Fair Trade Legislation and the Retailer

Abstract

T HE TERM trade embraces a variety of restrictions on pricing freedom. With reference to the relations between commercial buyers and sellers, that is, manufacturers, wholesalers, and retailers, there is the well-known Robinson-Patman Act, aiming to prevent so-called price discrimination accomplished either directly, or indirectly by collateral transactions between buyers and sellers regarded in the law as tantamount to pricing subterfuges. These restrictions are aimed principally at buying practices. Other types of fair trade legislation are directed at the selling end and especially at retail pricing practices, that is, at pricing relations between retailers and consumers. Here the principal form of restriction consists of the state price maintenance acts, commonly referred to as fair trade acts, and the supporting Federal measure, the Miller-Tydings Act, the effect of which is to give manufacturers of trademarked goods in some 42 states the privilege of stipulating resale prices and, by means of a contract made with one distributor, enforcing those resale prices on all the distributors handling the product. Resale price maintenance of course applies only to trade-marked goods and is permissive rather than mandatory. Another type of legislative restriction, designed primarily to curb freedom of action in setting selling prices, is represented by the various unfair trade practices acts now on the statute books of some 15 states. These laws' which apply not merely to branded merchandise but to all merchandise, and which, of course, are mandatory rather than discretionary, have as their general purport the prohibition of sales below cost, cost being defined sometimes as invoice cost, sometimes as invoice cost plus some stated percentage, such as 6% or 10%, and sometimes, as in the case of California, invoice cost plus the entire cost of doing business. Such enactments are in general to be distinguished from the statutes, mostly of long standing, which follow the Clayton Act in forbidding locality discrimination, though sometimes the two are combined.