Resale price maintenance laws

What is Resale Price Maintenance?

Resale Price Maintenance (RPM) is a pricing practice whereby a manufacturer or supplier and a reseller agree on the minimum price of a product that the reseller may charge. It is illegal in many countries, including the United States, as it is believed to restrain competition and increase prices to the detriment of consumers.

Why is Resale Price Maintenance Illegal?

Resale Price Maintenance is illegal because it reduces competition between resellers by limiting the resellers’ ability to set their own prices, thus preventing them from competing on price. This can lead to higher prices, reducing the ability of consumers to access products at lower prices. RPM can also limit the ability of resellers to offer discounts or promotions, resulting in fewer choices for consumers.

Examples of Resale Price Maintenance

There are a number of examples of Resale Price Maintenance. One example is a manufacturer forbidding its resellers from selling its products below a certain price. Another example is a manufacturer setting a minimum advertised price, which is the lowest price that a reseller may advertise a product for. This can prevent resellers from offering discounts or promotions in their advertising.

Conclusion

Resale Price Maintenance is illegal in many countries because it reduces competition between resellers and can lead to higher prices for consumers. Examples of Resale Price Maintenance include a manufacturer forbidding its resellers from selling its products below a certain price or setting a minimum advertised price.

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