dstieger wrote:Illegal?
I'm no business law expert, but I believe that a company can set their price.
Illegal price fixing, I'm pretty sure, has to do with 'competitors' agreeing to set a price floor (and not compete?)
It
can become price-fixing when several competitors all set minimum pricing policies, working together to make sure retailers are not pricing products to consumers so that nobody is undercutting the other. Either by all agreeing on nothing below a certain $$ amount or certain % of MSRP, or some other formula that protects their profits.
A long time ago regulators went after Coke and Pepsi distrubutors for having minimum pricing and sale policies that made sure that both products were never on sale at the same time as well as what the minimum prices on each product would be. In effect, they set a base price on both products and then "took turns" as to which brand would be on sale.
This was the 80's though and regulators and courts were on a big anti-trust kick for a while. One famous decsion, when talking about WHY a company would try to get away with breaking the law in order to price fix, noted that about 250 years ago the Lord Chancellor of England said: "Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?
It seems to me that still goes on but I guess they a bit more careful about how things are done now or perhaps the regulators don't care as much about soda...
Cigars would be harder to go after since they are, arguably, more differentiated products than cola. You would have to show that you basically have the same customers for, for example, AF's and Padrons and that those customers are not going to buy some other cigar if those prices are higher but they would switch between the two based on price, so creating complimentary MAP's do - in effect - "fix" the price on that product.
Here is an interesting article on "cooperative" sale pricing
http://mindyourdecisions.com/blog/2011/09/06/why-are-coke-and-pepsi-never-on-sale-at-the-same-time-an-answer-from-game-theory/#.VUjwWflVhHw
And here is one of the legal actions on Coke and Pepsi (with that famous quote)
http://www.leagle.com/decision/19881551695FSupp856_11433.xml/U.S.%20v.%20ALLEGHENY%20BOTTLING%20CO.