason might consist of a desire to stabilize wholesale
prices), that special reason may well reflect the special
circumstances just described: new entry, “free riding,” or
variations on those themes.
The upshot is, as many economists suggest, sometimes
resale price maintenance can prove harmful; sometimes it
can bring benefits. See, e.g., Brief for Economists as Amici
8 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
Curiae 16; 8 Areeda & Hovenkamp ¶¶1631–1632, at 306–
328; Pitofsky 1495; Scherer 706–707. But before conclud
ing that courts should consequently apply a rule of reason,
I would ask such questions as, how often are harms or
benefits likely to occur? How easy is it to separate the
beneficial sheep from the antitrust goats?
Economic discussion, such as the studies the Court
relies upon, can help provide answers to these questions,
and in doing so, economics can, and should, inform anti
trust law. But antitrust law cannot, and should not,
precisely replicate economists’ (sometimes conflicting)
views. That is because law, unlike economics, is an ad
ministrative system the effects of which depend upon the
content of rules and precedents only as they are applied by
judges and juries in courts and by lawyers advising their
clients. And that fact means that courts will often bring
their own administrative judgment to bear, sometimes
applying rules of per se unlawfulness to business practices
even when those practices sometimes produce benefits.
See, e.g., F.M. Scherer & D. Ross, Industrial Market
Structure and Economic Performance 335–339 (3d ed.
1990) (hereinafter Scherer & Ross) (describing some cir
cumstances under which price-fixing agreements could be
more beneficial than “unfettered competition,” but also
noting potential costs of moving from a per se ban to a rule
of reasonableness assessment of such agreements).
I have already described studies and analyses that
suggest (though they cannot prove) that resale price main
tenance can cause harms with some regularity—and
certainly when dealers are the driving force. But what
about benefits? How often, for example, will the benefits
to which the Court points occur in practice? I can find no
economic consensus on this point. There is a consensus in
the literature that “free riding” takes place. But “free
riding” often takes place in the economy without any legal
effort to stop it. Many visitors to California take free rides
Cite as: 551 U. S. ____ (2007) 9
BREYER, J., dissenting
on the Pacific Coast Highway. We all benefit freely from
ideas, such as that of creating the first supermarket.
Dealers often take a “free ride” on investments that others
have made in building a product’s name and reputation.
The question is how often the “free riding” problem is
serious enough significantly to deter dealer investment.
To be more specific, one can easily imagine a dealer who
refuses to provide important presale services, say a de
tailed explanation of how a product works (or who fails to
provide a proper atmosphere in which to sell expensive
perfume or alligator billfolds), lest customers use that
“free” service (or enjoy the psychological benefit arising
when a high-priced retailer stocks a particular brand of
billfold or handbag) and then buy from another dealer at a
lower price. Sometimes this must happen in reality. But
does it happen often? We do, after all, live in an economy
where firms, despite Dr. Miles’ per se rule, still sell com
plex technical equipment (as well as expensive perfume
and alligator billfolds) to consumers.
All this is to say that the ultimate question is not
whether, but how much, “free riding” of this sort takes
place. And, after reading the briefs, I must answer that
question with an uncertain “sometimes.” See, e.g., Brief
for William S. Comanor and Frederic M. Scherer as Amici
Curiae 6–7 (noting “skepticism in the economic literature
about how often [free riding] actually occurs”); Scherer &
Ross 551–555 (explaining the “severe limitations” of the
free-rider justification for resale price maintenance);
Pitofsky, Why Dr. Miles Was Right, 8 Regulation, No. 1,
pp. 27, 29–30 (Jan./Feb. 1984) (similar analysis).
How easily can courts identify instances in which the
benefits are likely to outweigh potential harms? My own
answer is, not very easily. For one thing, it is often diffi
cult to identify who—producer or dealer—is the moving
force behind any given resale price maintenance agree
ment. Suppose, for example, several large multibrand
10 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
retailers all sell resale-price-maintained products. Sup
pose further that small producers set retail prices because
they fear that, otherwise, the large retailers will favor
(say, by allocating better shelf-space) the goods of other
producers who practice resale price maintenance. Who
“initiated” this practice, the retailers hoping for consider
able insulation from retail competition, or the producers,
who simply seek to deal best with the circumstances they
find? For another thing, as I just said, it is difficult to
determine just when, and where, the “free riding” problem
is serious enough to warrant legal protection.
