Resale Price Maintenance Agreements Held To Be Legal In New York

In People of the State of New York et al. v. Tempur-Pedic International Inc., New York state appeals court upheld a dismissal of the state’s suit against Tempur-Pedic International Inc., claiming that Tempur-Pedic’s policy forbidding retailers of its products from setting their prices below the range set out by the company’s guidelines, constitutes illegal resale price fixing.   The state claimed that although under New York state law contracts for resale price restraints (“RPM”s) are not illegal, New York fair trade law had been specifically amended in order to prevent the artificially high prices enabled by Tempur-Pedic’s business practices.  The court disagreed, holding that there is nothing in the text of the law to declare RPMs to be illegal or unlawful; rather the statute provides that such provisions are simply unenforceable in the courts of New York.   And even if the plain language of the statute could be held to render RPMs illegal as a matter of law, the state failed to adduce sufficient evidence to support its petition against Tempur-Pedic.

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