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The US Supreme Court finds agency relationship between a manufacturer and its distributors to be a sham amounting to Resale Price Maintenance (RPM) focusing on the competitive effects and the purpose behind the agreements (Simpson / Union Oil)

Introduction Under the U.S. antitrust laws a manufacturer is free to set the prices at which it sells its own goods and is free to use intermediaries to facilitate the sales. When intermediaries come into the picture, however, one of the antitrust issues that may arise is whether, on the one hand, the manufacture has parted with the ownership of the goods, i.e., a sale to the middleman took place, and thus the manufacturer became restricted in its ability to set the resale prices, or, on the other hand, the manufacturer remains the owner of the goods under a bona fide consignment agreement and thus remains free to set the prices at which its agent may sell the consigned goods. There are two seminal antitrust cases in the area of consignments — United States v. General Electric Co.

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Anna M. Pavlik, The US Supreme Court finds agency relationship between a manufacturer and its distributors to be a sham amounting to Resale Price Maintenance (RPM) focusing on the competitive effects and the purpose behind the agreements (Simpson / Union Oil), 20 April 1964, e-Competitions Bulletin 1964, Art. N° 52683

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