I recognize that scholars have sought to develop check
lists and sets of questions that will help courts separate
instances where anticompetitive harms are more likely
from instances where only benefits are likely to be found.
See, e.g., 8 Areeda & Hovenkamp ¶¶1633c–1633e, at 330–
339. See also Brief for William S. Comanor and Frederic
M. Scherer as Amici Curiae 8–10. But applying these
criteria in court is often easier said than done. The
Court’s invitation to consider the existence of “market
power,” for example, ante, at 18, invites lengthy time-
consuming argument among competing experts, as they
seek to apply abstract, highly technical, criteria to often
ill-defined markets. And resale price maintenance cases,
unlike a major merger or monopoly case, are likely to
prove numerous and involve only private parties. One
cannot fairly expect judges and juries in such cases to
apply complex economic criteria without making a consid
erable number of mistakes, which themselves may impose
serious costs. See, e.g., H. Hovenkamp, The Antitrust
Enterprise 105 (2005) (litigating a rule of reason case is
“one of the most costly procedures in antitrust practice”).
See also Bok, Section 7 of the Clayton Act and the Merg
ing of Law and Economics, 74 Harv. L. Rev. 226, 238–247
(1960) (describing lengthy FTC efforts to apply complex
criteria in a merger case).
Cite as: 551 U. S. ____ (2007) 11
BREYER, J., dissenting
Are there special advantages to a bright-line rule?
Without such a rule, it is often unfair, and consequently
impractical, for enforcement officials to bring criminal
proceedings. And since enforcement resources are limited,
that loss may tempt some producers or dealers to enter
into agreements that are, on balance, anticompetitive.
Given the uncertainties that surround key items in the
overall balance sheet, particularly in respect to the “ad
ministrative” questions, I can concede to the majority that
the problem is difficult. And, if forced to decide now, at
most I might agree that the per se rule should be slightly
modified to allow an exception for the more easily identifi
able and temporary condition of “new entry.” See Pitofsky
1495. But I am not now forced to decide this question.
The question before us is not what should be the rule,
starting from scratch. We here must decide whether to
change a clear and simple price-related antitrust rule that
the courts have applied for nearly a century.
II
We write, not on a blank slate, but on a slate that begins
with Dr. Miles and goes on to list a century’s worth of
similar cases, massive amounts of advice that lawyers
have provided their clients, and untold numbers of busi
ness decisions those clients have taken in reliance upon
that advice. See, e.g., United States v. Bausch & Lomb
Optical Co., 321 U. S. 707, 721 (1944); Sylvania, 433 U. S.,
at 51, n. 18 (“The per se illegality of [vertical] price restric
tions has been established firmly for many years . . .”).
Indeed a Westlaw search shows that Dr. Miles itself has
been cited dozens of times in this Court and hundreds of
times in lower courts. Those who wish this Court to
change so well-established a legal precedent bear a heavy
burden of proof. See Illinois Brick Co. v. Illinois, 431 U. S.
720, 736 (1977) (noting, in declining to overrule an earlier
case interpreting §4 of the Clayton Act, that “considera
12 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
tions of stare decisis weigh heavily in the area of statutory
construction, where Congress is free to change this Court’s
interpretation of its legislation”). I am not aware of any
case in which this Court has overturned so well-
established a statutory precedent. Regardless, I do not see
how the Court can claim that ordinary criteria for over
ruling an earlier case have been met. See, e.g., Planned
Parenthood of Southeastern Pa. v. Casey, 505 U. S. 833,
854–855 (1992). See also Federal Election Comm’n v.
Wisconsin Right to Life, Inc., ante, at 19–21 (SCALIA, J.,
concurring in part and concurring in judgment).
