Why some items never go on sale, and why that’s legal - for now
Q. There are some brands of goods that absolutely never are discounted or on sale. Even when there is a storewide sale, these products are excluded by the fine print in the sale ad. Presumably the manufacturer is orchestrating this. I thought there were fair trade laws that make this practice illegal. What am I missing?
Jeff Ashworth, Quincy
A. What you see is no illusion and, under certain circumstances, it can be illegal. But for the most part, you are seeing a phenomenon in which manufacturers get retailers to agree to a “minimum advertised price.’’
High-end products, particularly, tend to be excluded from storewide sales and other discounts because in exchange for being able to sell the product, the retailer has agreed to not sell below that agreed-upon price.
“Historically, a manufacturer could not force a retailer to sign an agreement prohibiting it from advertising prices below the minimum set by the manufacturer. Those types of agreements were ‘per se’ illegal,’’ explained Edgar Dworsky, a Massachusetts consumer lawyer who now runs the site ConsumerWorld.org. “The manufacturer could only ‘announce’ minimum prices, and use friendly persuasion to keep retailers from advertising below those minimum levels.’’
But a recent Supreme Court ruling said that those agreements are not always illegal and that they would have tobe examined case by case - leading to more of these agreements, he said.
Toys “R’’ Us is currently defending against a class-action lawsuit and faces the possibility of federal action over its alleged relationship with some of its manufacturers.
The lawsuit, which was certified for class-action status over the summer, alleges that the company would not allow certain marquee manufacturers to offer their goods below the price tag they had at Babies “R’’ Us stores.
The company, which won’t comment on the lawsuit, has said that it has been cooperating with Federal Trade Commission investigators looking into the accusations.
Companies that have these agreements tend to vigorously enforce them - keeping retailers in line and, therefore, allowing no deviation in price from one store to the next. The practice is detrimental to consumers looking for the same opportunities to purchase at a discount as they have with most other products. But there are moves afoot to try to write new laws that would restrict the practice.
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