When Anti-Trust is Anti-Competitive

November 16, 1994

It may seem like an issue that was long ago decided in favor of competition and against monopoly pricing. But London Fog wants government approval to set retail prices of its raincoats and deny its wares to retailers who try to sell them at a discount. The apparel concern, whose only U.S. manufacturing plant is in Baltimore, says this is necessary to protect the premium-quality image of London Fog outerwear.

London Fog's competitors, including foreign coatmakers, are free to set retail prices for their products in this country. But London Fog is still bound by a 1978 consent decree with the Federal Trade Commission that bars it from enforcing "retail price maintenance" policies.

The FTC order was imposed when London Fog was owned by a huge clothing conglomerate that had potentially anti-competitive power over retailers. That's not the case today, with London Fog a separate investor-owned firm fighting to reshape its marketing plans to survive. More than 700 Maryland jobs are tied to the company's future.

The fixed-price raincoat policy may be a sales disaster; it may result in fewer sales of the name-brand products. But London Fog needs the same freedom its competitors enjoy if it is to fairly and effectively merchandise its clothing. The FTC, which has invited companies to seek reviews of old consent decrees, should give a prompt and favorable ruling on London Fog's request to modify the 16-year-old order.

More than 100 similar U.S. anti-trust decrees are decades old, Business Week magazine reports. These old federal restrictions were imposed in a domestic economic setting, when foreign competitors were hardly a factor, in order to protect U.S. business competition. However, many of them now unfairly restrain American companies in the contemporary era of global competition.

The argument is not to revoke all anti-trust orders, but to review them to ensure they meet current standards for competitiveness and market efficiency. The FTC recently decided that its anti-trust decrees will have time limits, which they did not have in the past.

London Fog doesn't seek special protection for its products. It simply needs the same rules that apply to its competition. It will then be up to management to decide whether to use the fixed-price strategy to weather the financial storm.

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