Fair Trade Law Q&A - Resale Price Maintenance

What anticompetitive effects can resale price maintenance have on market competition?

When an upstream supplier engages in resale price maintenance ("RPM"), it deprives downstream distributors of their independent pricing discretion with respect to the goods or services they sell. As a result, RPM suppresses price competition at the distribution level and may adversely affect competition in the marketplace, particularly in markets involving highly differentiated products or products sold in monopolistic or oligopolistic markets. For this reason, most jurisdictions generally take a prohibitive approach toward RPM practices. Only limited exceptions are exempted, such as for publications or certain daily necessities sold in intensely competitive markets. In recent years, however, legislative trends in major jurisdictions indicate that the scope of permissible exceptions to RPM prohibitions has gradually narrowed.