Obviously, the intent of the amendment was to protect the smaller independent dealer, not in a position to make demands upon the manufacturer. Although it undoubtedly has done some good, it is doubtful whether the Robinson-Patman law or any other law can prevent the natural advantage that comes from size and integrated operations. The economies of large-scale operation can be, and often are, passed on to the consumer, thus attracting customers because of lower prices. No violation of either letter or spirit of the law may be involved.
Another type of legislative approach was the attempt to prevent below-cost selling in order to protect the small middleman against the power of size. There were two forms of laws against below-cost selling. One was the so-called "Fair Trade Law," under which the seller is permitted to set a price below which it is unlawful to resell the merchandise in question. Thus, while the original antitrust laws did not allow price conspiracy, whereby buyers and sellers agree on price, the Resale Price Maintenance laws specifically exempted the seller from the operations of these restrictions in pricing his own branded merchandise.
The aim of such permissive legislation was to pro¬tect the small dealer from price cutting by the larger dealer. It had nothing to do with the ability of the large buyer to buy for less (this was supposedly governed by the Robinson-Patman law). But the law stated that no buyer, large or small, could offer for sale branded goods at prices below those set by the owner of the brand. The seller who fixed such fair trade prices did so in order to protect his smaller customers.
The original Federal Fair Trade Act was the Miller- Tydings Act of 1937. There was immediate demand for "little fair trade laws" in the individual states, since the federal law could only operate in interstate business. Many of the states did pass such laws. Some industries, especially drugs and electrical appliances, embraced resale price maintenance as "the salvation of the small dealer."
In 1950, the law was challenged because, in effect, it forced merchants into price-maintenance contracts to which they had not been parties. The challenge was successful and resulted in pressure for an amendment to the original law, known as the McGuire Act, which specifically declared that, even if the merchant were a "non-signer," the law would apply. This became known as "the non-signer clause." But the McGuire Act, again, was operative only in interstate commerce. Many of the individual states refused to or failed to pass "baby McGuire Acts." The net result was that by 1960, much of the power of the resale price maintenance laws had been dissipated.
Enforcement in the case of fair trade laws was up to the manufacturer or seller. Some manufacturers spent large sums of money attempting to enforce the laws. Probably the last straw came with the discount houses, which offered electrical appliances and many other items at substantial discounts, in disregard of the fair trade laws.
The laws are still on the books and in some fields - notably the drug industry-are still observed. In many states, however, these laws have been declared uncon¬stitutional. In other states, observance has simply broken down for lack of enforcement on the part of manufacturers. The outlook for this type of legislation is doubtful.
Attempts have been made, especially in the food industry, to prevent below-cost selling through what have become known as "Unfair Sales Acts." An attempt was made to establish a legal price, this being the manufacturer's net invoice price, plus 2 per cent for wholesale and 6 per cent for retail operations. Thus, the lowest legal price at which merchandise could be sold (except for specific situations) would be manufacturer's net in¬voice plus the prescribed wholesale and retail markup, a total of 8 per cent for integrated (chain store) operations.
Enforcement of these acts, which at one time were on the statute books of some twenty-five or more states, proved most difficult. Although most of the acts have not been repealed, they are not enforced.
No comments:
Post a Comment