By the end of the month, the US Supreme Court is set to decide whether to scrap an existing rule that prohibits manufacturers from stipulating retail prices for their products.

The case between California-based women's leather fashion accessories manufacturer Leegin Creative Leather Products, Inc. and ladies’ clothing retailer PSKS, Inc. will have far-reaching effects for the manufacturing and retail industries.

Leegin’s pricing policy states that retailers selling its products, particularly the Brighton collection, should stick to the minimum price it has designated. Its client, PSKS, regularly flouted this rule, pricing items below the company’s minimum. Leegin responded by suspending Brighton shipments to the retailer and PSKS subsequently pursued legal action against Leegin, following a decline in profits. The US District Court for the Eastern District of Texas found in favour of PSKS and the company was awarded $3.6 million in damages. However, Leegin has launched an appeal arguing that, instead of the ‘per se’ rule, which applied in the prior case, dating back to 1911, the court should use the ‘rule of reason’, which requires a case-by-case analysis of whether a vertical arrangement on price is anti-competitive. The decision is pending and will affect how companies across all retail sectors price their goods.