Pricing and the Legal Issues

Businesses worldwide operate within systems of laws in setting prices for products and services. These legal frameworks, made up of laws, court decisions, and administrative regulations, are focused on preserving competition and preventing restraints of trade, as well as regulating competitive actions that may result in unfairness and deception on the part of the seller. In England, for example, the common-law rule is that all interference with individual liberty in trading and all restraints in and of themselves are contrary to public opinion and therefore void unless justified by special circumstances. From the passage of the original statutes such as the Sherman Antitrust Act in the USA a century ago the scope and interpretation of these legal frameworks have been expanded and redefined to include much of what businesses view today as the essence of competition. It should come as no surprise that much of the legal attention has been and continues to be on pricing, the setting of prices, and the uses of prices in competitive actions. For example, the practice of price fixing is prohibited outright by Sweden’s Competition Act 1982. In the United Kingdom, the Restrictive Trade Practices Acts 1976 and 1977 make compulsory the registration of agreements between two or more manufacturers or suppliers doing business that impose any restriction on two or more parties to the agreement as to prices.