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Consumers Lose Out

May 22, 1988

Regarding the May 4 story, "Discount Stores Unsettled by Price Protection Ruling":

The Supreme Court's ruling that "a manufacturer does not automatically violate antitrust laws if it drops a discount retailer to protect another dealer from price competition" flies in the face of the congressionally enacted Clayton Antitrust Act and the Sherman Antitrust Act.

The Clayton Act--a 1914 amendment to the Sherman Antitrust Act--prohibits exclusive dealing contracts where the effect may be "substantially to lessen competition." The Sherman Antitrust Act prohibits any unreasonable interference to a "freely competitive pricing or distribution system" of the open market.

The victory for Sharp Electronics and its calculator dealer that charged higher prices can only tend to create a monopoly, unreasonably interfere with the distribution system and lessen competition, which, consequently, will artificially maintain calculator prices.

This is a bitter defeat for all consumers and the discounters that spurred competition by charging lower prices for similar goods. The court ruling that a discount retailer has to prove that the manufacturer entered into an agreement on prices with the competing dealer will be interpreted by manufacturers as the "go ahead" on monopolies in product distribution.

Today, it's calculators; tomorrow the Supreme Court may be sanctioning interference with the freely competitive prices of paper clips, toothpaste, microwave ovens, refrigerators, washing machines or whatever product. In any event, when prices are artificially maintained, the consumer is the real loser.



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