The state of Maryland is taking on price-fixing manufacturers with a new law that prohibits manufacturers from requiring retailers to charge a certain minimum price for products.
The Wall Street Journal reports (subscription required) that "Under the new state law, retailers doing business in Maryland -- as well as state officials -- can sue manufacturers that impose minimum-pricing agreements. The law also covers transactions in which consumers in Maryland buy goods on the Internet, even when the retailer is based out of state. That could potentially affect manufacturers throughout the country."
Many manufacturers like minimum-price laws because instead of competing with a lowest-price warehouse model, retailers spend more money on advertising products.
But for consumers, it's hard to see anything at all that is good about minimum pricing policies. They, by definition, eliminate competition and force customers to pay more for products than the retailers would sell them for if they could.
Price-fixing policies are clearly anti-competitive, interfering with the right of retailers to sell merchandise for the prices they see fit. It's good to see Maryland taking this on and with the power of the internet, it could make price-fixing difficulty to implement in the other states too.
Take the first steps to building your portfolio.View Course »