Tick Talk[Vacheron Moderator]
2195
"V&C watches are price-maintained in all Fair Trade States"
Nov 23, 2021,16:23 PM
That interesting line appears in the 7-day approval plan. The term "fair trade" generally refers to fair prices paid to producers between countries so as not to exploit third world labour, and is not a phrase commonly used in the watch world. The use of capitals in "Fair Trade States" hinted at something formal and a little digging revealed a surprising twist in the meaning of this term, unique to the US, which connects with price fixing.
Prior to the 1930s, the ability of a manufacturer to fix the selling price of their product was prohibited by the Sherman Anti-Trust Act which was intended to control the power of monopolies. But in 1933 California, under economic siege by the Great Depression, amended their state Fair Trade Act to include a new power for manufacturers to impose a minimum selling price in their contracts with dealers. The intention was to protect small town independent retailers from being undercut by big city chain stores. Many states copied this initiative and in 1937 the Sherman Act was amended to exempt price maintenance agreements. By the 1960s, when this literature was published, such "fair trade" legislation had generally fallen out of favour at the state level and by 1975 all were repealed by Congress.
Nevertheless retail price maintenance in the form of MSRP, and distributor or manufacturer boycotts of those who fail to conform, is a reality today. If you visit the Federal Trade Commission website, they will inform you that a Supreme Court decision in 2007 removed the existing federal restrictions against setting minimum selling prices. As a result, a seller has the right to refuse to deal with any person who fails to confirm with their selling policies as long as their actions are not part of an "anticompetitive agreement with other firms or part of a predatory or exclusionary strategy to acquire or maintain a monopoly". So, "Fair Trade" is alive and well.