A
I can find no change in circumstances in the past several
decades that helps the majority’s position. In fact, there
has been one important change that argues strongly to the
contrary. In 1975, Congress repealed the McGuire and
Miller-Tydings Acts. See Consumer Goods Pricing Act of
1975, 89 Stat. 801. And it thereby consciously extended
Dr. Miles’ per se rule. Indeed, at that time the Depart
ment of Justice and the FTC, then urging application of
the per se rule, discussed virtually every argument pre
sented now to this Court as well as others not here pre
sented. And they explained to Congress why Congress
should reject them. See Hearings on S. 408, at 176–177
(statement of Thomas E. Kauper, Assistant Attorney
General, Antitrust Division); id., at 170–172 (testimony of
Lewis A. Engman, Chairman of the FTC); Hearings on
H. R. 2384, at 113–114 (testimony of Keith I. Clearwaters,
Deputy Assistant Attorney General, Antitrust Division).
Congress fully understood, and consequently intended,
that the result of its repeal of McGuire and Miller-Tydings
would be to make minimum resale price maintenance per
se unlawful. See, e.g., S. Rep. No. 94–466, pp. 1–3 (1975)
(“Without [the exemptions authorized by the Miller-
Tydings and McGuire Acts,] the agreements they author
Cite as: 551 U. S. ____ (2007) 13
BREYER, J., dissenting
ize would violate the antitrust laws. . . . [R]epeal of the fair
trade laws generally will prohibit manufacturers from
enforcing resale prices”). See also Sylvania, supra, at 51,
n. 18 (“Congress recently has expressed its approval of a
per se analysis of vertical price restrictions by repealing
those provisions of the Miller-Tydings and McGuire Acts
allowing fair-trade pricing at the option of the individual
States”).
Congress did not prohibit this Court from reconsidering
the per se rule. But enacting major legislation premised
upon the existence of that rule constitutes important
public reliance upon that rule. And doing so aware of the
relevant arguments constitutes even stronger reliance
upon the Court’s keeping the rule, at least in the absence
of some significant change in respect to those arguments.
Have there been any such changes? There have been a
few economic studies, described in some of the briefs, that
argue, contrary to the testimony of the Justice Depart
ment and FTC to Congress in 1975, that resale price
maintenance is not harmful. One study, relying on an
analysis of litigated resale price maintenance cases from
1975 to 1982, concludes that resale price maintenance
does not ordinarily involve producer or dealer collusion.
See Ippolito, Resale Price Maintenance: Empirical Evi
dence from Litigation, 34 J. Law & Econ. 263, 281–282,
292 (1991). But this study equates the failure of plaintiffs
to allege collusion with the absence of collusion—an equa
tion that overlooks the superfluous nature of allegations of
horizontal collusion in a resale price maintenance case
and the tacit form that such collusion might take. See H.
Hovenkamp, Federal Antitrust Policy §11.3c, p. 464, n. 19
(3d ed. 2005); supra, at 4–5.
The other study provides a theoretical basis for conclud
ing that resale price maintenance “need not lead to higher
retail prices.” Marvel & McCafferty, The Political Econ
omy of Resale Price Maintenance, 94 J. Pol. Econ. 1074,
14 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
1075 (1986). But this study develops a theoretical model
“under the assumption that [resale price maintenance] is
efficiency-enhancing.” Ibid. Its only empirical support is
a 1940 study that the authors acknowledge is much criti
cized. See id., at 1091. And many other economists take a
different view. See Brief for William S. Comanor and
Frederic M. Scherer as Amici Curiae 4.
Regardless, taken together, these studies at most may
offer some mild support for the majority’s position. But
they cannot constitute a major change in circumstances.
Petitioner and some amici have also presented us with
newer studies that show that resale price maintenance
sometimes brings consumer benefits. Overstreet 119–129
(describing numerous case studies). But the proponents of
a per se rule have always conceded as much. What is
remarkable about the majority’s arguments is that noth
ing in this respect is new. See supra, at 3, 12 (citing arti
cles and congressional testimony going back several dec
ades). The only new feature of these arguments lies in the
fact that the most current advocates of overruling Dr.
