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8 Minimum Advertised Price Continued from Page 7 processes either through online AB market testing or other methods. The loss of customers may or may not outweigh any potential gains in profit from a robust MAP policy. Why Cant I Control Price Directly The Af- termath of Leegin Prior to the Supreme Courts decision in Leegin Creative Leather Products Inc. v. PSKS Inc. 551 U.S. 877 2007 federal antitrust law subjected hor- izontal price-fixing and vertical price-fixing to the same standard of review. Whether it was a deal be- tween competitors to maintain prices horizontal price-fixing or a deal between a manufacturer and its retailer to maintain prices vertical price-fixing or RPM the courts considered the activity to be per se illegal. The Leegin decision however noted the many pro-competitive effects of RPM. Higher mar- gins could encourage retailers to invest in customer service and attractive displays. By enforcing RPM policies manufacturers can protect retailers that spend money on these pro-consumer services and prevent them from being undercut by discount com- petitors that free ride off of these advertising and services for which they themselves have not paid. Id. at 890-91. Consequently the Supreme Court adopted the more forgiving rule of reason stand- ard to analyze whether the activity was an unreasonable restraint of trade. Though Leegin loosened the federal regulations against RPM policies the state responses to Leegin were more mixed. Manufacturers that implement RPM policies may yet face the risks of civil litiga- tion and state-level prosecution. For example in both Franke and KWC the courts noted that RPM policies are unenforceable under section 369-a of New Yorks General Business law. In New York the Attorney General sued Tempur-Pedic for termi- nating contracts with retailers that did not follow a RPM policy. Closer to home in California the At- torney General sued beauty product manufacturers Bioelements and Dermaquest for implementing RPM agreements. In contrast to RPM MAP policies have always been subject to the rule of reason standard of review and do not have the same degree of litigation and prosecution risks that RPM policies face. See Blind Doctor Inc. v. Hunter Douglas Inc. 2004 WL 1976562 N.D. Cal 2004 Campbell v. Austin Air Systems 423 F.Supp.2d 61 W.D.N.Y. 2005. Enforcing MAPThe Importance of Unilateral Action Under Colgate The federal Sherman Act prohibits all contracts combinations and conspiracies in restraint of trade. The Supreme Court held in United States v. Colgate Co. 250 U.S. 300 1919 however that manufac- turers do not violate the Sherman Act when they unilaterally announce resale prices in advance and refuse to sell to those that do not comply. California courts have expressly adopted the Colgate doctrine when applying Californias own antitrust statute the Cartwright Act. Chavez v. Whirlpool Corp. 93 Cal.App.4th 363 370 2001. Thus the Colgate doctrine provides a safe haven for manufacturers under federal and California antitrust law. So long as a manufacturer unilaterally announces a MAP policy in advance and then without negotiation refuses to deal with anyone who fails to comply with the MAP policy the manufacturer will be on safer ground under the Sherman Act and Cartwright Act. As soon as a manufacturer fails to enforce its MAP policy or negotiates different terms with one retail- er but enforces it with another there is a risk that the unequal treatment will be viewed as i an illegal conspiracy with the first retailer to harm the second retailer in violation of the ShermanCartwright Act or ii unfair competition in violation of California Business and Professions Code 17200 et seq. Sim- ilarly if manufacturers agree amongst each other to implement similar MAP policies for their retailers this would no longer constitute a unilateral policy and would fall under the proscriptions of the Continued on Page 10