In 1915, the Federal courts refused to issue an injunction re straining the manufacturer of a breakfast food from carrying out the policy of refusing to sell to those dealers unwilling to maintain resale prices. In 1922, the U.S. Supreme Court held that a corpo ration may have and announce a policy of refusing to sell to cut rate dealers and withhold its goods but may not consistently go beyond this act and by contracts or combinations, express or implied, unduly hinder or obstruct the free and natural flow of commerce (F.T.C. v. Beech-Nut Packing Co., 257 U.S. 441).
Throughout the period from the Dr. Miles decision in 1911 to the enactment of the National Industrial Recovery Act in June 1933 (48 Stat. 195), bills to legalize resale price maintenance in interstate commerce in the United States were continually pre sented to the Congress, but all failed of passage. In 1931, however, the State of California enacted a law legalizing resale price main tenance by contract between manufacturers or distributors and re tail dealers within the State of California. With the setting up of the National Recovery Administration under the National Indus trial Recovery Act, interest in the enactment of further State laws waned due to the fact that numerous codes contained price control provisions and a number provided for some form of resale price maintenance. Following the decision of the U.S. Supreme Court in the Schechter case (Schechter Poultry Corp. v. U.S., 295 U.S. 495) which declared portions of the National Recovery Act un constitutional, the movement to enact State resale price mainte nance laws again gained momentum. By the end of 1935, ten States had enacted such laws, generally similar to the 1931 Cali fornia act. Late in 1936, the U.S. Supreme Court declared the State laws of California and Illinois to be constitutional (Old Dearborn Distributing Co. v. Seagram Distillers Corp., 299 U.S. 183, and The Pep Boys, Manny, Moe & Jack of California, Inc. v. Pyroil Sales Co., Inc., 299 U.S. 198). These decisions provided such a stimulus that by 44 of the States had legalized resale price maintenance, by laws commonly designated as Fair Trade Acts.
In 1937, the Tydings-Miller Act amended the Sherman Anti trust Act by exempting from the application of that act, "contracts or agreements prescribing minimum prices for resale of a com modity which bears, or the label or container of which bears the trade mark, brand, or name of the producer of such commodity, and which is in fair and open competition with commodities of the same general class produced or distributed by others when contracts or agreements of that description are lawful as applied to intrastate transactions, under any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Columbia," and further declared that the making of such con tracts "shall not be an unfair method of competition under the Federal Trade Commission Act." This exemption, however, is
specifically stated in the act not to make lawful "horizontal" agree ments or understanding on prices between competitors, whether they be manufacturers or distributors, and such "horizontal" agreements are still a violation of law when in restraint of trade or commerce among the States.
While resale price maintenance appears presently to find legal sanction in the United States and in the United Kingdom, con sumer organizations and economists generally are opposed to the practice from the standpoint of its effects on the public, and many in the United States advocate returning to former policies on the ground that the evils inherent in a system of fixed retail prices outweigh the benefits of resale price maintenance to manufacturers of some lines of merchandise and a segment of the retail trade.
of Committee on Fixed Retail Prices, 662 (192o) ; Report of Registrar (1926) and of Commissioner (1927) under the Canadian Combines Investigation Act on the Canadian Proprietary Articles Trade Association ; Reports of the U.S. Federal Trade Commission on Resale Price Maintenance (1929 and 1931) ; Report of the Commissioner under the Canadian Combines Investiga tion Act on an Alleged Combine in the Distribution of Tobacco Products (1938) ; E. T. Grether, Resale Price Maintenance in Great Britain (1935), Price Control under Fair Trade Legislation (1939).
(R. E. F.)