Legal Definitions - Miller–Tydings Act

Miller–Tydings Act

The Miller–Tydings Act was a federal law passed in 1937 that significantly altered the landscape of pricing agreements in the United States. It acted as an amendment to the existing Sherman Antitrust Act, which generally prohibits agreements that restrict competition, including price-fixing.

Specifically, the Miller–Tydings Act created an exemption, allowing states to enact and enforce "fair trade" laws. These state laws, in turn, permitted manufacturers to enter into agreements with retailers to set minimum resale prices for their products. This practice, known as resale price maintenance, meant that a manufacturer could legally dictate the lowest price at which its products could be sold by retailers, without violating federal antitrust prohibitions against price fixing.

The Act was eventually repealed in 1975 by the Consumer Goods Pricing Act, which once again made such resale price maintenance agreements illegal under federal antitrust law.

Here are some examples of how the Miller–Tydings Act would have applied during its active period:

• Example 1: High-End Electronics
  Imagine a manufacturer of premium stereo systems in the 1950s. They wanted to ensure their brand maintained an image of quality and exclusivity, and that retailers didn't engage in price wars that could devalue their products. Under the Miller–Tydings Act, if a state had a fair-trade law, this manufacturer could legally require all authorized dealers in that state to sell their top-model stereo system for no less than $1,500. Any retailer attempting to sell it for less could face legal action from the manufacturer, as this agreement was protected from federal antitrust challenges by the Act.
• Example 2: Branded Cosmetics
  Consider a popular cosmetics company in the 1960s that sold its products through various department stores and drugstores. To protect the profit margins of its retailers and prevent its products from being seen as "discounted" or cheap, the company could, in states with fair-trade laws, mandate a minimum selling price for its signature lipstick, perhaps $10. The Miller–Tydings Act allowed this company to enforce that $10 minimum price across all retailers in those states, ensuring price consistency and brand perception without being accused of illegal price fixing under federal law.
• Example 3: Children's Toys
  During the holiday season in the early 1970s, a toy manufacturer might have released a highly anticipated new doll. To ensure that smaller, independent toy stores could compete with larger chain retailers and to prevent aggressive discounting that could erode the product's perceived value, the manufacturer could leverage the Miller–Tydings Act. In states with fair-trade laws, they could establish a minimum retail price of $25 for the doll. This meant that no retailer, regardless of their size or purchasing power, could sell the doll below $25, thereby providing a level playing field for retailers and maintaining the manufacturer's desired price point, all legally protected by the Act.