Adding Uncertainty to the Virtual Shopping Cart: Antitrust Regulation of Internet Minimum Advertised Price Policies

March 1, 2012

Online commerce has fundamentally changed how consumers shop and how products are distributed. As a result, manufacturers impose Internet Minimum Advertised Price (IMAP) policies, prohibiting internet retailers from advertising prices below a fixed amount. Consumers often encounter these policies through website instructions such as “see price in cart,” “to view price, add to your shopping cart,” and “price unavailable—click to see more.” Manufacturers argue that IMAP policies are non-price vertical restraints that do not run afoul of antitrust laws because they regulate only advertising. However, IMAP policies can and do impact resale pricing, resulting in higher prices and unjustifiable limitations on consumer choice.

Recent jurisprudence regarding price fixing, general uncertainty around the legality of resale price maintenance (RPM) under state and federal antitrust statutes, and high pleading standards have led to nearly insurmountable barriers for plaintiffs who raise antitrust challenges to IMAP policies. The Supreme Court held in 2007 that RPM may have procompetitive justifications, and should thus be analyzed using the rule of reason when challenged under federal antitrust law. This Note examines the analysis of IMAP policies in the context of recent antitrust jurisprudence. After a discussion of the relevant antitrust law and an analysis of recent IMAP litigation, this Note concludes that IMAP policies are sufficiently anticompetitive to justify per se prohibition and should be treated as such in state and federal courts.

March 2012

No. 4