Fair-trade laws were designed to prevent large retail stores from selling certain merchandise at extremely low prices in attempts to drive their smaller competitors out of business. Such laws are also called resale price maintenance laws. Many U.S. states once had such laws. However, fair-trade laws have been illegal in the United States since 1975.
In some states, if any retailer agreed with a manufacturer to sell an item at a particular price, the state’s fair-trade laws required all retailers to sell the item at that price. Other states allowed merchants to sell an item either at a price specified by the manufacturer or at a higher price. Goods covered by fair-trade laws included television sets, stereo equipment, clothing, watches, bicycles, and jewelry.
In 1931, California became the first state to pass a fair-trade law. By 1950, 45 states had such laws. Ordinarily, price fixing would violate federal antitrust laws (see Antitrust laws). But two federal laws, the Miller-Tydings Act of 1937 and the McGuire Act of 1952, made such price fixing legal. Opponents of fair-trade laws argued that the laws cost consumers millions of dollars a year in higher prices. In time, many states repealed such laws. The U.S. Congress abolished the remaining ones in 1975 by repealing the Miller-Tydings and McGuire acts.
