A TIP OF THE CAP
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.