Experts See High Prices at High End
Yesterday’s Supreme Court decision generally allowing manufacturers to enforce minimum retail prices isn’t likely to raise prices for common household products, many experts say.
Instead the decision is most likely to have an impact on prices for high-end goods, according to the Wall Street Journal (sub. req.).
The 5-4 ruling overturns a 1911 precedent that said minimum retail prices are a per se violation of antitrust law. But it permits policing of anti-competitive practices, Legal Times reports.
Big retailers have clout to bargain with manufacturers to keep prices low, the Wall Street Journal points out. And auto dealers can evade minimum prices for vehicles in low demand by, for example, paying more for trade-ins.
Jeremy Bulow, an economics professor at Stanford University, told the Journal the decision gives the makers of sophisticated new goods a chance to keep prices high and use the profits to offer training or other consumer services.
“As much as I hate to go along with the conservatives on the court, I think they got it right,” he said.
Justice Stephen G. Breyer sees a bigger impact.
“The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail and that it will create considerable legal turbulence as lower courts seek to develop workable principles,” he wrote.
During the 38-year period when states could permit retail price fixing, minimum price agreements covered about 10 percent of consumer goods, the New York Times reports .
Breyer said that translates to increased costs of $750 to $1,000 for the average family in today’s dollars.
