• Women's Wear Daily, Tuesday, June 19, 2007 11:30 AM

The U.S. Supreme Court is weighing a case that pits the rights of brands against those of retailers and the power to control prices hangs in the balance.

In an attempt to compete against larger brands, Leegin Creative Leather Products a decade ago began requiring retailers to adhere to a minimum price. Kay's Kloset, a boutique operated by PSKS Inc., balked at the policy and, in 2001, began selling the firm's leather goods at a 20% discount. Leegin pulled its product from the store, and a lawsuit ensued that was at first decided for Kay's.

The Supreme Court's decision could overturn nearly a century of legal precedent dictating that all price-fixing agreements are automatically illegal, giving judges in future cases more leeway to decide the appropriateness of such pricing policies. If the Supreme Court overturns the precedent, it would make it easier for manufacturers to protect their brands from discounting. Retailers, however, would be left with less flexibility to move merchandise and set prices in their own stores.

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