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Supreme Court Okays Price Fixing

High Court Says Manufacturers Can Set Retail Prices

By Mark Huffman
ConsumerAffairs.com

June 28, 2007
The suggested retail price is no longer a suggestion. The U.S. Supreme Court has ruled that manufacturers are within their rights to set prices for consumers, and to forbid discounting if they choose.

A divided court voted 5-4 to overturn a 96-year-old law against retail price fixing.

This is a court decision that consumers could quickly feel in the pocketbook. Under the old law, price competition could be fierce, resulting in loss leaders and door buster specials that stores used to draw customers. In the process, smart shoppers could sometimes find money-saving bargains.

Now, if Sony decides its newest HDTV wide screen model will sell for $2,200, there's no point in running between Best Buy, Wal-Mart and the electronics boutique in the mall. You'll pay the same price at all three places.

The old law stemmed from a 1911 anti-trust case, in which a maker of patented medicines successfully argued that price-fixing arrangements between manufacturers and retailer were illegal.

Writing for the majority, Justice Anthony Kennedy concluded the rule was out of date and out of step in the global economy.

Resale price maintenance can increase inter-brand competition by encouraging retailer services, Kennedy wrote.

The justices rejected arguments that competition would suffer as a result of overturning the law. Manufacturers will still compete with one another on price, the court said.

Thursday's ruling stemmed from a case involving a California handbag maker. The owner had insisted that retailers sell his products at a set price and not offer discounts.

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