Price Fixing

[Gravitymaster 0]

This comment was made in anothe topical forum. I am bringing it up for discussion here .

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Since there is a factory imposed minimum sale price on the Cypres2, you will find most legitimate dealers all selling them for around the same price.

If this is true, it appears to me to be a violation of Federal Anti-Trust Legislation ie. Price Fixing.

http://www.usdoj.gov/atr/public/guidelines/primer-ncu.htm

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American consumers have the right to expect the benefits of free and open competition — the best goods and services at the lowest prices. Public and private organizations often rely on a competitive bidding process to achieve that end. The competitive process only works, however, when competitors set prices honestly and independently. When competitors collude, prices are inflated and the customer is cheated. Price fixing, bid rigging, and other forms of collusion are illegal and are subject to criminal prosecution by the Antitrust Division of the United States Department of Justice

[justinb138 0]

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This comment was made in anothe topical forum. I am bringing it up for discussion here .

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Since there is a factory imposed minimum sale price on the Cypres2, you will find most legitimate dealers all selling them for around the same price.

If this is true, it appears to me to be a violation of Federal Anti-Trust Legislation ie. Price Fixing.

I'm not sure of its legality, but the pratice is fairly common. Ever tried to buy a car stereo? Nearly every place will have them for the exact same price

The only places that will have them for a lower price aren't "Authorized Dealers" and therefore the products aren't covered under any manufacturer warranties.

[DrunkMonkey 0]

Since the Cypres is made in Germany, I'm sure there's going to be international trade implications here...

[chuckbrown 0]

A manufacturer is well within it's rights as to what it sells the product to dealers for. The dealers are selling at the same price to be competitive.

Every retailer "fixes" prices. It becomes illegal when two or more collude to set a price that has no relationship to the market. For example, if a dealer buys Cypresses for $1,000 dollars and expects to make profit, he would sell them at $1,200. (20% profit margin is pretty good). Other dealers have the same cost of goods and will sell them at similar prices to be competitive (maybe lower to gain market share, but not below the cost of goods-that's predatory pricing and is illegal). That's legal. It becomes illegal, if 2 dealers say let's each set our prices at $2,000 so people will have to buy from us and we can each make a 100% profit. That's price fixing and is illegal.

[lawrocket 3]

Look at the other side. If there was no minimum price charged for it, some big seller could start selling them below cost, which would drive competitors out of business, leaving only one business to sell them at a supracompetitive price. "Below cost" sales, if they are "predatory" are also a violation of federal antitrust laws.

By the way, you should also note this language: "When competitors collude, prices are inflated and the customer is cheated." Here, Airtec isn't colluding with anybody but themselves and setting a price-floor for downstream sellers.

This doesn't violate anti-trust law. In fact, it preserves the CYPRES2 presence throughout the US by ensuring that any seller can sell it without fear of being driven out of business. Then the business owner driven out of business doesn't have to resort to court for damages from the predatory seller. The predatory seller can't sell the product anymore.

Make sense?

edited to add: you don't like the price, buy an FXC, Sentinel or Vigil. If all of them got together with Airtec and said, "Let's increase our base price by $1000, that would be a violation of antitrust.

My wife is hotter than your wife.

[AndyMan 7]

There is some wiggle room.

From http://www.ftc.gov/bc/compguide/illegal.htm

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The antitrust laws, however, give a manufacturer latitude to adopt a policy regarding a desired level of resale prices and to deal only with retailers who independently decide to follow that policy. A manufacturer also is permitted to stop dealing with a retailer who breaches the manufacturer’s resale price maintenance policy. That is, the manufacturer can adopt the policy on a "take it or leave it" basis.

Which doesn't make a lot of sense to me. To me, the anti trust laws read something like "Manuafacturers have a responsibility to treat customers fairly. Price controls will be vigorously prosecuted.... Price controls are perfectly acceptable."

_Am

__

You put the fun in "funnel" - craichead.

[kelpdiver 2]

Resale price maintenance agreements. Vertical price-fixing -- an agreement between a supplier and a dealer that fixes the minimum resale price of a product -- is a clear-cut antitrust violation. It also is illegal for a manufacturer and retailer to agree on a minimum resale price.
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This is the paragraph immediately proceeding the one you quoted. Sends a very different message, and is exactly what so many manufacturers do. Oakley even tries to check on prices with a how much did you pay question on the registration form.

A lot of manufacturers have a minimum advertized price (Alti-2 is one, I believe) and seems to be a way to comply with the law while trying to maintain price levels.

[billvon 3,107]

>Price controls will be vigorously prosecuted.... Price controls are perfectly acceptable."

