Corporate & Securities Law

Three State Attorneys General Obtain Consent Decree Against Herman Miller for Resale Price Maintenance

By Matthew S. Wild

On March 21, 2008, Herman Miller, Inc. entered into a consent decree with the attorneys general for New York, Michigan and Illinois to resolve allegations of resale price maintenance over its Aeron chair — an ergonomic desk chair.  Filed in the United States District Court for the Southern District of New York, the Complaint alleged that Herman Miller used its Suggested Retail Price policy to enforce a resale price maintenance scheme over the Aeron chairs.  According to the Complaint, Herman Miller coerced retailers to agree not to advertise or discount Aeron chairs below Herman Miller’s Suggested Resale Price or a pre-determined discount set by Herman Miller.  The states alleged violations of Section 1 of the Sherman Act and the New York, Illinois and Michigan antitrust statutes.  Although this action was brought after the Supreme Court in Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007), held that resale price maintenance was subject to analysis under the rule of reason (and no longer a per se violation of Section 1), the Complaint pled only a per se violation.  The consent decree requires Herman Miller to refrain from resale price maintenance and enforcement of its Suggested Retail Price policy for all of its products.  Herman Miller also was required to pay a $750,000 fine.  This case serves as a cautionary tale to manufacturers who take too much comfort from Leegin.   With aggressive enforcement by sate attorneys general and potential litigation by terminated retailers under more stringent state laws, manufacturers would be well advised to act unilaterally under the Colgate doctrine.  They are free to terminate discounters unilaterally but should not require retailers to agree to adhere to resale prices as a condition of receiving shipments.  Similarly, to reduce the chance that any termination of a discounter could be considered the product of a conspiracy between the manufacturer and other retailers, manufacturers should refuse to listen to complaints from retailers about discounting.  The Herman Miller Complaint and Consent Decree are attached.  Herman Miller Complaint; Herman Miller Consent Decree

Full post as published by Antitrust Commentary on March 31, 2008 (boomark / email).