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Resale Price Maintenance Agreements (RPM) are agreements between sellers and resellers that set a minimum or maximum price for a product. In the past, these agreements were illegal, but now they are analyzed under the rule of reason. However, some states still have their own laws that treat RPM unfavorably.
Resale Price Maintenance Agreements (RPM) are agreements between resellers and manufacturers that set a minimum or maximum price for a product. For example, a manufacturer may require that a reseller sell their product at a minimum price of $50 or a maximum price of $100.
These agreements used to be illegal under federal antitrust law, but in 1997 the U.S. Supreme Court changed the rules. Now, RPM agreements are subject to the "rule of reason" which means they are analyzed on a case-by-case basis to determine if they are anti-competitive.
However, some states have their own antitrust laws that are more strict than federal law. For example, in Maryland and California, RPM agreements are considered illegal no matter what. In New York, pricing arrangements are unenforceable but not actionable, and in Illinois, vertical price arrangements are regularly challenged.
Overall, RPM agreements can be a way for manufacturers to control the price of their products, but they must be careful not to violate antitrust laws.
A manufacturer of high-end headphones requires that all resellers sell their product at a minimum price of $200. This is an example of a minimum RPM agreement.
Another example is a manufacturer of a popular toy requiring that all resellers sell their product at a maximum price of $50. This is an example of a maximum RPM agreement.
These examples illustrate how RPM agreements can be used to control the price of a product and ensure that it is sold at a certain price point. However, if these agreements are found to be anti-competitive, they may be illegal under antitrust laws.