Conspicuous consumption

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What we learned at the Supreme Court on Monday: If your company makes something that's a great value for the cost, Justice Stephen Breyer should be your target customer. If instead you sell something that's extremely expensive, Justice Antonin Scalia is a much better bet to buy it.

And so it went during Monday's oral arguments for Leegin Creative Leather Products Inc. v. PSKS Inc. A debate over century-old antitrust law devolved into shopping preferences. (Justice Clarence Thomas, I'd guess, prefers to shop online.)

In the case, which I wrote about for the March issue of Inc., Leegin is arguing that the court overrule a 96-year-old antitrust ruling intended to promote competition. The company makes handbags, and wanted a retail store, Kay's Kloset, to charge a consistent, substantial amount for its bags. When Kay's discounted the bags by as much as 20 percent, Leegin cut off shipments to the store. The store suffered financial losses as a result, so much so that it was forced to move into smaller quarters.

At issue in this case is a 1911 ruling, known as Dr. Miles, which made it illegal for manufacturers to dictate retail prices—generally understood as price fixing. Leegin wants the the justices to overturn precedent on the grounds that interbrand competition (competition between two or more different brands) is just as vital to the economy as intrabrand competition (i.e., competition between stores selling the same brand).

Last updated: Mar 27, 2007




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