Confidential price quotes

Question

We have a customer that shares our price quotes with our competition. Is this legal? What can we do to prevent this from happening?

Answer 1

In the united-states, the First Amendment protects the right to share information about prices. Va. Pharmacy Bd. v. Va. Consumer Council, 425 U.S. 748, (1976).

Your customers are presumably sharing your quotes because they want a better price. You can probably prevent this from happening by giving them a price low enough that they no longer feel the need to shop around..

Answer 2

Is this legal?

Yes. In fact, it’s pretty normal business practice - it’s more likely than not that most of your customers do this, this particular customer is just more open about doing so.

What can we do to prevent this from happening?

1. Not quote them.
2. Have them agree as a condition of your quoting, that they will keep the prices confidential.

Of course, the prices have to be confidential for this to work - if you provide the same prices to anyone who asks, then it isn’t confidential information because you freely share it. This would really only work if there are genuinely different prices quoted to different customers - price discrimination is legal provided the basis for the discrimination is legal (e.g. it’s based on projected sales volume but not if it’s based on the race of the customer).

Of course, the potential customer has to agree to this and you have to be willing to sue to enforce it. I will point out that sueing potential customers is an interesting marketing strategy.