Generally, price fixing is illegal, but it is tolerated and even sanctioned by government when it's in their best financial interest. In the United States, if the price fixing is not politically correct, it can be prosecuted as a criminal felony offense under section 1 of the Sherman Antitrust Act.
Apparently, under U.S. law, price fixing is only illegal if it is intentional and comes about via communication or agreement between firms or individuals, not the government.

A 1945 Massachusetts law set minimum prices for smokes by the pack and carton depending on brand. But as a pitch to hike tobacco taxes by $1 per pack burns through the Legislature, lawmakers have tacked on the amendment removing the price controls as relief for retailers.

The pricing law now dictates that a pack of Marlboros, for example, cannot be sold in the Bay State for less than $4.97 - or a store owner faces a $500 fine. If the government sanctioned illegal minimum pricing is outlawed, prices could mirror New Hampshire, where the same pack sells for about $3.75, and no rules or fines apply.

Throwing out price controls for cigarettes - blasted by fuming antismoking activists - still won’t be a windfall for mom-and-pop outlets using the profits to keep other costs down, convenience store owners say. "We use the money we make on cigarettes to sell a couple of brands of milk" cheaper, said Roger Bush, owner of Apple Country Market in Clinton.

In other words, Big Tobacco has been subsidizing Big Dairy.