March 1998


Should manufacturers be allowed to cap prices on their branded products? The Supreme Court says yes

The Supreme Court ruled recently that manufacturers are allowed to cap the prices retailers charge for their products. The ruling (State Oil vs. Khan) means that manufacturers can now set a maximum price above which retailers can't go, as long as they can prove they aren't inhibiting competition. While consumer advocates applauded the ruling as a victory for consumers looking for fair and consistent prices, retailers worried they could be squeezed if manufacturers raise wholesale prices but insist on no increase in retail price.

Manufacturers responding to such worries said they're unfounded, since it wouldn't serve their interests to strangle retailers and cause them to go out of business. The decision is part of a general trend toward easing antitrust laws regulating the interactions between manufacturers and retailers.

Copyright © 1998 by Bond Communications.


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