The Abolition of Resale Price Maintenance: Some Notes on Canadian Experience

Abstract

Canada was the first country to ban resale price maintenance unconditionally (December 28th, 1951)1 and then follow the ban with an exhaustive inquiry into loss-leader selling. It is, therefore, understandable that both advocates and opponents of resale price maintenance in other countries should attach a good deal of weight to what they consider to be the lessons of Canadian experience. Unfortunately, some of the lessons appear to differ greatly-even categoricallyfrom one observer to the next. It is, of course, notoriously difficult to trace out all the major consequences of a basic policy change such as that involved in the banning of resale price maintenance. Dynamic changes occurring in both production and distribution give rise to a mingling of influences, and clear and precise chains of causation are not always easy to follow through. Nevertheless, there are some developments, both positive and negative, that can be established with such a high degree of confidence that disagreement among informed observers should not arise and is difficult to justify. It is the purpose of this article to examine three aspects of Canadian experience which have attracted a good deal of attention in the United Kingdom, but which have been misunderstood. It is not the intention to undertake an exhaustive analysis of the effects on pricing and distribution that flowed from the prohibition of resale price maintenance in Canada; that would require much more space than is available, although some judgments of a broad nature will emerge, more or less explicitly, from the discussion.