Discounted Brand Name Items May Be A Thing Of The Past


brand name shoesThe Supreme Court made a huge decision today which will likely hit everyone in the pocket book and it will likely result in some major changes in the retail market in the near future.

The Supreme Court ruled 5-4 that manufacturers are allowed to set a fixed price for their product and forbid retailers from discounting them. This overturns the previous anti-trust law that stood for nearly 100 years which prohibited retail price fixing. Manufacturers can now enforce “resale price maintenance agreements” which forbid retailer discounting for both online and traditional retailers.

That means that the brand manufacturers can now set a firm price for the goods they deliver to retailers and retailers must abide by selling them at these prices. The results are that you may see the most expensive Christmas retail season as stores may be forbidden by manufacturers to discount their brand items.

This could also mean the end of negotiating prices for new cars at the dealership as this ruling opens up the possibility that car manufacturers can set the retail price that their cars are to be sold at. Discount retail chains may find that they are not able to discount and newly released books may become a lot more expensive since they will not be discounted. Basically the law will make that “suggested retail price” the actual retail price.

While the Supreme Court ruled that the old law was outdated and that competition between competing manufacturers would keep prices in check, the Consumers Union believes that consumers will be seeing higher prices as a result of the decision.


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June 28th, 2007
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Comment Number:
1
Written by:
Ann
Posted on:
June 28, 2007 at 9:08 pm

On what level is this a good idea?

Comment Number:
2
Written by:
kenny
Posted on:
June 29, 2007 at 1:10 am

This is a bad idea all the way around. Consumers really lost it with this decision.

Comment Number:
3
Written by:
Ben
Posted on:
June 29, 2007 at 7:17 am

This post really tells just one side of the story.

First of all, manufacturers are not required to set a firm or minimum retail price for their products. This decision just gives them the option to do so. Saying that “the suggested retail price is now the actual price” is not accurate. This is only the case if the manufacturer decides to do so.

When an item is sold at the store, the manufacturer does not make more money if it is sold at a higher price. The store already bought the item from the manufacturer at wholesale, so the manufacturer does not benefit from higher retail prices. In fact, most manufacturers do better when the retail price is discounted, because that means that more items are sold. For this reason, I believe that for most items, this decision won’t have an impact.

So why would any manufacturer decide to set a minimum price? One reason would be to protect small businesses that sell their product. Some manufacturers will decide that they want to set a minimum price so that Wal-mart cannot sell products below the cost of smaller stores. Like I said, I don’t think most manufacturers will do this, because it will hurt overall sales of their product. But if some manufacturers decide they want to do this with their own products, I don’t have a problem with it. If the price is too high, I won’t buy it.

By the way, this decision also allows manufacturers to set a maximum price if they choose, preventing retail stores from price gouging popular items.

Comment Number:
4
Written by:
merrychristman
Posted on:
June 30, 2007 at 6:11 am

I wonder what will happen to all the unsold items that would normally be discounted by retailers who want to clear out their inventory. Will dumpster divers start getting better choices for merchandise?

Also, how will this ruling affect online auctions? Will those sellers be allowed to discount?



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