Not all Strange Laws are Unconstitutional: The Case of Fixed Price of Books in Mexico, as Ordered by Law

1 09 2011

Less "FACE" and more "BOOK." Gandhi Bookstore, Mexico.

Librerías Gandhi is a bookstore chain in Mexico, famous for their good service and smart advertising campaigns (as illustrated by the image below). I loved going to their original location in Coyoacán while in law school in Mexico City. Since 2008, Gandhi cannot, by law, offer discounts in the price of most books, or charge more than the price fixed by editors or importers.

Articles 22 and 24 of the Ley de Fomento para la Lectura y el Libro (Law that Promotes Reading and Books) orders editors and importers to set a unique price for each not only acceptable, but mandatory. And sellers cannot charge more for the book, ever. And cannot sell for less either, within the first 18 months of publication. (The law provides for an exception: it is OK to give a discount if the buyer is the government, a public library or an educational institution.)

The rationally behind the law is that if let open to the market forces, supply and demand would only benefit big bookstores—normally found at big cities—in detriment of small towns and small book stores. The ultimate result should be, according to the law, to ease access to book ownership to everybody. None of that has happened so far, as the invisible hand of the market is known for its stubbornness.

COSTCO Mexico also sells books (although it is not its primary business). COSTCO, we all know, bases its sales model in offering discounted prices to their members, and resented the legal restrain on moving down the prices of books sold at their stores. COSTCO MX challenged the law was initiated via an Amparo trial, that was ultimately decided by the Suprema Corte de Justicia de la Nación (SCJN), Mexico’s highest court.

The SCJN ruled today in a divided 6-5 majority decision that a law requiring book editors and importers fixing a unique price for books neither promotes monopolies (which are prohibited by the Constitution) nor violates fundamental rights of commerce and equality, according to a SCJN’s press release. Or read the court transcript.

Weird law. But the issue before the SCJN was whether it promoted a monopoly, and the answer was in the negative. So be known: at least in Mexico, strange ≠ unconstitutional.