Miles have abandoned a host of other not-very-persuasive
arguments upon which prior resale price maintenance
proponents used to rely. See, e.g., 8 Areeda ¶1631a, at
350–352 (listing “ ‘[t]raditional’ justifications” for resale
price maintenance).
The one arguable exception consists of the majority’s
claim that “even absent free riding,” resale price mainte
nance “may be the most efficient way to expand the manu
facturer’s market share by inducing the retailer’s per
formance and allowing it to use its own initiative and
experience in providing valuable services.” Ante, at 12. I
cannot count this as an exception, however, because I do
not understand how, in the absence of free-riding (and
assuming competitiveness), an established producer would
need resale price maintenance. Why, on these assump
tions, would a dealer not “expand” its “market share” as
Cite as: 551 U. S. ____ (2007) 15
BREYER, J., dissenting
best that dealer sees fit, obtaining appropriate payment
from consumers in the process? There may be an answer
to this question. But I have not seen it. And I do not
think that we should place significant weight upon justifi
cations that the parties do not explain with sufficient
clarity for a generalist judge to understand.
No one claims that the American economy has changed
in ways that might support the majority. Concentration in
retailing has increased. See, e.g., Brief for Respondent 18
(since minimum resale price maintenance was banned
nationwide in 1975, the total number of retailers has
dropped while the growth in sales per store has risen);
Brief for American Antitrust Institute as Amicus Curiae
17, n. 20 (citing private study reporting that the combined
sales of the 10 largest retailers worldwide has grown to
nearly 30% of total retail sales of top 250 retailers; also
quoting 1999 Organisation for Economic Co-operation and
Development report stating that the “ ‘last twenty years
have seen momentous changes in retail distribution in
cluding significant increases in concentration’ ”); Mamen,
Facing Goliath: Challenging the Impacts of Supermarket
Consolidation on our Local Economies, Communities, and
Food Security, The Oakland Institute, 1 Policy Brief, No.
3, pp. 1, 2 (Spring 2007), http://www.oaklandinsti
tute.org/pdfs/facing_goliath.pdf (as visited June 25, 2007,
and available in Clerks of Court’s case file) (noting that
“[f]or many decades, the top five food retail firms in the
U. S. controlled less than 20 percent of the market”; from
1997 to 2000, “the top five firms increased their market
share from 24 to 42 percent of all retail sales”; and “[b]y
2003, they controlled over half of all grocery sales”). That
change, other things being equal, may enable (and moti
vate) more retailers, accounting for a greater percentage of
total retail sales volume, to seek resale price maintenance,
thereby making it more difficult for price-cutting competi
tors (perhaps internet retailers) to obtain market share.
16 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
Nor has anyone argued that concentration among manu
facturers that might use resale price maintenance has
diminished significantly. And as far as I can tell, it has
not. Consider household electrical appliances, which a
study from the late 1950’s suggests constituted a signifi
cant portion of those products subject to resale price main
tenance at that time. See Hollander, United States of
America, in Resale Price Maintenance 67, 80–81 (B.
Yamey ed. 1966). Although it is somewhat difficult to
compare census data from 2002 with that from several
decades ago (because of changes in the classification sys
tem), it is clear that at least some subsets of the household
electrical appliance industry are more concentrated, in
terms of manufacturer market power, now than they were
then. For instance, the top eight domestic manufacturers
of household cooking appliances accounted for 68% of the
domestic market (measured by value of shipments) in
1963 (the earliest date for which I was able to find data),
compared with 77% in 2002. See Dept. of Commerce,
Bureau of Census, 1972 Census of Manufacturers, Special
Report Series, Concentration Ratios in Manufacturing, No.
MC72(SR)–2, p. SR2–38 (1975) (hereinafter 1972 Census);
Dept. of Commerce, Bureau of Census, 2002 Economic
Census, Concentration Ratios: 2002, No. EC02–31SR–1,
p. 55 (2006) (hereinafter 2002 Census). The top eight
domestic manufacturers of household laundry equipment
accounted for 95% of the domestic market in 1963 (90% in
1958), compared with 99% in 2002. 1972 Census, at SR2–
38; 2002 Census, at 55. And the top eight domestic manu
facturers of household refrigerators and freezers ac
counted for 91% of the domestic market in 1963, compared
with 95% in 2002. 1972 Census, at SR2–38; 2002 Census,
at 55. Increased concentration among manufacturers
increases the likelihood that producer-originated resale
price maintenance will prove more prevalent today than in
years past, and more harmful. At the very least, the
Cite as: 551 U. S. ____ (2007) 17
BREYER, J., dissenting
majority has not explained how these, or other changes in
the economy could help support its position.
