Author: Jarod Bona
That is, people want to know when it is okay for suppliers or manufacturers to dictate or participate in price-setting by downstream retailers or distributors.
I think that resale-price maintenance creates so many questions for two reasons: First, it is something that a large number of companies must consider, whether they are customers, suppliers, or retailers. Second, the law is confusing, muddled, and sometimes contradictory (especially between and among state and federal antitrust laws).
If you want background on resale-price maintenance, you might also review:
- An article on the US Supreme Court’s decision in Leegin and federal antitrust law.
- An article about resale-price maintenance under state antitrust law.
- An article about Minimum Advertised Pricing (MAP) Policies.
- Questions to ask before worrying about the antitrust risks of new restraints on your distributors.
- Resale-Price Maintenance and horizontal restraints.
- An article about the difference between a Colgate Policy and Resale Price Maintenance Agreements.
Here, we will discuss alternatives to resale-price maintenance agreements that may achieve similar objectives for manufacturers or suppliers.
The first and most common alternative utilizes what is called the Colgate doctrine.
The Colgate doctrine arises out of a 1919 Supreme Court decision that held that the Sherman Act does not prevent a manufacturer from announcing in advance the prices at which its goods may be resold and then refusing to deal with distributors and retailers that do not respect those prices.
Businesses (with some exceptions) have no general antitrust-law obligation to do business with any particular company and can thus unilaterally terminate distributors without antitrust consequences. Before you rely on this, however, you should definitely consult an antitrust attorney, as the antitrust laws create several important exceptions, including refusal to deal, refusal to supply, and overall monopolization limitations.
Both federal and state antitrust law focuses on the agreement aspect of resale-price maintenance agreements. So if a company unilaterally announces minimum prices at which resellers must sell its products or face termination, the company is not, strictly speaking, entering an agreement.