Sherman Act Vertical Price Fixing Maintenance

The video tutorial explains resale price restraint as a potential antitrust violation under Section 1 of the Sherman Act. It covers two main categories: vertical price fixing, where manufacturers set resale prices, and retail price maintenance, where minimum prices are set. Vertical price fixing is generally illegal, while retail price maintenance may have justifications. The Colgate doctrine allows manufacturers to recommend prices without coercion. The tutorial discusses the legal implications and potential consumer harm of these practices.

What are the two categories of resale price restraint discussed in the video?

• Horizontal price fixing and vertical price fixing

• Vertical price fixing and vertical price maintenance

• Price discrimination and price gouging

• Retail price maintenance and horizontal price maintenance

Why is vertical price fixing generally considered per se illegal?

• It allows manufacturers to control the market.

• It encourages price wars among competitors.

• It promotes healthy competition among retailers.

• It leaves no room for distributors to compete, harming consumers.

What is the main difference between vertical price fixing and retail price maintenance?

• Retail price maintenance is more harmful to consumers than vertical price fixing.

• Retail price maintenance can have pro-competitive justifications, unlike vertical price fixing.

• Vertical price fixing is always legal, while retail price maintenance is not.

• Vertical price fixing involves setting a maximum price, while retail price maintenance sets a minimum price.

What does the Colgate doctrine allow manufacturers to do?

• Monitor and penalize distributors for price deviations.

• Enforce strict price controls on retailers.

• Set a mandatory resale price for distributors.

• Recommend a resale price without coercion.

Under the Colgate doctrine, what is a manufacturer not allowed to do?

• Communicate with distributors about price adherence.

• Set a minimum resale price.

• Refuse to deal with non-compliant distributors.

• Recommend a resale price.