Retail Trade Assoctns Ils 163 by H LEVY

Author:H LEVY [LEVY, H]
Language: eng
Format: epub
Tags: Social Science, Sociology, General
ISBN: 9780415176903
Google: fRp3PgAACAAJ
Publisher: Routledge
Published: 1998-01-29T04:49:04+00:00

PART IV

THE ENFORCEMENT OF PRICE MAINTENANCE

CHAPTER 13

PROTECTED LISTS AND EXCLUSIVE AGREEMENTS

It appears to us that the maintenance of freedom of contract and the right to combine is as much a matter of public interest in the sphere of commerce as it is in that of employment. It is inevitable that this freedom should lead to hardship in individual cases.

Report on Restraint of Trade, 1931.

WE have hitherto discussed the aims and principles upon which price policy depends, wherever the former conditions of unregulated competition are replaced by price-fixing agreed between members of trade associations. Price-maintenance may, of course, be effected between single retailers and single manufacturers; it may be carried out by agreement between a cartel and single retailers ; but the main and most general case is the agreement either binding members of a trade association and of interlocking trade associations, or creating bilateral arrangements between retailers' and suppliers' associations. By what measures is this price-maintenance policy generally made effective ? Apart from indirect measures, aimed at influencing prices by restricting the number of competitors, there are two main types of measure— agreements designed to bind members of the association to the observance of fixed prices and margins, and action against the infringement of such price-maintenance by price-cutters.

The first category involves trade practices which have become characteristic of trade associations. They are explained by the need to “enforce” the observance of agreements. Such practices may well exist in principle before the formation of any trade association becomes practicable. As the Report on Restraint of Trade explained, it is quite normal for the single manufacturer to try to enforce the maintenance of his prescribed prices “first by persuasion, second by threat of withholding supplies, and third by actual withholding of supplies”.1 The Report also stressed the fact that the “difficulties encountered by individual manufacturers seeking to maintain resale prices” have greatly stimulated the formation of trade associations. It is quite evident that individual manufacturers can use the “withholding” threat only where they feel themselves strong enough to do so. Where retailers' insistence is not keen enough to make withholding of supplies an effective sanction, the association principle as a collective expedient becomes increasingly urgent to manufacturers. If no association exists, the individual retailer may be expected to rely upon other sources of merchandise if he wishes to avoid subjugation to the will of a single manufacturer, however important he may be. Such evasion becomes increasingly difficult if manufacturers associate for the same purpose of upholding their sale rules, or if the individual retailer becomes a member of an association which lays down rules to be observed. The single retailer may then feel that his independence has been restricted, but he may on the other hand have gained the advantage of some protection against undercutting competitors. He may feel that he has not gained any preference for himself, but that he has become protected against any preference to be granted to others.1 Wherever trade associations have been formed, however, it has become

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