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Supreme Court Ruling Aids Premium Brands


The U.S. Supreme Court overturned a 96 year old antitrust precedent that banned manufacturers and retailers from agreeing to minimum retail prices. The ruling may have broad ramifications, especially for premium golf equipment makers who rely on pricing strategies as one way to distinguish their golf brands. The 5-4 decision rendered June 28 goes into effect immediately, giving manufacturers greater ability to establish retail prices and restrict discounters' behavior.

Ping Golf Co. was among the companies that lobbied a "friend of the court" brief in support of its reversal. The ruling was a victory for Ping and a host of business advocates that argued pricing agreements actually help promote competition. With discounting taken out of the equation, they say retailers would be spurred to compete and improve business by providing better service - ultimately benefiting consumers.

Many in the business community, however, don't share that outlook, and the divisiveness of the issue was evident among the justices as well. In writing the dissenting opinion, Justice Stephen Breyer said: "The only safe prediction to make about today's decision is that it will likely raise the price of goods at retail and that it will create legal turbulence."

The change isn't likely to raise prices at large discount golf retailers, who often wield influence over golf equipment manufacturers to set their own prices. It could make it more difficult for smaller retail shops to lower prices without permission from manufacturers. The decision also may limit the ability of online golf retailers to sell goods at lower prices.

Ping officials say the ruling also will make it easier for manufacturers to conduct business with their retail partners. Bill Gates, Ping's associate general counsel and director of distribution said, "Now the court has said you can have an agreement between a manufacturer and a retailer if there is a good justification or under 'the rule of reason' test. That's a big change. We're still trying to digest what that means for Ping, but it's a good thing." Ping instituted its iFit pricing policy in 2004. Under the old law, the company could only issue a unilateral pricing policy - a written company statement that set pricing - without discussing its intent with retailers and obtaining their acceptance of it. "We were walking on egg shells every time we talked to a retailer because it might be misinterpreted as an agreement," Gates said. It was equally frustrating for many retailers, especially when Ping adopted a zero-tolerance stance for violators of its policy. "We actually live in fear of being shut off," said Leigh Bader of Joe & Leigh's Discount Golf Pro Shop in South Easton, Mass., and president of Internet retailer

The issue came before the Supreme Court in a case involving a dispute over the sales price of designer hand bags made by Leegin Creative Leather Products, makers of the Brighton brand of women's accessories. The Supreme Court adopted the ban on resale price agreements between manufacturers and retailers in 1911, when it found that the Dr. Miles Medical Co. had violated the Sherman Antitrust Act. The company had attempted to sell medicine only to retailers who agreed to resell them at set prices. The court ruled such agreements benefit only retailers, not consumers, and declared such agreements unlawful.

thanks to "Golfweek" magazine










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