You have hit upon a fundamental issue in capitalism in a democratic society. If the product in question is something most people don't care about (i.e. ultracapacitors) then normal capitalistic drives apply. If a few manufacturers make them and everyone wants them, price is really high. If there is a lot of supply but no one wants them, prices are low. And that's generally fine with everyone. Not too many people care if airbag systems cost an extra $10.

However, if that product is a product everyone wants - say, gasoline or milk - then the forces that normally drive prices down are fair, capitalistic, competitive etc and forces that drive prices high are deceptive, gouging, a rip-off etc. There is much pressure on our leaders to "fix the problem" which they often do with some very dumb laws (like price caps.) Price caps, of course, cause instant and massive dysfunction within a capitalistic system; it's like taking a spring out of an engine's governor.

Thus we end up with a handful of laws designed to 'protect consumers', which in reality effectively protect monopolistic practices that tend to drive prices down.

Case in point. Recently Barbara Boxer, who is a speak-first think-later type of person, heard about a statement by a speaker at an oil trade show. The speaker said effectively "we don't want refinery capacity to way outstrip demand; that would be shooting ourselves in the foot." That is, when you think about it, exactly what an industry _should_ do - build as much capacity as they need and not a bit more. The ones that build too much have higher overheads, greater depreciation etc and cannot remain competitive. The ones who build too little cannot move as much product, and don't do as well.

Her reaction to this commonsense statement? She wants "action taken" against the "gougers." She suggested a law that effectively requires too much refinery capacity be built, in hopes it will drive down gas prices. In a democracy such silly ideas often get a lot of popular support.

[justinb138 0]

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Not too many people care if airbag systems cost an extra $10.

Never had to buy an airbag system, but had to fork over 115$ for a damn window switch for my grand prix a few months ago (GM dealership was the only place to get it)..

[Kris 0]

A famous example of price fixing is Bose. Bose speakers aren't allowed to be "on sale" for less than their retail price, and the prices are fixed by region. What you pay at a mom & pop audio store is what you'll pay at Best Buy or a high-end boutique store.

edited to add: Apple is notorious for their fixed pricing as well.

Sky, Muff Bro, Rodriguez Bro, and
Bastion of Purity and Innocence!™

[rehmwa 2]

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>Her reaction to this commonsense statement? She wants "action taken" against the "gougers." She suggested a law that effectively requires too much refinery capacity be built, in hopes it will drive down gas prices. In a democracy such silly ideas often get a lot of popular support.

Yet I don't understand how you take this position but want to artificially drive gas prices up via mistaken, but possibly well intentioned, government interference with the market.

In a democracy such silly ideas often get a lot of popular support

I do agree, the government should just stay out of markets with a healthy suppy and demand basis. I also agree, Barbara Boxer is a nutjob appealing to unreasonable emotive types.

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[kelpdiver 2]

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Recently Barbara Boxer, who is a speak-first think-later type of person

That's a great description of her.

She's got to be one of the luckiest politicians alive - won her first Senate seat against a right wing radio commentator, her second against a minority Republican (almost a contradiction in terms). Bill Jones seemed like a guy that could do well in California, but somehow got nowhere at all.

[rehmwa 2]

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minority Republican(almost a contradiction in terms).

and.....BAM..... the racial stereotype comes flying into the outfield

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[Darius11 12]

No it is in the gray area.

I have the same problem with a few of our manufacturer.

They will call me up and say other dealers are complaining so please increase your price.
We either have to or they will not sale us there product.

I think it sucks.
In my line of work it is usually the case that the other dealer has bad customer service or bad business practice but needs someone to blame for his lack of sales.

Like I said I think it sucks.
You should be able to sale or even give it away if you want.

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[lawrocket 3]

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You should be able to sale or even give it away if you want.

Nothing says that you can't, so long as the purpose of your low prices is not to harm other sellers.

The manufacturer wants to ensure that it has plenty of distributors/dealers - especially for a market with a limited market. For example, you don't have a big risk of gasoline companies like Arco lowering their prices to drive Shell, BP/Amoco, Chevron, Exxon, etc. out of business. Demand is too high and the risk is too great.

But if your business is driving other distributors out of business, that could have a negative effect on the citizenry and on the manufacturer. ON the citizenry, it creates a monopoly, where once you get the lion's share you can drive prices up at will.

For the manufacturer, other distributors/dealers not carrying their product eats up their market share. People won't want to have to go all the way to you. The manufacturer, to protect itself, may quit giving you the product if your prices are too low.

This can be especially dangerous in this age where I can order ribs from Tennesse tonight and have them delivered in time for dinner tomorrow.

These tactics are also aimed at preventing the Walmart's of the world - dealers and distributors who do it cheaply and get rid of mom and pop.

My wife is hotter than your wife.

