U.S. to Crack Down on Price Dictating : Retailing: Justice Department is reversing hands-off Reagan, Bush policies on price fixing by manufacturers.
The Clinton Administration on Tuesday said it will begin to prosecute manufacturers who require retailers to sell their products at certain prices, calling the stand a reversal of enforcement practices under the Reagan and Bush administrations.
Such pricing requirements, known as vertical price fixing, violate antitrust laws and will be “vigorously and effectively” enforced, the Justice Department said in a statement.
Such price fixing prevents retailers from offering lower prices--hurting shoppers and potentially making it difficult for discounters to stay in business. And the illegal practice is on the rise, consumer advocates say.
The enforcement policies were unveiled by Assistant Atty. Gen. Anne Bingaman at an American Bar Assn. conference Tuesday in New York. Bingaman, in charge of the agency’s antitrust division, told conferees that Justice Department officials appointed by Reagan and Bush established the department’s “vertical restraints guidelines,” an enforcement policy based on the assumption that such pricing requirements are not an important threat to competition.
“These guidelines seem so thoroughly to discount the anti-competitive potential . . . as to predetermine the conclusion against enforcement in almost every case,” Bingaman said during the speech. “I find it difficult to square such views with existing case law.”
Bingaman said the department is revoking those guidelines. She also said she is expanding the 1978 “corporate leniency policy” in which businesses may avoid prosecution by reporting their own antitrust violations before the start of a government investigation. Some companies may now also get the same lenient treatment if they decide to expose their practices during a probe.
The policy changes drew praise from the International Mass Retail Assn., a Washington-based trade group.
“There was an increase in price fixing because antitrust authorities had been sending a bad message,” said Morrison Cain, the retail group’s lawyer.
Some states have been active antitrust litigants. For example, some state attorneys general in the 1980s brought charges against companies that manufacture Panasonic consumer electronics products and Minolta cameras, prompting those firms to offer refund payments to some customers.
Reacting to such high-profile prosecutions, some federal legislators have unsuccessfully called for new laws that would eliminate price-fixing “loopholes.” The Electronics Industries Assn. and some other manufacturer groups have opposed such legislation, contending the bills would interfere with their right to select or reject retailers based on service standards and other issues unrelated to price.
