I am looking for some information on  Federal anti-trust rules
regarding ?Minimum Advertised Pricing? policies between companies and
independent distributors.

 

Here is the background:

 

I am an independent distributor in a very large network marketing
company that promotes a unique dietary supplement.  This company has
been around for several years, with tens of millions (USD) per month
in gross sales, and has a virtual monopoly on their unique supplement.
The company allows distributors to have a personal website to
promote/sell the product.  I personally have a website that actively
markets the dietary supplement to the general U.S. public.

 

My current understanding is that Federal anti-trust laws prohibit
companies from forcing distributors to agree upon a minimum sales
PRICE. .?)  Is my understanding correct?

 

The company, whose products I market, seems to agree with this because
its policy states that a ?distributor CAN sell product to a customer
at whatever price they agree upon.?

 

However, the company has another policy that seems to contradict the
one aforementioned: The company?s policy states that ?a distributor
must promote the full suggested retail price? of the product.  The
company considers all ?advertising? below suggested retail price to be
in violation of its policy.  Additionally they assert advertising to
mean ?anything written?; whether that be by 1) mass e-mail, a 2) a
unique fax-on-demand price quote to a customer, or a3) personalized
letter or email reply to a customer?s inquiry, etc. etc.  The
company?s rules on what constitutes advertising are so strict, that
there is virtually no opportunity to ?agree upon? a price other than
the one suggested by the company.

 

The ?agreement upon a price? between a distributor and customer, in my
opinion, necessitates communication. The acceptable form of this
communication is not delineated in the company?s policies.  It seems
to me that this company wants to play both sides: they both want to be
in compliance with Federal anti-trust rules & regulations, but at the
same truly maintain a fixed price by eliminating all means of
distributor communication of lower prices to customers.

 

My questions:

 

1)      Please provide the Federal rules & regulations that prevent a
company from fixing prices.  Please include specific references to
government websites, Federal court cases, etc. etc.

 

2)      Is it legal for a company to maintain a minimum advertised
pricing policy on advertisements that it does no cooperatively
fund?meaning ones independent distributors pay for entirely by
themselves? Again please provide specific references to government
websites and/or Federal court cases to support your answer.

 

3)      If companies CAN legally maintain a strict advertising policy
(question #2 above), then what legally constitutes ?advertising??  A
price tag? a store banner? a newspaper ad? an email reply? an opt-in
email newsletter? a personalized thank you letter to previous
customers that offers ongoing pricing below that suggested? a
telephone conversation? a face to face conversation? an invitation to
call the company for ?special offers?? Again, please provide as many
objective government based references as possible in support of your
answer.

 

Thanks,

 

A very concerned small business owner

If it makes any difference, some companies (Amazon.com,
CircuitCity.com, eg) won't advertise a price on certain specific
items. That is, (I assume, and IANAL) they say 'Add this item to your
cart to see our low price'. They have no direct price that can be
visible by search engines, and (I assume) qualify for not displaying a
price against the MSRP or mfr's minimum advertised price.

Besides which, even if you list the price as the SRP/MAP, I wonder if
you would be prevented from adding a 'dealer coupon' for whatever
discount, to apply to the order. 'To receive x% off this order, enter
code GOODCUSTOMER10'.

I am not a lawyer. This may not even be legal for you. All I would say
is that the list price is what I'm advertising the product. What
happens at point of sale is not advertising. The customer is about to
order the product AT LIST, but I'm including a coupon, if the customer
hasn't blocked a popup :).

Greetings Johnvitamins:

Please review the following sites for information that may prove
important to your query.

Horizontal Price Fixing 
"Price Fixing is the formation of an agreement to set prices. In order
to prove price-fixing, it must be shown that the parties actually
agreed to fix prices or to retain existing uniform price structures
[Credit Bureau Reports, Inc., v. Retail Credit Co., (1971)(1973)].
Horizontal price-fixing is an agreement between direct competitors on
the same level of the market structure [ Credit Bureau v. Retail
Credit]. Price-fixing can also occur vertically, by formation of a
combination between the manufacturer and distributors to maintain
retail prices [Albrecht v. The Herald (1968)]."
http://www.leflaw.com/index.php?module=pagemaster&PAGE_user_op=view_page&PAGE_id=102
Please read entire article for further information concerning vertical
price fixing.

Identifying Horizontal Price Fixing in the Electronic Marketplace",
Antitrust Law Journal, vol. 65, Fall 1996, pp. 41-55
http://www.ftc.gov/speeches/other/confbd4.htm

Best regards,
journalist-ga