Home > West's Encyclopedia of American Law > Fair-Trade Laws

State statutes enacted in the first half of the twentieth century permitting manufacturers to set minimum, maximum, or actual selling prices for their products, and thus to prevent retailers from selling products at very low prices.

Manufacturers have an interest in establishing and maintaining good will toward their products. This means assuring consumers that the manufacturers' goods are quality products. Good will is promoted by advertising and other sales efforts. Manufacturers in the early 1900s believed that commanding minimum retail prices was necessary to preserve good will, and that uncontrolled price-cutting by retailers would be detrimental to good will. Specifically, manufacturers feared that consumers would become skeptical if a particular retailer began to sell for a lower price a product that had had a relatively consistent price over the years: the lower price would undercut any claim by the manufacturer that the...