Headsets: "Minimum Advertised Price"

You didn't read down far enough....below that section is this:
Q: I own a small jewelry store and the manufacturer of TimeCo brand watches
recently dropped me as a dealer. I’m sure it’s because my competitors
complained that I sell below the suggested retail price. The explanation was
the manufacturer’s policy: its products should not be sold below the
suggested retail price, and dealers who do not comply are subject to
termination. Is it legal for the manufacturer to dictate my prices?

A: The law allows a manufacturer to have a policy that its dealers should
sell a product above a certain minimum price, and to terminate dealers that
do not honor that policy. Manufacturers may choose to adopt this kind of
policy because it encourages dealers to provide full customer service and
prevents other dealers, who may not provide full service, from taking away
customers and "free riding" on the services provided by other dealers. If
TimeCo got you to agree to maintain the suggested retail price, it would be
illegal. It also would be illegal if TimeCo agreed with your competitors to
drop you as a dealer to help maintain a price to which they had agreed.
However, a complaint from a competing retailer is not sufficient to prove
such an agreement, because the manufacturer may have decided independently
that its interests were better served by sticking with its policy.

=====

Now, what this suggests to me is that it IS legal to coerce a dealer into
compliance under threat of being dropped as a dealer. HOW this isn't
anti-competitive, God only knows.

Aloft wrote:

Now, what this suggests to me is that it IS legal to coerce a dealer into
compliance under threat of being dropped as a dealer.

Actually not. The text you quoted says "If TimeCo got you to agree to maintain the
suggested retail price, it would be illegal.", so they can't legally coerce you by
threatening to drop you as a dealer. They *can* drop you as a dealer, but they can't
threaten to do so.

George Patterson
This marriage is off to a shaky start. The groom just asked the band to
play "Your cheatin' heart", and the bride just requested "Don't come home
a'drinkin' with lovin' on your mind".

On Fri, 09 Apr 2004 11:40:01 GMT, "Aloft" wrote:

Now, what this suggests to me is that it IS legal to coerce a dealer into
compliance under threat of being dropped as a dealer. HOW this isn't
anti-competitive, God only knows.

I am as amazed as you, especially since it would only work in cases
where the manufacturer has a real advantage over his competitors, as
in name recognition or share of the market.

The difference between this and the Minimum Retail Price of the 1950s
appears to be merely that in the former case, the dealer who cut
prices had actually broken the law, and there could be penalties
assessed against him.

Happily the New Price Fixing doesn't usually work, because
manufacturers generally needs Wal Mart more than WM needs them.

all the best -- Dan Ford
email: (put Cubdriver in subject line)

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