Thursday, November 1, 2007

Antitrust priorities of the next adminstration?

In previous posts (Will Resale Price Maintenance Return?), we have argued that contracts between manufacturers and retailers, like the contracts between PING and its golf stores, serve to align the incentives of retailers with the goals of the manufacturer.

With Clinton futures trading at $0.71, we get a glimpse of a what a Clinton antitrust policy might look like. Senators Kohl, Biden, and Clinton introduced a bill that would prohibit manufacturers and retailers from contracting on price:
The Discount Pricing Consumer Protection Act (s 2261) will ... simply add one sentence to Section 1 of the Sherman Act--the basic provision addressing combinations in restraint of trade--a statement that any agreement with a retailer, wholesaler or distributor setting a price below which a product or service cannot be sold violates the law. No balancing or protracted legal proceedings will be necessary. Should a manufacturer enter into such an agreement it will unquestionably violate antitrust law.

1 comment:

  1. This is why I will be voting for the Democrats this election. I laugh at the notion that allowing manufacturers to fix prices is pro-competitive. First, the argument that the colgate doctrine is an inefficient manner for manufacturers to operate (ping brief)does not outweigh the ineffiency that is created by forcing retailers to sign price restraint contracts. Most small/medium retailers are not sophisticated enough to deal with antitrust contracts and will be forced to spend large amounts of cash and time with antitrust attorneys. Can you imagine retailers having to sign multiple restraint contracts without some kind of legal help. These restraint contracts can still be challenged in court. What a mess--I look forward to manufacturers explaining to a Jury the pro-competitive aspects of price fixing. Maybe a Democratic President (Senator Clinton co-sponsered the Discount Pricing Consumer Protection Act) can return nearly 100 years of legally protected price competition. This is an issue for Congress!!!