In sum, there is no relevant change. And without some
such change, there is no ground for abandoning a well-
established antitrust rule.
B
With the preceding discussion in mind, I would consult
the list of factors that our case law indicates are relevant
when we consider overruling an earlier case. JUSTICE
SCALIA, writing separately in another of our cases this
Term, well summarizes that law. See Wisconsin Right to
Life, Inc., ante, at 19–21. (opinion concurring in part and
concurring in judgment). And every relevant factor he
mentions argues against overruling Dr. Miles here.
First, the Court applies stare decisis more “rigidly” in
statutory than in constitutional cases. See Glidden Co. v.
Zdanok, 370 U. S. 530, 543 (1962); Illinois Brick Co., 431
U. S., at 736. This is a statutory case.
Second, the Court does sometimes overrule cases that it
decided wrongly only a reasonably short time ago. As
JUSTICE SCALIA put it, “[o]verruling a constitutional case
decided just a few years earlier is far from unprece
dented.” Wisconsin Right to Life, ante, at 19 (emphasis
added). We here overrule one statutory case, Dr. Miles,
decided 100 years ago, and we overrule the cases that
reaffirmed its per se rule in the intervening years. See,
e.g., Trenton Potteries, 273 U. S., at 399–401; Bausch &
Lomb, 321 U. S., at 721; United States v. Parke, Davis &
Co., 362 U. S. 29, 45–47 (1960); Simpson v. Union Oil Co.
of Cal., 377 U. S. 13, 16–17 (1964).
Third, the fact that a decision creates an “unworkable”
legal regime argues in favor of overruling. See Payne v.
Tennessee, 501 U. S. 808, 827–828 (1991); Swift & Co. v.
Wickham, 382 U. S. 111, 116 (1965). Implementation of
the per se rule, even with the complications attendant the
18 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
exception allowed for in United States v. Colgate & Co.,
250 U. S. 300 (1919), has proved practical over the course
of the last century, particularly when compared with the
many complexities of litigating a case under the “rule of
reason” regime. No one has shown how moving from the
Dr. Miles regime to “rule of reason” analysis would make
the legal regime governing minimum resale price mainte
nance more “administrable,” Wisconsin Right to Life, ante,
at 20 (opinion of SCALIA, J.), particularly since Colgate
would remain good law with respect to unreasonable price
maintenance.
Fourth, the fact that a decision “unsettles” the law may
argue in favor of overruling. See Sylvania, 433 U. S., at
47; Wisconsin Right to Life, ante, at 20–21 (opinion of
SCALIA, J.). The per se rule is well-settled law, as the
Court itself has previously recognized. Sylvania, supra, at
51, n. 18. It is the majority’s change here that will unset
tle the law.
Fifth, the fact that a case involves property rights or
contract rights, where reliance interests are involved,
argues against overruling. Payne, supra, at 828. This
case involves contract rights and perhaps property rights
(consider shopping malls). And there has been consider
able reliance upon the per se rule. As I have said, Con
gress relied upon the continued vitality of Dr. Miles when
it repealed Miller-Tydings and McGuire. Supra, at 12–13.
The Executive Branch argued for repeal on the assump
tion that Dr. Miles stated the law. Ibid. Moreover, whole
sectors of the economy have come to rely upon the per se
rule. A factory outlet store tells us that the rule “form[s]
an essential part of the regulatory background against
which [that firm] and many other discount retailers have
financed, structured, and operated their businesses.”
