Thursday, September 24, 2009

Anna Wintour, Price Fixing is Illegal!

By Laura Ng

(c) 2009 Laura Ng and The Docket.  First appeared on The Docket Online, Sept. 24, 2009.

Anna Wintour, the editor-in-chief of Vogue and quite possibly the most powerful person in the fashion industry, may think that she is now above the law.  At the Town Hall meeting of the Council of Fashion Designers of America (CFDA) on July 28, 2009, Ms. Wintour asked whether “someone [could] lead a committee that would make ground rules for retailers of when the discounting starts, and then all the retailers can agree to it.”[1]  When CFDA president, Diane von Furstenberg, immediately pointed out the illegality of price fixing, Ms. Wintour responded, “Is that something we can change?  We have friends in the White House now!”[2]

Granted, First Lady Michelle Obama does wear the latest frocks from young American high-end fashion designers, and the recession did strike a huge blow to the global fashion industry, but Ms. Wintour is unreasonably overestimating her influence at the White House. American fashion designers, retailers, and magazine editors are not exempt from the federal antitrust law under the Sherman Antitrust Act (15 U.S.C. §§ 1-7).  The purpose of antitrust law is to protect trade and commerce from restraints, monopolies, price-fixing, and price discrimination.[3]  Ms. Wintour’s proposed price fixing would directly violate Section 1 of the Sherman Act, because interference with price setting by the free market economy is illegal per se,[4] even when the interference indirectly affects prices.[5]  Ms. Wintour’s suggested ground rules on discounting would interfere with the setting of prices by the free market economy, because the ground rules could hinder desperate retailers, such as Saks Fifth Avenue, from independently setting the record low 70% discounts on high fashion luxury goods that consumers have seen since November 2008.

At least Diane von Furstenberg realizes that a price fixing conspiracy is not a legitimate answer to the luxury fashion industry’s search for a new business model.

[1] Irina Aleksander, At CFDA Town Meeting, Wintour Proposes Discount by Committee; DVF: ‘That’s Illegal!’The New York Observer, July 28, 2009.

[2] Ibid.

[3] Black’s Law Dictionary.

[4] U.S. v. Container Corp. of America, 393 U.S. 333 (1969).

[5] U.S. v. General Motors Corp., 384 U.S. 127 (1966).

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