Resale Price Maintenance

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T- I LEGAL SYSTEM of vertical private price controls, by which a manufacturer seeks to control the price of his product after he has sold it, is embodied in the so-called Fair-Trade Laws which were enacted in the nineteen-thirties by forty-five states. As everyone knows, these statutes apply to commodities sold under a trade-mark, trade-name or brand which are in fair and open competition with commodities of the same general class; the statutes authorize contracts for sale or resale of such commodities, pursuant to which the purchaser undertakes that he will not resell except at the price stipulated by the vendor and that the purchaser, in turn, will require any dealer to whom he may resell to agree that such dealer will not resell except at the price stipulated by the original vendor. Manufacturers of the commodities described are thus enabled to determine not only their own selling prices, but the wholesale and retail prices as well. All of the statutes contain the famous nonsigner clause which creates a cause of action for unfair competition against anyone who willfully and knowingly sells the commodity below the prices established by such a contract, whether or rAot a party thereto. Thus, one contract would be sufficient to bind all distributors of the commodity, provided the terms of that one contract have been made known to them. Finally, all the statutes explicity state that they do not apply to horizontal agreements between manufacturers, or between wholesalers, or between retailers.'