Resale price maintenance

The implications of resale price maintenance for the public interest continue to be interpreted differently by economists and businessmen. As a result of the investigation of the MacQuarrie Committee in 1951, resale price maintenance was banned unconditionally in Canada in the same year but recently a retrenchment of the position occurred with the amending of the Combines Investigation Act in 1960.;Resale price maintenance appears as detrimental to the public interest. It creates a favourable climate for price agreements at the various distributive levels. The consumer is forced to pay a higher price than might otherwise have been required if price competition were present. In addition he is made to pay for services which he may not desire and at the same time is denied his right to influence the distribution system thus retarding change in the structure of distribution. As a result inefficient uses of resources occur both in distribution and in manufacturing.;An examination of the history of the practice within modern retailing in the United Kingdom, the United States and Canada reveals a difference in the legal approach by the governments concerned. The more common arguments advanced in support of resale price maintenance fail in their objective when examined in relation to the benefits accruing to the consumer. The most prevalent aspect of these arguments, "loss-leader" competition, appears as an indeterminate concept because of the inability of both economists and businessmen to arrive at an acceptable definition. Nevertheless these same arguments give some insight into the motives of retailers, wholesalers and manufacturers for desiring the use of resale price maintenance. These motives evolve from the desire to either increase or protect present profits. Retailers who support the practice admittedly desire protection from price competition but their reasons for entitlement to such protection fail to indicate any benefits for the consumer. Manufacturers claim many damaging aspects resulting from the use of their product as a "loss-leader", none of which are clearly substantiated. It appears that it is their profit margin which is damaged.