Sunday, July 01, 2007


Doc's Revenge

On Friday the Supreme Court threw out the ban on minimum pricing that has been around since the Dr. Miles decision of 1911. In short, manufacturers haven't been able to dictate prices to retailers, only "suggest" them. But now?...

From Forbes:

In a 1911 decision, the Supreme Court had declared that minimum pricing agreements always violate federal antitrust law. But minimum price agreements can benefit consumers, Supreme Court Justice Anthony Kennedy wrote for the majority, by enabling retailers to invest in customer service or provide more retail space to a specific product without fear of being undercut by discount rivals....

During oral arguments in the case in March, Justice David Souter suggested that the success of big-box discounters such as Wal-Mart, Target Corp. and Home Depot Inc. is related to the elimination of minimum price agreements.

It's a remarkable decision, and all the more noticeable in that it has generated no conversation yet on its potential effects over the long term to bookselling. Chains live on a steady diet of deeply discounted bestsellers. Should a major book conglomerate decide to impose minimum pricing, chains will no longer take this tactic entirely for granted, and may lose a vital advantage over indies.

There's no telling yet whether this is even remotely likely to happen, but it's certainly not a hypothetical notion. From 1899 to 1996 British publishers had minimum pricing under the Net Book Agreement; its repeal threw open the doors to chains and the reign of King Wottakar and Sir Pot Snack.

The NBA survived a number of legal challenges and revisions over the years, for the simple reason that it did at least some good for the British public. A 1963 Modern Law Review article quotes the UK's Restrictive Practices Court 1957 ruling on what they feared would happen if minimum pricing was eliminated:

"The number of stockholding booksellers in the country would be reduced. The stocks held by surviving stockholding booksellers would be less varied than at present. Althought in rare cases purchasers might be able to buy particular titles more cheaply than if the the agreement remained in force, the retail prices of most books would be higher. Fewer titles would be published, and those which failed to find a publisher... would include works of probable literary and scholastic value."

Sound familiar?

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