Appraisal of “Fair Trade” and “Unfair Practices” Acts

Abstract

LAWS which forbid the sale of goods at retail for less than cost (frequently called unfair practice acts) and laws which permit manufacturers and distributors to establish resale prices by contract (generally called fair trade laws) have been outstanding in recent state legislation designed to maintain prices. Though both types of statute seek to establish some form of minimum price for distributors, they differ greatly in origin, administrative machinery, and significance. Minimum price laws were developed primarily by organized retail grocers; resale price maintenance laws by organized retail druggists. Minimum pr ce laws are enforced by the state; resale price contracts by private suits for injunction or for damages. Minimum price aws establish uniform markups, whereas the markup under resale price contracts depends upon the discretion of the contracting parties and may differ gr atly from one commodity to another. Minimum price laws, being avowedly based upon cost, are limited in their capacity to raise prices, whereas the contracts p rmitted by resale price laws may be used to set prices as high as the contr cting parties choose. Such differences make it necessary to discuss the two types of laws separately.