Come January 1, the 29 retailers across the US and Canada that sell loungewear and hostess gowns are slated to begin a coordinated sale, months after the usual sale time. The legality of such an agreement, however, is questionable under US antitrust laws, which forbid businesses to collude to keep prices high.
A growing concern over the survival of this niche market led a group of retailers and manufacturers this summer to form the Loungewear and Hostess Gown Council, which synchronized sale dates and markup prices. Sales are scheduled to be held on January 1 and on July 4, 2008, and the markup price for shabbos robes increased from 50 percent to 65% above wholesale. …
Typically stores begin their sales at the end of the Jewish holidays in time for the new season, when warm-weather robes are replaced with winter ones. And women have become accustomed to buying only on sale. …
In order to increase sales, stores would price each other out by competing to go on sale first.
To avoid competition and ensure profitability, the retailers and manufacturers agreed in an August meeting to stave off sales until January 1, allowing them more time to sell at full price and avoid competition. …
In addition, the group agreed to increase the markup on the garments gradually to “secure a healthy margin.” A 65% markup was initiated for the 2007 holiday season. Next Pessah, they plan to increase the markup again by a percentage still to be determined. …
Jewish law allows price-setting by associations of manufacturers and suppliers, but says such price-fixing must be approved by a communal authority, according to an article on MyJewishLearning.com by Prof. Nahum Rakover2.
A far-reaching opinion on consumer protection can be found in the writings of Rabbi Menahem Ha-me’iri, the 13th-century Provencal Talmud commentator. Ha-me’iri holds that artisans do not have the authority to stipulate prices, even with the approval of a distinguished man, since such practices cause a loss to the townspeople: “It appears to me that the members of a particular trade are not permitted to set prices for their work without permission of the townspeople, since the townspeople would otherwise be forced to take an unfair loss” (Bet Ha-behira on Bava Batra 9a).
Is industry collusion such as described above Halachically permissible?
I am not sure that the Meiri (cited by Rakover in his article) is really relevant to the question of the permissibility of collusion to fix prices. The Meiri is writing in the context of a Talmudic discussion of the authority inhering in the municipal citizenry and the membership of a specific profession to enact binding legislation and consequent financial and even corporal sanctions, including excommunication, against the offenders thereof, which he qualifies by the aformentioned restriction:
ומכל מקום יראה לי שאין בני אומנות אחת רשאין לעשות קיצת שער בעניני אמנותם בלא רשות בני העיר שהרי מפסידין בני העיר בכך שלא כדין
He may merely be saying that the authority that the Gemara ascribes to the members of a specific profession does not extend to the enactment of legislation which is against the interest of the general citizenry; I do not know if we can extend this to an injunction against the voluntary, or even contractual, cooperation of willing individuals, והדבר צריך עיון.
Aside from the Meiri, I know of no Halachic objection to the sort of collusion under discussion here. [A discussion of the applicability of Dina D’malchusa Dina to our issue is beyond the scope of this post, and also against this blog’s general policy.] On the contrary, there’s actually extensive discussion in the Halachic literature of the possibility that a merchant can demand that a competitor refrain from undercutting the market price even in the absence of any agreement between them, as we shall see, בג”ה, in subsequent posts.
- December 30, 2007. Updated December 31.
- available here.