List price

Under earlier US state Fair Trade statutes, the manufacturer was able to impose a fixed price for items.

It's a policy that manufacturers or distributors set to maintain brand identity and to ensure that retailers do not advertise or sell their products at excessively low prices, which can lead to several issues such as: brand devaluation, price erosion and unfair competition.

In Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007), the Supreme Court considered whether federal antitrust law established a per se ban on minimum resale price agreements and, instead, allow resale price maintenance agreements to be judged by the rule of reason, the usual standard applied to determine if there is a violation of section 1 of the Sherman Act.

In holding that vertical price restraints should be judged by the rule of reason, the Court overruled Dr.

In fact, in Leegin, the Court identified at least two ways in which a purely vertical minimum RPM agreement might be illegal.

First, "[a] dominant retailer ... might request resale price maintenance to forestall innovation in distribution that decreases costs.

Second, "[a] manufacturer with market power... might use resale price maintenance to give retailers an incentive not to sell the products of smaller rivals or new entrants."

In both of these examples, an economically powerful firm uses the RPM agreement to exclude or raise entry barriers for its competition.

In Australia, any sort of attempt at setting minimum advertised pricing or any retaliation against such a reseller is against the Competition and Consumer Act.