Impact of the Consumer Goods Pricing Act of 1975 on FTC' No. 763 7008, position on manufacturer preticketing…

Impact of the Consumer Goods Pricing Act of 1975 on FTC' No. 763 7008, position on manufacturer preticketing. (File released August 20, 1976.

ADVISORY OPINIONS 1017

Op1:nion Letter

August 11, 1976 Dear Mr. Bauman:

This is in response to your inquiry of March 4, 1976, requesting advice concerning price preticketing practices of men s sportswear manufacturers. Your letter indicates that many sportswear manufacturers affix hang tags to finished garments, and that while some of the tags show a suggested retail price " others unqualifiedly designate a- retail price. When manufacturers independently place resale price labels on goods that will be sold to others for ultimate resale to consumers , both antitrust and consumer protection issues can arise. A vertical agreement to fix resale prices is, of course, a violation of the antitrust laws. F. T. G. v. Beech-Nut. Packi'ng Go. 220 U.S. 373 (1911). And the leeway permitted to a manufacturer in affirmatively implementing a restrictive resale price policy is severely limited. Albrecht v. Herald Go. 390 S. 145 (1968).

The passage of the Consumer Goods Pricing Act of 1975, Pub. Law 94145 (Dec. 12, 1975), altered neither these principles nor the Commission s basic position on the policy issues raised by price preticketing. The Act, effective March 11 , 1976, repealed the McGuire Act amendments to Section 5(a) of the Federal Trade Commission Act, 15 U. ~45(a), and the Miller-Tydings Act amendments to Section 1 of the Sherman Act, 15 U. C. ~1. As a consequence, resale priee maintenance programs that were previously immunized from attack are now exposed to Federal antitrust scrutiny.

From an antitrust standpoint, the Commission does not object to manufacturer preticketing done at the request of a retailer who intends to sell the products at the price marked, or to preticketing that involves merely the designation by the manufacturer of a "suggested retail price. " However, when goods are preticketed with a specific "retail price " established by the manufacturer and not qualified by the word suggested " the effect goes beyond the mere suggestion of a price at which retailers may elect to sell. At the least, such preticketing represents a specification by the manufacturer of the price to consumers he desires or expects retailers to charge. If, as a consequence, the specified price generally prevails at retail, warrant may well exist for the institution of a Commission investigation to see if resale prices are in fact being unlawfully maintained.

223-239 0 - 77 - 65

88 F.

Alternatively, however, if retailers strike through such a designated retail price" and add a different price, consumer deception issues can arise. The retailer s alteration of the "retail price" may lead consumers to believe that the retailer has changed his own regular or prior retail price. Unlike a "suggested retail price " a preticketed " retail price represents itself to be the retailer s price. Thus, a preticketing progTam that involves a designation by the manufacturer of a specific "retail price" may raise issues of vertical price maintenance on the one hand and deceptive pricing on the other.

Other possible consumer protection considerations, such as those directly addressed under Section 3 of the Commission s present Guides Against Deceptive Pricing, 16 C. R. ~233. , are not here considered. Proposed revisions of those guides have been published by the Commission in the Federal. Regl~ster 39 F.R. 21059 (1974), and are now under review at staff level. While the Commission has not yet promulgated final revised deceptive pricing guides, such revision will not alter the Commission position \vith respect to resale price maintenance as an antitrust violation.

Chairman Collier concurs in the above conclusions, but wishes to emphasize that he does not believe that, from an antitrust standpoint, it is unlawful for a manufacturer to unilaterally preticket his merchandise, so long as the manufacturer does not attempt to maintain the preticketed price through agTeements with 'wholesalers or retailers, or through the imposition of sanctions against those who decline to sell at the preticketed price.

By direction of the Commission.

Letter of Request