WASHINGTON — The U.S. Supreme Court today struck down a 96-year-old ban on minimum pricing agreements between manufacturers and retailers.

The 5-to-4 decision shifts the balance of power to brands, giving them the right to set minimum prices and reshaping the relationship between vendors and retailers.

of course if you are talking about commodities it is a different story, but obviously this is not the context here…

The problem with the doctrine is that a manufacturer cannot restrict the output of competitors by this (in order to obtain monopoly power), nor are they likely to pursue the policy solely to put profits in the pockets of their distributors (unless we are willing to accept the altruist theory of corporate behavior, which I think JC has just-a refuted). The most likely justification left, then, is that the practice leads to greater efficiency. This is an institutional response to the free rider problem: one retailer goes to the trouble of advertising and providing informed sales staff and post-sales follow-up, while another does not. The former creates value, in Miracle’s terms, by bringing customers in, informing them, reassuring them that someone will deal with potential problems, and then the customer walks across the street to the non-advertising, non-sales-staff-training discounter across the street (or on the web).

I think Irene points out exactly the problem with dawn’s point: yes, once you buy it, it is yours to do with as you wish. But the manufacturer should have just as much freedom, should they not? If you agreed to certain terms in the course of the purchase, you have an obligation, and the manufacturer should have recourse (like not selling to you anymore).

Vesta’s nuance is interesting: she has basically endorsed rebating, another controversial practice that brought about Sherman in the first place (railroads would advertise one price to everyone, and then cut that to their largest customers by giving them rebates). Alison, on the other hand, has just struck down both the patent laws and the Harrison Narcotics Act of 1918 (introducing prescriptions and giving physicians the power to write them), the Food, Drug, and Cosmetic Act of 1938 (extending the FDA’s power beyond merely making sure the labels were accurate), and the Durham-Humphrey Amendment to it that finally gave the world’s most powerful cartel (the AMA) the gatekeeper power over your health because you obviously can’t be trusted with it. I agree with both of them, with certain caveats of course (like, do I really want heroin to be freely available to little kids? No, but that’s getting even more off-topic than I already am).

It usually allows for end of season or out of season discounts. What it attempts to avoid is discounting recent, in season, merchandise, off the bat (i.e. never selling at full retail).

“saturated market”,
never get the order right,
always be extremely late with shipping,
suddenly move their PO to ‘backorder’ status while filling a favorite order, first,
OOH! refuse to honor chargebacks(!),
etc, etc, etc.

I have a MAP (minimum advertised price) policy, which I enforce by refusing to sell to anyone who publicly undercuts our MAP (other than occasional sales, promotions, etc). I don’t see it as price fixing either. Someone can buy from me and do with the product as they please. Once. But no one can force me to ship to them again. That’s what’s crazy about this Kay’s Kloset case. Are they going to force the MFG to sell to this store?? Ain’t. Besides, I can always find a reason to stop selling to someone. Just tell them we’re saturated in their market, e.g. This whole case is strange to me.

I believe the MFG should set the MSRP as a ‘tone’ for the market the product should play in. After all, without researching the target market, how can you ensure the product fits? Regardless, it’s the Retailer’s prerogative to follow suite on the MSRP or not. If they want to cut their nose off or argue with their neighbors that’s their business.

I think a MFG also needs to be firm in their pricing. I mean, if 60% of your customer base is buying at $3 per piece and is satisfied with their margins, why cave when Big_Name_Dept_Store asks for $1.80 per piece?

Please: tell me why I should incur the wasteful expense of acquiring a factor and allowing Big_Name_Dept_Store a greater margin than everyone else? Tell you what… you wanna terms, you-a pay the Factor fees You wanna discount, you-a pay 50% cash upfront!

[/soapbox OFF]