12.14.09

SCHUMER REVEALS: BACKROOM DEALS BETWEEN MAJOR RETAILERS AND MANUFACTURERS COST NY TOY, ELECTRONIC SHOPPERS MILLIONS EVERY YEAR - ALLOWS PRICE FIXING OF MANY POPULAR GOODS THIS HOLIDAY SEASON

Recent Supreme Court Decision Lets Manufacturers Require Stores to Charge High Prices -- Particularly The Prices Discount and Online Stores Can Charge for Toys, Electronics, And Other ProductsToys 'R Us Recently Cited By Feds from Blocking Their Manufactures From Distributing to Retailers Who Could Sell They Toys At a DiscountSo-Called "Retail Price Fixing" Costs Shoppers Thousands Every Year - Schumer Backs New Legislation to Re-Impose Tough Rules Blocking Contracts

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.S. Senator Charles E. Schumer today revealed that a recent Supreme Court decision, overturning a 96year old consumer protection, has allowed major manufacturers and retailers of a wide range of consumer products, including toys and electronics, to significantly raise the price of their products. In 2007, the US Supreme Court's 54 decision overturned a century old ban on manufacturers setting a minimum price below which retailers cannot sell that manufacturer's product. Overturning the ban allows manufacturers to now place strict limits on what prices retailers, particularly online and discount retailers, can charge for their products. Department of Justice studies conducted in the late 1960s indicated that prices were between 1827% higher in the states that allowed vertical price fixing, costing consumers billions in the form of higher prices.

 

"The Supreme Court opened up the floodgates to backroom deals that cost every single New York holiday shopper that goes to the cash register this weekend. The ban on vertical price fixing was one of the most basic consumer protections around because it protected basic price competition."

 

In the Leegin decision, the Supreme Court overturned a nearly century old antitrust rule forbidding vertical price fixing   the practice of a manufacturer setting a minimum retail price. In his dissenting opinion in the Leegin case, Justice Breyer estimated that if only 10 % of manufacturers engaged in vertical price fixing, the volume of commerce affected today would be $300 billion dollars, translating into retail bills that would average $750 to $1,000 dollars higher for the average family of four every year. Consumer rights advocates fear that allowing manufacturers to set retail prices will threaten discount stores, and lead to higher prices for consumers.

 

Since the decision, more than 5,000 companies have implemented minimum pricing agreements. For example, retailers were prevented from discounting toys at preChristmas sales during the 2008 holiday season, including the Xbox 360.

 

Schumer today announced he is backing new legislation authored by Senator Herb Kohl (DWI) called the "Discount Pricing Consumer Protection Act" to ensure that consumers will be able to continue discount shopping despite the Supreme Court's decision to overturn the ban on vertical price fixing. The Court's decision in the Leegin case allows manufacturers to set a minimum price below which a retailer cannot sell the manufacturer's product, threatening the existence of discounting and discount stores and leading to higher prices for consumers.  Kohl's legislation would restore the ban on vertical price fixing.



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