Leegin and its Progeny: Implications for Internet Commerce

Abstract

Retailing involves more than merely reselling products; it also provides product information to consumers. Product information can be offered by salespeople at conventional retailers and electronically by Internet retailers, or by a product's manufacturer through extensive advertising. Outcomes depend on who provides consumers with this information. This issue has strong implications for antitrust policy towards manufacturer-distributor relationships. The message of the recent Leegin decision was that vertical price restraints should be evaluated under the rule of reason. That message however is largely vacuous without more detail because it merely shifts the issue to what should be the criteria for different outcomes. I review here the antitrust case brought against Babies “R” Us, the leading retailer of various baby products. That case was the first application of the Leegin decision and suggests a path for future antitrust jurisprudence dealing with interactions between manufacturers and both conventional and Internet retailers.