My analysis is nearly the opposite of Brad's.  For price ceilings on retail
prices, the rule of reason now applies and the challenger has the burden of
proving a market power problem.  I suspect in most retail markets as well as
manufacturer markets, there is no market power problem. If there were market
power with the retailer (e.g., superstores), the manufacturer imposed
ceiling should address the problem by limiting the retailer's ability to
charge a monopoly price.  It would therefore be judged to be reasonable.
Price floors or minimum vertical price fixing is still per se illegal, so I
don't recommend it.  However, a similar result can be achieved by announcing
a "no discounters" policy and only selling to full price retailers.  Should
the manufacturer accidentally sell to a discounter and discover the error,
it should terminate the account immediately without negotiation or
discussion.  Otherwise it risks forming a per se illegal price fixing
agreement rather than a unilateral no discounter policy.
Note this advise only applies in the U.S.  In Europe, the practice would
still likely be readily condemned.
Ross Petty
-----Original Message-----
From: Brad Sleeper <[log in to unmask]>
To: [log in to unmask] <[log in to unmask]>
Date: Monday, March 27, 2000 10:57 AM
Subject: manufacturer price-setting issue


>Colleagues,
>
>I would appreciate some direction on the legal dynamics of manufacturers
>mandating price ceilings or floors to retailer-buyers.  A marketing teacher
>here has had the issue arise in his class.    Would I be accurate to advise
>him that while this practice is no longer considered per se vertical
>price-fixing (or resale price maintenance) based on recent Supreme Court
>decisions, one would for practical purposes have trouble conceiving of
>situations where the practice is legal?  In other words, price agreements
>between manufacturers and retailers are virtually always anticompetitive
>for consumers and/or the retailers themselves?
>
>
>Brad Sleeper
>
>---------------------------------------------------------------------------
--
>Brad Sleeper                            Professor of Business Law
>BB 307                                  email:  [log in to unmask]
>St. Cloud State University              telephone:  (320) 255-4227
>St. Cloud, MN  56301-4498               fax: (320) 255-4061
>
>To laugh often and much. To win the respect of intelligent people, and the
>affection of children.
>To earn the appreciation of honest critics and endure the betrayal of false
>friends.  To appreciate beauty. To find the best in others. To leave the
>world a bit better, whether by a healthy child, a garden patch, or a
>redeemed social condition. To know even one life has breathed easier
>because you have lived. This is to have succeeded.      - Ralph Waldo
Emerson
>
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