Originally posted by Al_Kahollick If a company threatens to cease ties with you unless you sell this product at a minimum price of _____, that's illegal, you notify the FTC or AG's office. Retailers are free to name their own price, however, it'd be foolish to sell an item at the original "lower" price if your replacement costs are going to cut into your profit margin for said item.
Correct, and incorrect at the same time. I was confused by this at first too, until I dug a little deeper(Past the wikipedia link below), only to find that big businesses always trump the small guys in the US.(And several other nations) The policies in other areas are more towards market freedom, but as a result, prices go higher.(The ultimate way to prevent cheap sales) I know this is the case in Canada as of 2009, it's illegal to implement such a pricing policy(Thus why ProDigital2000 is able to trump US competition on prices for the most part, they move so many units, that they're able to purchase at a lower rate than most[Not as low as US sellers, but again, they're not bound to sell at a minimum price], and as such, can sell them for cheap.); As it's basically price fixing. EU nations have similar policies.
It's legal to terminate sales to a company for any reason, including if they violate your suggested retail price. Illegal to say that "Can't sell it below ____", perfectly legal to say "We won't sell anyone these anymore if we find you sold them below _____". Shady Capitalism at it's best.
"While vertical price agreements remained taboo, in 1919 the Supreme Court in United States v. Colgate & Co., recognized the manufacturer's right to deal with whomever it wanted, and as importantly, its right to refuse to deal. This distinction allowed manufacturers to announce terms under which they would deal with their resellers and then refuse to deal with those who failed to comply. Colgate's progeny in 1984 further built upon this right in Monsanto Co. v. Spray-Rite Service Corp., stating that, "under Colgate, the manufacturer can announce its re-sale prices in advance and refuse to deal with those who fail to comply, and a distributor is free to acquiesce to the manufacturer's demand in order to avoid termination"."
It's all available for viewing here:
Unilateral policy - Wikipedia, the free encyclopedia
TLDR: It's like someone saying "I can sell you Oranges for $12/dozen." Then they shout in no general direction "All oranges I sell must be resold at $15/Dozen or more!". If they find you later selling them for $13/Doz, they can simply refuse to sell you more.(Albeit those are some rather expensive oranges)