There’s been much talk about the Supreme’s decisions on desegregation and free speech, but another ruling with broad consumer impact has gone relatively unnoticed. In a 5-4 decision [PDF], the U.S. Supreme Court struck down a 96-year-old ban on minimum pricing agreements between manufacturers and retailers. Dissenting opinion believes that this ruling will hurt consumers, raise prices and keep new retailers out of the marketplace. The 1911 ruling that was overturned was Dr. Miles Medical Co. vs. John D. Park & Sons which decided that it is always illegal for a supplier to dictate minimum prices to a retailer.
Corrente adds: Justice Kennedy said Thursday that the court was not bound by the 1911 precedent because of the “widespread agreement” among economists that resale price maintenance agreements can promote competition.
And I bet you can guess the kind of economists they’re listening to. That’s right: The guys who brought you Augusto Pinochet. The Bush administration, along with economists of the Chicago school, had argued that the blanket prohibition against resale price maintenance agreements was archaic and counterproductive because, they said, some resale price agreements actually promote competition.
Of course they would say that, they’ll say anything, but come on. What the decision does is allow corporations to take away your option to buy products at a discount. The decision will give producers significantly more, though not unlimited, power to dictate retail prices and to restrict the flexibility of discounters.
Another way of looking at this is that the Bush Court just took $1000 out of your pocket and gave it to the corps:
During a 38-year period from 1937 to 1975 that Congress permitted the states to adopt laws allowing retail price fixing [which the Bush Court—well, I won’t say “legalized,” I’ll just say “encouraged”—again with this decision], economists estimated that such agreements covered about 10 percent of consumer good purchases. In today’s dollars, Justice Breyer estimated that the agreements translated to a higher annual average bill for a family of four of about $750 to $1,000.