Brief for Burlington Coat Factory Warehouse Corp. as
Amicus Curiae 5. The Consumer Federation of America
tells us that large low-price retailers would not exist with
Cite as: 551 U. S. ____ (2007) 19
BREYER, J., dissenting
out Dr. Miles; minimum resale price maintenance, “by
stabilizing price levels and preventing low-price competi
tion, erects a potentially insurmountable barrier to entry
for such low-price innovators.” Brief for Consumer Fed
eration of America as Amicus Curiae 5, 7–9 (discussing,
inter alia, comments by Wal-Mart’s founder 25 years ago
that relaxation of the per se ban on minimum resale price
maintenance would be a “ ‘great danger’ ” to Wal-Mart’s
then-relatively-nascent business). See also Brief for
American Antitrust Institute as Amicus Curiae 14–15, and
sources cited therein (making the same point). New dis
tributors, including internet distributors, have similarly
invested time, money, and labor in an effort to bring yet
lower cost goods to Americans.
This Court’s overruling of the per se rule jeopardizes
this reliance, and more. What about malls built on the
assumption that a discount distributor will remain an
anchor tenant? What about home buyers who have taken
a home’s distance from such a mall into account? What
about Americans, producers, distributors, and consumers,
who have understandably assumed, at least for the last 30
years, that price competition is a legally guaranteed way
of life? The majority denies none of this. It simply says
that these “reliance interests . . . , like the reliance inter
ests in Khan, cannot justify an inefficient rule.” Ante, at
27.
The Court minimizes the importance of this reliance,
adding that it “is also of note” that at the time resale price
maintenance contracts were lawful “ ‘no more than a tiny
fraction of manufacturers ever employed’ ” the practice.
Ibid. (quoting Overstreet 6). By “tiny” the Court means
manufacturers that accounted for up to “ ‘ten percent of
consumer goods purchases’ ” annually. Ibid.. That figure
in today’s economy equals just over $300 billion. See
Dept. of Commerce, Bureau of Census, Statistical Abstract
of the United States: 2007, p. 649 (126th ed.) (over $3
20 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
trillion in U. S. retail sales in 2002). Putting the Court’s
estimate together with the Justice Department’s early
1970’s study translates a legal regime that permits all
resale price maintenance into retail bills that are higher
by an average of roughly $750 to $1000 annually for an
American family of four. Just how much higher retail bills
will be after the Court’s decision today, of course, depends
upon what is now unknown, namely how courts will decide
future cases under a “rule of reason.” But these figures
indicate that the amounts involved are important to
American families and cannot be dismissed as “tiny.”
Sixth, the fact that a rule of law has become “embedded”
in our “national culture” argues strongly against overrul
ing. Dickerson v. United States, 530 U. S. 428, 443–444
(2000). The per se rule forbidding minimum resale price
maintenance agreements has long been “embedded” in the
law of antitrust. It involves price, the economy’s “ ‘central
nervous system.’ ” National Soc. of Professional Engineers,
435 U. S., at 692 (quoting Socony-Vacuum Oil, 310 U. S.,
at 226, n. 59). It reflects a basic antitrust assumption
(that consumers often prefer lower prices to more service).
It embodies a basic antitrust objective (providing consum
ers with a free choice about such matters). And it creates
an easily administered and enforceable bright line, “Do
not agree about price,” that businesses as well as lawyers
have long understood.
The only contrary stare decisis factor that the majority
mentions consists of its claim that this Court has “[f]rom
the beginning . . . treated the Sherman Act as a common-
law statute,” and has previously overruled antitrust prece
dent. Ante, at 20, 21–22. It points in support to State Oil
Co. v. Khan, 522 U. S. 3 (1997), overruling Albrecht v.
Herald Co., 390 U. S. 145 (1968), in which this Court had
held that maximum resale price agreements were unlaw
ful per se, and to Sylvania, overruling United States v.
Arnold, Schwinn & Co., 388 U. S. 365 (1967), in which this
Cite as: 551 U. S. ____ (2007) 21
BREYER, J., dissenting
Court had held that producer-imposed territorial limits
were unlawful per se.
The Court decided Khan, however, 29 years after
Albrecht—still a significant period, but nowhere close to
the century Dr. Miles has stood. The Court specifically
noted the lack of any significant reliance upon Albrecht.
