The Rapid Evolution of Resale Price Maintenance Regulation in the United States and United Kingdom

Vol. 43 No. 1

By

Brenner Allen, an attorney in the U.S. firm of Allen, Pinnix & Nichols, is licensed in the State of Washington and Washington, D.C. Ms. Allen advises clients in the areas of antitrust, administrative, and international law. E. Susan Singleton is a U.K. solicitor and founder of the London firm Singletons. She advises a wide range of clients on competition law. She is vice chairman of the U.K. Competition Law Association and author of Comparative Law of Monopolies.

Resale price maintenance regulations in the United States and the United Kingdom both appear to have a nearly identical goal: preventing and punishing agreements that restrain competition. But nuances abound within the laws and practices of both countries regarding price-setting policies and agreements. And since both countries’ antitrust regulations have extraterritorial reach, regulation of resale price maintenance stretches beyond U.S. and U.K. borders. Further, as the recent U.S. and EU challenges to the Apple Corporation’s e-book price-fixing schemes have demonstrated, companies may be obliged to simultaneously follow the regulations of both jurisdictions. The following is an introduction to this continually evolving area of the law in the United States and U.K.

Section 1 of the Federal Sherman Antitrust Act bans agreements to restrain trade: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal.” 15 U.S.C. § 1. Federal law does allow manufacturers to unilaterally decide on a minimum resale price for their products, announce that price to retailers, and then refuse to deal with any retailer that fails to comply with the pricing. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752 (1984). But, to varying degrees, federal and state antitrust laws currently prohibit price-setting agreements. Thus, the crucial legal questions are what constitutes a universally permitted policy and what constitutes a possibly illegal agreement. U.S. federal and state courts vary in their answers to this question, and the area of the law is rapidly evolving.

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