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A Supreme Screw-Up

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...the Supreme Court decided that you, the consumer, should pay no less than what a producer says you should pay for the goods you purchase.

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The Supreme Court yesterday overturned a ban on minimum pricing at the retail level. In other words, the Supreme Court decided that you, the consumer, should pay no less than what a producer says you should pay for the goods you purchase. The Justice-ification of overturning a century-old ban on price collusion between producers and retailers was that the higher prices would allow retailers to put more money into providing customer service, thus improving the consumer experience.

Without putting too fine a point on it, the Supreme Court Justices are idiots in regards to retail. Or at least, the majority of them are.

To take a loosely related example from elsewhere in today's paper, let's say the Supreme Court decided that you, the consumer, had to pay a legally mandated minimum price to rent movies. As a result, companies like Netflix (NFLX) and Blockbuster (BBI) would be legally forbidden from engaging in their current price war, lest they violate the price minimum established by movie studios.

By definition, this would mean higher prices for DVD rentals. Would it lead to a better customer service experience? Obviously not, as evidenced by the fact that Blockbuster was a terrible place to shop before the price war and will remain a terrible place to shop for the rest of our (or Blockbuster's) life. A price minimum may have allowed Blockbuster to keep the 283 stores they are closing alive for a few more quarters but that's shuffling deckchairs on the Titanic that is BBI's business model.

The Supremes just raised prices in a world of shrinking consumer demand. It's a bad decision for everyone involved, even the manufacturers who fought for it.

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