Minimum Sales Prices?

Discuss this among yourselves.

Saw this in a brief of today's Supreme Court actions...

"Court abandoned a 96-year-old ban on manufacturers and retailers setting price floors for products.

In a 5-4 decision, the court said that agreements on minimum prices are legal if they promote competition.

The ruling means that accusations of minimum pricing pacts will be evaluated case by case.

The Supreme Court declared in 1911 that minimum pricing agreements violate federal antitrust law."

Does this mean that it's "legal" to say.. "May not be sold for less than $XYZ" ?

Pete

Apple has always done that. Every authorized retailer as well as apple.com have the exact same price on new Apple computers. The price that is set by Apple.

If it was illegal to set a minimum price, it must not have been enforced.

I wonder if the law applies to agreements on 'general products' such as mp3 players or TV's or whatever rather than a specific brand and model. If Best Buy and Circuit City and others agreed to sell ALL mp3 players for no less than $150 I can see where that could be a price fixing problem. A company such as Apple telling them that the 80 gig iPod Video must be sold at $300 would be a completely different scenario I would think. Although most products have a "suggested retail price" which retailers can undercut at their own discretion.

That's an interesting question Pete. Hopefully someone can shed a little more light on this one, you've really got me thinking!

Todd,

One of the reasons I posed the question was because folks are often talking about the legality of saying.. "You may resell this book at $XYZ." Many folks have felt this wasn't legal.

BUT, if the SC ruling sticks, wouldn't that allow ebook sellers to set a minimum price that their product could be sold at?

Just wondering myself.

Pete

Pete,

Thanks for asking.

My take - apart from the idea of it all being on a case-by- case basis - the ruling does Not apply to the products from one supplier, but when there are a Competing Range of products.

E.g. You, as sole supplier, can set whatever Minimum Price you want your product to be sold at. And a Condition of doing business with you is the sellers Agreement to that.

Illegal. Commodity items like Gas. Now despite so-called investigations I doubt there is a person who doesn't think the price of gas is not fixed by those different companies who sell it. It's THIS kind of Minimum that I think the law was made to stop.

Like ALL doctors agreeing to a Minimum fee. All gas companies agreeing to a Minimum they sell gas for. All rival computer companies agreeing to a minimum they sell new computers for, and so on.

If HP, ACER, IBM, DELL et al, all agreed to a minimum, then THAT Would have been illegal under the old law. But what Minimum HP would have permitted of its own brand of computers would not have been illegal.

Now, back when the law was made - I assume we're talking American Steel days, - this was a problem, it seems...

Steel Co A would normally compete with Steel Co B. But seeing as they were then both Acquired by Carnegie Steel Trust America, the Trust would have a Monopoly and would thus set minimums the steel would be sold at - removing the nature of Competition.

What this all boils down to is simply this... if YOU have a single proprietary product you allow others to sell, YOU can set whatever Minimum Price and Sales Conditions you like. If the sellers don't like it they don't have to sell it.

If you had a product which was being sold by others - their own version - the agreeing to a minimum price to charge people would have been deemed wrong, under the law just over turned.

Hope that clears it up.

Michael Ross