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Tiffany Montgomery
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Price controls to stop discounting return

By Tiffany Montgomery
August 18, 2008 7:52 AM

The Wall Street Journal has an interesting front-page story today about a U.S. Supreme Court ruling that allows manufacturers to set minimum price standards for their products to force retailers to stop discounting.


Previously, manufacturers that punished retailers that discounted by cutting off shipments risked violating anti-trust laws.


The recent Supreme Court ruling has changed that, according to the Journal. While it is still illegal for a group of manufacturers or retailers to band together and fix prices, the court ruled manufacturers have a right to enforce minimum prices on their own products.


The story quotes several retailers who have been cut off from suppliers after failing to honor minimum price agreements.


Manufacturers who set and require minimum price agreements say discounts tarnish a brand's image.


State attorney generals are not happy with the ruling, however. Attorney generals from 35 states, including California, wrote to Congress in May asking for a law to make price-fixing policies illegal. The attorney generals worry that minimum pricing policies will feed inflation.


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