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J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4385
Experience:  Experienced and trained in the area of business law.
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Is it legal for a manufacturer to set a fixed advertising and

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Is it legal for a manufacturer to set a fixed advertising and selling price for a product purchased for resale?

J.Hazelbaker :

Hello. Thank you for using JustAnswer.

JACUSTOMER-jfulp522- :

Hello

J.Hazelbaker :

In 2007, the U.S. Supreme Court determine that the Sherman Antitrust Act of 1890 did not prohibit manufactures requiring retailers to

J.Hazelbaker :

agree to "price maintenance agreements"

J.Hazelbaker :

Thus, a manufacturer can legally require a retailer to enter into such an agreement in order to sell the manufacturer's products as long as

J.Hazelbaker :

the agreement does not result in an anti-competitive environment.

J.Hazelbaker :

This would occur, for example, when a manufacture makes widgets and requires retailers to sell them at below cost in order to drive out competition.

J.Hazelbaker :

Please let me know what follow-up questions you have. If my above responses have been helpful, please click Accept so that I get credit for the time/effort. You may always restart the thread and ask follow-up questions at any time by clicking the “Reply” button at the bottom of the question/answer thread. You can access this thread later in your profile under the “My Questions” tab.

JACUSTOMER-jfulp522- :

ok. This manuf has no formal agreement for its 8-10 distributors

JACUSTOMER-jfulp522- :

I priced the product 5% below others, willing to lose the profit to make the volume, and was told the following...

JACUSTOMER-jfulp522- :

I had thought this had gotten taken care of last week. It needs to be fixed if you are going to continue to buy our product. All product must be sold at our MSRP or we will suspend your account for 90 days. There also needs to be no mention of special pricing on your web page.


 


Please send me back an e-mail agreeing to this pricing or we will discontinue you as a dealer effective 11/01/10.

J.Hazelbaker :

It could not enforce such a price on the retailers, though it could try to get them to agree to it.

J.Hazelbaker :

Is a similar product available from other manufacturers?

JACUSTOMER-jfulp522- :

yes. it is printer ink cartridges. many other "competitive" products similar to this one.

J.Hazelbaker :

It appears that the manufacturer would fall within the new change in the law. For 100 years prior to 2007, that would not have been allowed. Now, it is.

JACUSTOMER-jfulp522- :

ok. Thank you.

J.Hazelbaker :

You are welcome. Please let me know, if additional questions arise.

JACUSTOMER-jfulp522- :

Will do.

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