The US Supreme Court heard oral arguments Monday in the case of Leegin Creative Leather Products, Inc. v. PSKS, Inc., 06-480, in which a clothing manufacturer requests the Court to overrule a 1911 Supreme Court decision, Dr. Miles Medical Co. v. John D. Park & Sons Co. that held any minimum price agreement to be per se illegal and anti-competitive. In the present case, manufacturer Leegin ceased supplying goods to retailer PSKS after PSKS lowered its prices beneath the minimum set by the manufacturer. Leegin argued that such agreements foster competition among smaller retailers by preventing large retailers from setting extremely low and predatory prices. The trial court found that Leegin's actions violated the Sherman Antitrust Act and awarded PSKS treble damages. The US Court of Appeals for the Fifth Circuit affirmed the decision in favor of PSKS. Associate Justice Stephen Breyer speculated that dropping the per se rule would raise prices, while Associate Justice Antonin Scalia suggested that some consumers prefer to pay more in return for greater customer service.
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