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Who controls the price of things?

TEXT OF STORY

LISA NAPOLI: Who sets the price of a product: the company that makes it or the store that sells it? Today the Supreme Court takes up that issue. From Washington D.C., Marketplace's John Dimsdale looks at the arguments.


JOHN DIMSDALE: When Leegin Leather Products discovered a Texas discounter selling their handbags cheaper than Leegin's minimum, they cut the retailer off.

The discount store sued, saying they were being punished just for being competitive. Lower courts, citing a 100-year-old law against price collusion between maker and seller, agreed.

But manufacturers argue discount stores don't provide support services, like education and repairs that more expensive stores do offer.

The National Association of Manufacturers' Quentin Riegel says too often customers don't buy from the specialty store where a salesperson educated them.

QUENTIN RIEGEL: They got the service from the first store. They buy it from the cheaper store. And the first store is going to go out of business because they're not going to make any sales. Well, that's bad for the manufacturer.

The White House is backing the manufacturers, and anti-trust experts say courts do seem more open to letting product makers set their prices.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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