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When exporting from Europe to the USA but not sourcing directly from the manufacturer, it is common to receive communications from companies along the lines

(1) in the USA we have a minimum price policy, which you are breaking/you have to source from our US supplier

(2) We forbid export of this product to the USA/it can only be done through authorized channels.

Is it the case that a company is allowed to prevent export of an identical product from a different country. Or is this anticompetitive behaviour which legislation prevents?

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  • It's not clear exactly what you're doing. Is your company based in the US?
    – Stuart F
    Commented Apr 22, 2023 at 16:05
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    One in the UK and one in the US. We export between the two. Commented Apr 22, 2023 at 16:08
  • This is a well-known issue between Switzerland and the EU, too. Companies are trying to get higher prices in Switzerland and hence forbid "direct imports" (e.g. of cars). This now is clearly illegal, but I have no clue about how that works between UK and US.
    – PMF
    Commented Apr 22, 2023 at 18:09
  • I'm assuming that there are no trade restrictions on the products in question? So these are not drugs, weapons or otherwise regulated items?
    – PMF
    Commented Apr 22, 2023 at 18:14
  • No. A typical item might be a branded spade, or household utensil, or cooking equipment. The most recent case was for some very boring cleaning bags where the two products were identical, but we were told we'd face litigation if we resold the items bought in the UK in the US (the price in the US was 2-3x that in the UK, and the manufacturer was clearly operating a price minimum in the US, as the price history across different marketplaces was completely stable Commented Apr 23, 2023 at 19:05

3 Answers 3

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It didn’t work for Nintendo

Nintendo used to have a policy of setting minimum retail prices for its products. If retailers didn’t comply, Nintendo would decrease or eliminate their supply.

In 1991, the FTC investigated Nintendo for price fixing, and Nintendo agreed to pay some money back and to reframe the minimum price as more of a “suggestion.”

Technically, this was a settlement, so the courts didn’t actually rule against (or in favor of) Nintendo. But being investigated by the FTC is already pretty serious.

https://www.upi.com/amp/Archives/1991/04/10/Nintendo-gives-coupons-to-settle-price-fixing-case/5169671256000/

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  • Are there any standard avenues for smaller parties? We've come across this sort of behaviour dozens of times Commented Apr 23, 2023 at 19:08
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It may be legal. Before Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007) it was illegal since 1911 under Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 which held that minimum pricing was per se illegal. Leegin overturned that ruling. The basic engine behind this decision is antitrust legislation (§1 of the Sherman Antitrust Act), and the premise that manufacturer price controls might reduce competition. Now the matter must be decided on the basis of judged based on the rule of reason, which is a doctrine saying how that act is to be interpreted. Now,

The accepted standard for testing whether a practice restrains trade in violation of §1 is the rule of reason, which requires the factfinder to weigh "all of the circumstances". This

rule distinguishes between restraints with anticompetitive effect that are harmful to the consumer and those with procompetitive effect that are in the consumer’s best interest. However, when a restraint is deemed "unlawful per se," ibid., the need to study an individual restraint’s reasonableness in light of real market forces is eliminated. Resort to per se rules is confined to restraints "that would always or almost always tend to restrict competition and decrease output." Thus, a per se rule is appropriate only after courts have had considerable experience with the type of restraint at issue

Bear in mind that states can also have separate antitrust laws.

A manufacturer could independently make price guidelines part of their agreement with retailers, and can stop dealing with sellers who do not follow the policy, on a "take it or leave it" basis. Violating a price-suggestion is not directly actionable, but can legally result in a "we won't deal with you anymore" response. Antitrust issues arise if manufacturers conspire to get a result, or if retailers conspire. On the face of it, forbidding importation to the US except through a specific channel smells strongly of anticompetitive behavior.

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  • the most common thing we encounter is the following (1) we find some product where the price sold by manufacturers in the USA Is 2-3x that in another country / well above what we normally encounter in other items (2) if we ship this item, we receive a letter from the brand threatening legal action, or a complaint by other means. E.g., we've had brands create fictitious counterfeit complaints to marketplaces such as Amazon if we ignore these letters (this nearly got us suspended) When I looked into it, this seemed to be a breach of this law.cornell.edu/uscode/text/15/1 Commented Apr 23, 2023 at 20:10
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Rules that companies have on their customers in other countries have no weight in the US. The company could stop selling to whoever is selling to your UK company, but they have no power over your sales in the US.

That said, it is unlawful to import grey market items that have been registered and have a trademark or the same name as a product sold in the US. If not registered with US Customs, import is allowed. This is how the "Pez Outlaw" managed to import Pez dispensers direct from Europe bypassing the US-licensed affiliate.

UK laws would be additional.

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