Retreat of the Fair Traders

Defeat after defeat in the U.S. marketplace and in the courts rocked fair-trade pricing during the last year. Last week, fair-trade's retreat seemed about to turn into a rout.

The biggest blow came when the W. A.

Sheaffer Pen Co. gave up its long fight for price fixing, announced that it would sell to certain "large-volume retail outlets," i.e., discount houses. To police its prices, Sheaffer spent $2 million over the past two years and lopped off some 700 dealers.

But the cost was high; sales for the fiscal first half ending Aug. 31, 1955 were down 9.5% from 1954's comparable period, and earnings tumbled 35%.

Another blow came from the Michigan Supreme Court. It reaffirmed an earlier ruling that a state fair-trade law could be enforced only against those retailers who had signed fair-trade agreements,* thus touched off a wave of defections. Toastmaster division of McGraw Electric Co., a longtime staunch defender of price fixing, discontinued enforcement in Michigan, thus chose the course taken there by General Electric weeks earlier. By week's end Sunbeam Corp., which had never willingly permitted its products to be discounted, joined the surrender and canceled all its fair-trade contracts with Michigan retailers. The State Supreme Court's decision, said Sunbeam President R.P. Gwinn, "destroys the last remaining legal basis for an effective fair-trade price structure."

* Courts in Arkansas, Colorado, Florida, Georgia and Virginia have handed down parallel decisions; three other states and the District of Columbia have no fair-trade laws.

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