I’m not in the industry, but I am familiar with this form of pricing … so, some clarification.
It’s not price fixing, and it’s not illegal. (I still don’t like it, but they are not breaking the law).
Price Fixing is when 2 competitors get together and agree to price at a certain level.
In this instance, it is the manufacturer prescribing a Minimum Price. If the retailer does not agree to sell the products at the minimum price, the manufacturer may legally stop doing business with that retailer – as long as that policy is in place for all other retailers in the same “class of business.”
And there’s the rub … a manufacturer may distinguish between brick & Mortar stores and online businesses. AS long as they treat all retailers in the same class equally, they are not breaking the law. So if they will no longer sell to Sarahsyarns because she was selling at a lower than minimum price, they must enforce that policy with all other internet stores – but they can allow brick & mortar stores to discount, because that could be considered a different ‘class’ of retailer. As long as they allow all bricks & Mortar stores to discount, they are in the clear.
though it’s a new thing for yarn, it’s been happening for years in other industries – do you ever see Apple products discounted? You may see some creative ways to get around the fact, such as offering free shipping, or a Target gift card with purchase, but the Apple products are never discounted independently of Apple announcing a price cut.
Mostly, the companies do it to protect the integrity of their brand, or to protect their large brick & mortar retailers. I’m not sure why these small yarn companies would be engaging in such practices.