Agreements Among Companies To Keep Prices At A Certain Level
For price-fixing reasons, many countries, including Australia and the European Union, have banned efforts to fix or influence resale prices. In the U.S. and Canada, however, companies can legally implement pricing programs in two ways: by agreement (in which a brand and a reseller agree on minimum selling or share prices) and by a unilateral policy (in which the mark independently determines prices). From a business perspective, this is a much more flexible approach that allows brands to adopt and modify guidelines at any time without having to get the approval of resellers. In addition, unilateral measures, if properly implemented, are unlikely to miss U.S. rules on agreements and abuse of dominance at the federal and regional levels. Under Canadian law, the distinction between unilateral agreements and policies does not matter; However, the flexibility of unilateral policies also favours their use. Since unilateral guidelines are the best choice for price programs in both countries, we focus on them in this article. Price agreements require a conspiracy between sellers and buyers. The aim is to coordinate pricing in the mutual interest of distributors.
Manufacturers and retailers may, for example, conspire to sell at a common retail price; Set a common minimum selling price for which sellers agree not to lower the agreed minimum price; Buy the product from a supplier at a maximum price Keep a price book or list price Co-op price advertising Harmonize credit terms for buyers Use uniform business premiums Limit discounts End a free service or set the price of a component of a global service consistently comply with previously announced prices and terms of sale; Set uniform costs and increases impose mandatory mark-ups; Targetedly reduce production or turnover in order to impose higher prices; Share or group markets, territories or customers in a targeted way. As noted above, companies should take unilateral action. It is easy to accidentally create an agreement that seems to set prices. Neglect on this point can put a brand in trouble. For example, if, in its contract with authorized resellers, a trademark states without restriction that they must comply with “all” of the brand`s guidelines, this lump sum statement would by definition involve the brand`s pricing policy and would therefore constitute a price agreement. In order to avoid pricing claims, brands should explicitly exclude the pricing policy of those to which their resellers must comply. Vertical price agreements are held in the production and distribution supply chain between producers, wholesalers and retailers.