Yesterday’s reversal by a 5-4 Supreme Court majority of 1911’s Sherman antitrust prohibition of retail price maintainence agreements, in which the manufacturer can set and enforce the price at retail, causes my brow to wrinkle trying to anticipate how this sea change will affect the aftermarket industry.

Off the top, I don’t agree. The Bush administration, arguing in support of the appeal brought by a designer of leather products against a Dallas reseller of fashion items, cited some economists opinions that price fixing can promote competition.

Justice Kennedy’s swing vote opinion showed he was impressed by the “widespread agreement” among economists that resale price maintenance agreements can promote competition. He then wrote that,

Vertical agreements establishing minimum resale prices can have either pro-competitive or anticompetitive effects, depending upon the circumstances in which they are formed.

So much for definitive fence-sitting: price fixing may be good or it may be bad, depending on the circumstances. Which is why the Sherman Anti-Trust legislation was enacted in the first place.

One of those claims reasoned that a new manufacturer would be able to better recover marketing costs, and that, in turn, would sway indecisive retailers that a stocking commitment would be money in the bank. Huh? A crystal clear example of that whacked out rationale can be seen over at our friends on Pharmaceutical Row. Talk about recouping marketing costs by fixing prices — if it weren’t for generics we’d be paying $5 a tab for aspirin. Put another way, what guarantee is there that a a) marketing program can deliver profit by b) fixing the price of the product? Would that all marketing were so effective.

Another administration argument pointed out the advantage internet retailers have over brick and morter retailers as a reason for retrenchment, with their higher fixed costs cutting into return. True on that count, and a prediction that among the biggest losers will be the eBayers who’ve eked out a niche tendering brand names at way below the pricing required to support stores and staff.

And as a further result, manufacturers will find it easier to shore up brand identity that’s suffered significantly under the pressure of online discounting.

I’m more concerned with the nuances we’ve come to accept over the years. While the conservative wing of the court sees blue skies ahead for consumers, I’m not convinced marketeers will roll back the built in pricing cushion that have become a standard hedge against discounted pricing. If you buy software of any kind, you never pay retail. Same goes for a huge chunk of the powersports aftermarket goods and services. It’s that built in cush that helps your local sole proprieter build customer loyalty, by offering on-the-spot double digit discounts as needed to secure a sale.

True, clout counts when a manufacturer adopts price fixing. Apple’s got it. A second tier boot builder might not have the heft to swing that big hammer. But from where I sit, as traditional retailers seem to have just started evolving successful competitive strategy to deal with internet resellers, and as web sales have begun to stall after seeing meteoric growth over the past couple of years, this was a decision too soon rendered and too little considered — most especially as we’re just beginning to factor in the role Chinese manufacturing has to play in overall marketing strategies.

Conclusion: this will either be good or very, very good for corporate interests, while the consumer may as well wait for the mail helicopter before seeing any competitive benefit.