Larry Thomas — Furniture Today,
Retail policies, common in furniture industry, must be evaluated case by case

WASHINGTON — A divided U.S. Supreme Court ruled Thursday that establishing minimum retail prices — a practice common in the furniture industry but technically illegal since 1911 — doesn’t automatically violate antitrust laws.


In overturning the 1911 ruling by a 5-4 decision, the court said minimum retail pricing policies need to be evaluated on a case-by-case basis to see if they are truly anti-competitive.

“Though each side of the debate can find sources to support its position, it suffices to say here that economics literature is replete with procompetitive justification for a manufacturer’s use of resale price maintenance,” Justice Anthony Kennedy wrote in the majority opinion.

The decision overturned a 1911 ruling that all minimum pricing policies violate the Sherman Antitrust Act.

Despite the 1911 ruling, such policies have been instituted in the furniture industry, especially among producers and distributors of upper-end goods. Examples of resources with minimum pricing policies include full-line producers/importers Bernhardt, Drexel Heritage and Lexington, upholstery producer Ekornes and bedding maker Tempur-Pedic.

The case on which the court ruled involved a women’s apparel store in Texas that sold the Brighton brand of belts and other fashion accessories until the line was pulled by the distributor in 2003 because the store was discounting the products by as much as 20%.

The store sued the distributor, Leegin Creative Leather Products, in federal court, and a jury awarded the retailer $1.2 million, a damage award that was tripled under federal law.

Jeff Castellano, owner of Castleton Furniture in Bloomfield, N.J., said he approved of minimum pricing policies and said they are good for the industry. “We always battled with the North Carolina discounters, and this leveled the playing field,” he said of the pricing policies.

On the other side of the fence, Jake Jabs, president of Englewood, Colo.-based American Furniture Warehouse, said he’s always tried to avoid suppliers with such policies. “I don’t believe in minimum pricing. I think the guys who can run the best operation and sell for less should get the business,” he said.

Jabs, however, recently started carrying Tempur-Pedic, which has a strict minimum pricing policy. He said he played by the producer’s rules to cater to a small percentage of consumers who came into his stores asking specifically for the product.

But Jabs said competitors have found ways to skirt the policy, such as offering $500 for the consumer’s old mattress. That’s the same as a discount, he argued.

Rather than play that game, Jabs said he may drop the line. “I’d love to sell it like everything else we sell — cheaper than everybody else,” he said.

Senior Retail Editor Clint Engel contributed to this story.