522 U. S., at 18–19 (Albrecht has had “little or no rele
vance to ongoing enforcement of the Sherman Act”).
Albrecht had far less support in traditional antitrust
principles than did Dr. Miles. Compare, e.g., 8 Areeda &
Hovenkamp ¶1632, at 316–328 (analyzing potential harms
of minimum resale price maintenance), with id., ¶1637, at
352–361 (analyzing potential harms of maximum resale
price maintenance). See also, e.g., Pitofsky 1490, n. 17.
And Congress had nowhere expressed support for
Albrecht’s rule. Khan, supra, at 19.
In Sylvania, the Court, in overruling Schwinn, explicitly
distinguished Dr. Miles on the ground that while Congress
had “recently . . . expressed its approval of a per se analy
sis of vertical price restrictions” by repealing the Miller-
Tydings and McGuire Acts, “[n]o similar expression of
congressional intent exists for nonprice restrictions.” 433
U. S., at 51, n. 18. Moreover, the Court decided Sylvania
only a decade after Schwinn. And it based its overruling
on a generally perceived need to avoid “confusion” in the
law, 433 U. S., at 47–49, a factor totally absent here.
The Court suggests that it is following “the common-law
tradition.” Ante at 26. But the common law would not
have permitted overruling Dr. Miles in these circum
stances. Common-law courts rarely overruled well-
established earlier rules outright. Rather, they would
over time issue decisions that gradually eroded the scope
and effect of the rule in question, which might eventually
lead the courts to put the rule to rest. One can argue that
modifying the per se rule to make an exception, say, for
new entry, see Pitofsky 1495, could prove consistent with
22 LEEGIN CREATIVE LEATHER PRODUCTS, INC. v.
PSKS, INC.
BREYER, J., dissenting
this approach. To swallow up a century-old precedent,
potentially affecting many billions of dollars of sales, is
not. The reader should compare today’s “common-law”
decision with Justice Cardozo’s decision in Allegheny
College v. National Chautauqua Cty. Bank of Jamestown,
246 N. Y. 369, 159 N. E. 173 (1927), and note a gradualism
that does not characterize today’s decision.
Moreover, a Court that rests its decision upon econo
mists’ views of the economic merits should also take ac
count of legal scholars’ views about common-law overrul
ing. Professors Hart and Sacks list 12 factors (similar to
those I have mentioned) that support judicial “adherence
to prior holdings.” They all support adherence to Dr. Miles
here. See H. Hart & A. Sacks, The Legal Process 568–569
(W. Eskridge & P. Frickey eds. 1994). Karl Llewellyn has
written that the common-law judge’s “conscious reshap
ing” of prior law “must so move as to hold the degree of
movement down to the degree to which need truly
presses.” The Bramble Bush 156 (1960). Where here is
the pressing need? The Court notes that the FTC argues
here in favor of a rule of reason. See ante, at 20–21. But
both Congress and the FTC, unlike courts, are well-
equipped to gather empirical evidence outside the context
of a single case. As neither has done so, we cannot con
clude with confidence that the gains from eliminating the
per se rule will outweigh the costs.
In sum, every stare decisis concern this Court has ever
mentioned counsels against overruling here. It is difficult
for me to understand how one can believe both that (1)
satisfying a set of stare decisis concerns justifies over
ruling a recent constitutional decision, Wisconsin Right to
Life, Inc., ante, at 19–21 (SCALIA, J., joined by KENNEDY
and THOMAS, JJ., concurring in part and concurring in
judgment), but (2) failing to satisfy any of those same
concerns nonetheless permits overruling a longstanding
statutory decision. Either those concerns are relevant or
Cite as: 551 U. S. ____ (2007) 23
BREYER, J., dissenting
they are not.
* * *
The only safe predictions to make about today’s decision
are that it will likely raise the price of goods at retail and
that it will create considerable legal turbulence as lower
courts seek to develop workable principles. I do not be
lieve that the majority has shown new or changed condi
tions sufficient to warrant overruling a decision of such
long standing. All ordinary stare decisis considerations
indicate the contrary. For these reasons, with respect, I
dissent.