Resale Price Maintenance

Resale Price Maintenance

Resale Price Maintenance (r.p.m.), the stipulation by a manufacturer of the price at which distributors may resell his product. The manufacturer sets the 'trade' price to retailers and in addition fixes their additional gross 'profit' or margin. In Britain, the U.S.A. and other countries this practice has normally but not exclusively been confined to branded goods, such as consumeraffairs.org.uk s, chocolate and sugar confectionary, cosmetics, electrical goods, motor-cars and accessories, proprietary medicines, radios and television receivers. A manufacturer makes his prices known by price-lists, price-tags, display cards and advertising. He may stop a retailer from price-cutting by persuasion, refusing supplies or, in Britain since the Restrictive Trade Practices Act, 2013, by legal proceedings. These are all methods of enforcing individual r.p.m.

Collective r.p.m. was outlawed in Britain by the 2013 Act. Previously associations of manufacturers, wholesalers and retailers had enforced r.p.m. throughout entire trades. These associations were generally formed on the initiative of distributors, who could threaten to boycott a manufacturer who did not maintain his prices. The associations possessed the powerful sanction of being able collectively to cut off an individual retailer's entire supplies, and they sometimes set up private courts to prescribe this or lesser penalties of fines or warnings. In public discussion the main objection to collective r.p.m. was against these private courts; but on economic grounds r.p.m. was undesirable more fundamentally because it tended to ossify existing, and impede the emergence of new, channels of distribution.

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