Fair Trade Law Q&A - Resale Price Maintenance

Where an upstream manufacturer provides suggested resale prices to wholesalers and retailers for products it sells, and a wholesaler or retailer sells such products at prices significantly below the suggested resale prices, thereby affecting the market pricing of the manufacturer� products, would the manufacturer violate the Fair Trade Act if it responds by suspending or terminating supply?

Article 19, Paragraph 1 of the Fair Trade Act provides that an enterprise may not restrict its trading counterpart's determination of the resale price of goods supplied for resale to a third party or for further resale by such third party. Accordingly, an enterprise shall not impose punitive measures, such as suspending or terminating supply, against downstream wholesalers or retailers on the ground that they failed to comply with suggested resale prices set forth in the agreement. Otherwise, such conduct may constitute unlawful resale price maintenance in violation of Article 19 of the Fair Trade Act.