What is resale price maintenance in economics?

Resale price maintenance involves agreements between manufacturers and downstream distributors that set the downstream price of the product, either at a minimum price or a maximum price. Antitrust law, until recently, condemned these vertical price arrangements as illegal per se.

What is an example of resale price maintenance?

Let’s start with some background: A resale price maintenance agreement is a deal between, for example, a supplier and a retailer that the retailer will not sell the supplier’s product to an end user (or anyone, for that matter) for less than a certain amount. It is a straight vertical price-fixing agreement.

Is resale price maintenance vertical price-fixing?

In today’s economy, manufacturers (and suppliers) often enter resale-price maintenance agreements with distributors and retailers. These are agreements that set the minimum price at which a reseller can sell the manufacturer’s product. This is vertical price-fixing.

What is resale price maintenance India?

Definition. Resale Price Maintenance is defined under Section 3(4)(e) of the Act as “any agreement to sell goods on condition that the prices to be charged on the resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices lower than those prices may be charged”.

Why is resale price maintenance regarded as an anti competitive activity?

Resale price maintenance (RPM) has traditionally been regarded as anti-competitive because it can mute price competition between retailers, resulting in higher prices for consumers who wish to acquire products and services.

What is maximum resale price?

Maximum Resale Price means the maximum purchase price that may be paid by any purchaser of a Unit, other than the initial purchaser who acquires the Unit from Declarant, that is determined in accordance with the provisions of Article 6 of this Covenant.

Is resale price maintenance illegal in US?

Thus, from the 1975 enactment of the Consumer Goods Pricing Act to the 2007 Leegin decision, resale price maintenance was again no longer legal in the United States.

What is the difference between horizontal and vertical price fixing?

Horizontal price-fixing, involving companies in the same supply chain level. Vertical price-fixing involves companies in different levels of the supply chain, both downstream and upstream.

Why is resale price maintenance regarded as an anti-competitive activity?

Is resale price maintenance Legal?

What is anti competitive market division?

For example, anticompetitive market division schemes occur when competitors divide up customers or types of customers, determining who can sell to which customers. For example, two competitors might decide that one company will get the market for senior citizens and the other will get the market for children.

Who sets the RRP?

the supplier
RRP is a price set by the supplier, as a recommendation to the retailer. It’s just what it sounds like: a recommendation. There are some suppliers who try and enforce a minimum retail price by threatening to withdraw distribution unless a reseller sells at a certain price – but this is against the law.