The Sherman Antitrust Law prevents a manufacturer from enforcing a set retail price (MSRP) with its vendors. As a practical matter, the practice has long existed. If a retailer discounts products beyond a level that a manufacturer finds acceptable, the manufacturer ceases to sell to the non compliant retailer. While technically illegal, relief was only available to stores willing to bear the expense of a lawsuit. Last March, such a suit was brought before the U.S. supreme Court in the case of Leegin Creative Leather Products vs PSKS Inc aka Kay’s Kloset, a suburban Dallas boutique. From WWD (sub):
In an attempt to compete against larger brands, Leegin a decade ago began requiring retailers to adhere to a minimum price. Kay’s balked at the policy and, in 2001, began selling the firm’s leather goods at a 20 percent discount. The brand pulled its product from the store and a lawsuit ensued that was at first decided for Kay’s, which won damages of $3.6 million.
It would appear that changes are afoot; the Supreme Court appears willing to reexamine the tenets of the Sherman Antitrust Act which would -as a practical matter- enable manufacturers to enforce price points in an effort to protect the exclusivity of their brands. While it is understandable that retailers want the flexibility to establish pricing, it is also likely that enforced MSRP policies could also benefit them. If large discount operations (such as Wal-Mart) had to sell at certain pricing levels, this would level the playing field for smaller independently owned stores who offer better service.
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The Supreme Court determined manufacturers have the right to enforce price points. If a customer discounts the price of new merchandise, you have the right to refuse future sales. That said, as a matter of fairness and pragmatism, you can’t expect a retailer to not discount product that isn’t moving.