Explain horizontal price-fixing and vertical minimum and maximum price-fixing. Discuss their status under antitrust laws
Horizontal price-fixing is the agreement between competitors on the prices at which they will buy or sell products or services. Horizontal price-fixing is a per se violation of Section 1 of the Sherman Act. Vertical price-fixing occurs when a manufacturer sets the minimum or maximum prices its distributors can charge. Resale price maintenance (RPM) is vertical minimum price-fixing, and in 1911 the Supreme Court held RPM to be a per se violation of the Sherman Act. However, in 2007, the Court reversed itself and held that RPM is a rule of reason violation. Vertical maximum price-fixing is also a rule of reason violation of the Sherman Act. The defendant is liable only if the price-fixing harms competition.
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