[kelpdiver 2]

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minority Republican(almost a contradiction in terms).

and.....BAM..... the racial stereotype comes flying into the outfield

This IS Speakers Corner.

If you want to sidetrack the thread and prove that it's not a true generalization, I'm all ears...and ready to LMAO.

[craddock 0]

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Like I said I think it sucks.
You should be able to sale or even give it away if you want.

Bullshit. I am a Territory Sales Manager for a Manufacturer, and I have no problem raising someones price if they are screwing up the market. I have recently raised someones price 25 points because they were selling product at no profit and attempting to ship throughout the country. You may think it sucks, but what really sucks is people whoring up the market.
The goal for a manufacturer is to be very profitable, and if you are not helping them do that don't be surprised if they fuck with you.

btw- my line are consumable products for the construction industry. But even if I was selling retail non-consumable widgets it would seem wise to keep customers playing fair.

You are not more important than the manufacturer. You may be content to work of low margins and whore up the market. Most dealers don't want to sell a product they can't make good money on. So instead they take on a competitive line. I can't allow that.
Sorry.

That spot isn't bad at all, the winds were strong and that was the issue! It was just on the downwind side.

[rushmc 23]

One company, manufacturing a product can set the price, and the price thier dealer sell at legally all they want. Two differenct companiens selling simular products is price fixing.

DeWalt has strict limitations on their dealers too. But they have compitition

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[bodypilot90 0]

I had heard a dz was selling them for cost (not sure what one), was this untrue?

[Darius11 12]

Then you should move to another country.

The point of a capitalistic economy is so the customer gets the best price.
I don’t know about who ever or whatever manufacturer you represent, but the ones I deal with still make the same profit. I buy the products from them for the same price. I want to give my customers better pricing that’s my choice not the manufacturers.

The manufacturers need to stand up for what’s right and not whore themselves out to the whiners.

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[Gravitymaster 0]

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Then you should move to another country.

The point of a capitalistic economy is so the customer gets the best price.
I don’t know about who ever or whatever manufacturer you represent, but the ones I deal with still make the same profit. I buy the products from them for the same price. I want to give my customers better pricing that’s my choice not the manufacturers.

The manufacturers need to stand up for what’s right and not whore themselves out to the whiners.

We actually agree on something. Whats the temperature outside?

[Darius11 12]

I don't know but I just saw Satan and he was making snow angels

I'd rather be hated for who I am, than loved for who I am not." - Kurt Cobain

[SkyDekker 1,465]

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The point of a capitalistic economy is so the customer gets the best price.

No its not. The point is to make as much money as possible.

[billvon 3,107]

>The point of a capitalistic economy is so the customer gets the best price.

Not really. The point of capitalism is to use greed to apportion limited resources, set prices via a natural, self-correcting means and provide incentives for commerce. One of the results is that, sometimes, consumers get a good price. Sometimes they get screwed. Try to buy a Monet and let me know whether you get a good deal. Or just wait a few years and try to buy gas.

Capitalism is essentially allowing markets to set prices. The market is made up of sellers and buyers, and a lot of work has been done on what affects markets and how the system works overall. Sometimes the system works well for consumers (i.e. it lowers prices) and when it does, the people/corporations involved are 'getting the job done,' 'providing good deals', 'being competitive.' When the exact same market forces drive prices up, people are being 'gouged,' 'ripped off', companies are 'taking advantage of people' etc.

>The manufacturers need to stand up for what’s right and not whore
>themselves out to the whiners.

"Whores" provide services for money, and the term whore generally refers to a person who puts money above all else. That is pretty much the definition of a successful corporation, so you'd be hard-pressed to say that the most successful ones are not like that.

[craddock 0]

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I don’t know about who ever or whatever manufacturer you represent, but the ones I deal with still make the same profit.

Not when the manufacturer loses bussiness to other customers that don't what to compete with a whore. They take on a competitors product and I lose sales. It's quite simple really yet it seems to be going over your head.

Again this is a consumable product I am talking about. If you decide to sell it with no markup and ship all over the country, you are going to get quite a bit of business most likely. What is also most likely is that my other customers are not going to want to sell a product at no margin so they will chose take on another line where they can make more margins. Now because of this me and my company lose sales.

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I want to give my customers better pricing that’s my choice not the manufacturers.

Wrong. If I raise your price because of your actions, you are unable to give your customers better pricing. So I would say the manufacturer can have quite a bit of choice in the matter.

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The manufacturers need to stand up for what’s right and not whore themselves out to the whiners.

Manufactures should not let their customers run their business.

Sorry to hurt your feeling, but we are out to make money. Not sacrifice sales on account of one customer's lousy business practices.

That spot isn't bad at all, the winds were strong and that was the issue! It was just on the downwind side.