Three Years After Leegin, California Remains Tough On Resale Price Maintenance

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California Attorney General Kamala D. Harris announced last week that the Office of the Attorney General (OAG) successfully had halted an illegal online vertical price-fixing scheme coordinated by Bioelements Inc., a Colorado-based cosmetics company that sells its products in stores across California as well as on the Internet.

On January 11, 2011, Judge Harold W. Hopp of the Superior Court of California signed the parties’ stipulated court judgment, which prohibited Bioelements from agreeing with its online retailers to fix resale prices. Further, the settlement required Bioelements to pay $51,000 in penalties and attorneys’ fees and to inform any third parties with whom the company had entered price-fixing contracts that, going forward, Bioelements considers these contracts void and will not enforce them.

According to the complaint, since 2009 Bioelements had entered into dozens of “Internet Only Accounts Agreements” with third-party companies for the distribution and sale of its products on the Internet. By agreeing to the terms of these contracts, retailers were prohibited from selling Bioelements products online at prices below (or above) the Manufacturer’s Suggested Retail Price (MSRP). These agreements were limited to online sales and did not touch upon pricing for products sold in stores.

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