Thursday, June 28, 2007


More Supreme Court

The final Supreme Court decisions for this term came out today – again marked by some more 5-4 decisions.

High Court Abandons Competition Rule -

Don't get too worked up over the headline – this decision just says that a distributor and a distributee can agree to a minimum sales price. I don’t think the AP is too happy with this.

“In recent decades, the Supreme Court has chipped away at what many economists traditionally regarded as vital consumer protections against anticompetitive conduct. For example, exclusive dealer territories and setting price ceilings are no longer automatically unlawful.”

Don’t you always love the non-attributed “many economists” reference? Left unsaid is exactly how an agreement setting “price ceilings” – in other words, a price cap – is somehow detrimental to the consumer. I’ll agree that in the long run they can be…but only when set by the ultimate price ceiling imposer: Government. The classic example, of course, is Rent Control and its dampening effect on the supply of rental property.

Another person who doesn’t seem to happy with this is dissenter Justice Breyer:

“The only safe predictions to make about today's decision are that it will likely raise the price of goods at retail,"

He was predictably joined by Justices Stephens, Ginsburg and Souter. I haven’t read their dissent yet but I hope it explains why a government-imposed price minimum like a minimum wage is okay but a minimum price on some high-priced leather goods is a social evil.

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