Personally, I don't see an issue with this, but here's my basic understanding of what was going on...
Nintendo was telling retailers - you can't sell the NES for less than $99.95 and you can't sell games for less than $49.95. Now, Nintendo couldn't actually *force* retailers to sell the items at $X, but for retailers that attempted to run sales and such, they'd find themselves getting less frequent shipments of Nintendo merchandise.
Now, Nintendo was a *major* player in the industry at the time. Hell, they were the *only* player in the industry. I forget the exact percentage, but Nintendo products accounted for a good chunk of Toys R Us' sales during this time. It was some crazy high percentage. Retailers couldn't afford to miss a shipment of Nintendo products, while Nintendo had enough demand, they could freeze them, cover them in ketchup and send them to Alaska to be sold to Eskimo women on their wedding day. Or something.
Obviously, this was a bad deal for consumers. Everyone wanted Nintendo and no one would ever run it on sale - meaning there was no price-based competition in the marketplace (this is, of course, ignoring the fact that this was pre-internet age and that stores could have easily competed based on things like, oh, customer service?).