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SCOTUS Case May End Sale Prices

kdawson posted more than 7 years ago | from the through-the-floor dept.

The Courts 527

An anonymous reader writes "If you own a mom & pop store and can't get rid of some of your inventory, you can always clear out some shelf space by holding a sale. If the Supreme Court sides with business interests in a case they heard today, however, such sales may no longer be possible. Since 1911 it has been illegal for manufacturers to force retailers into setting a price floor for products — individual retailers get to decide how much they sell products for. But today the Supreme Court heard oral arguments in a case seeking to overturn this longstanding rule. Should the Court do so, it would drive up consumer prices across the board. This case is particularly salient in the era of Internet shopping: consumers are now easily able to shop around to multiple retailers to find the best price. The Court could wipe out this advantage." From the article: "Should the Court abandon the... rule against minimum resale price maintenance... it would send a signal that the Roberts Court will continue to narrow the application of the antitrust laws and that the Court may disregard settled precedent and Congressional will in other areas of the law as well."

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adam smith is rolling in his grave (1, Flamebait)

User 956 (568564) | more than 7 years ago | (#18495063)

If the Supreme Court sides with business interests in a case they heard today, however, such sales may no longer be possible.

I don't care what the free marketeers say, these are exactly the types of questions that capitalism can't solve by itself.

Re:adam smith is rolling in his grave (0)

Anonymous Coward | more than 7 years ago | (#18495093)

I doubt it will happen. 1. IANAL but I can't forsee any good legal arguments to overturn the law. 2. This is the exact sort of thing that gets large sections of the populace up in arms, like gas prices. Even if they do overturn the law, expect Congress to enact a new one anyway. For similar reasons, I don't expect them to overturn it.

Re:adam smith is rolling in his grave (3, Interesting)

644bd346996 (1012333) | more than 7 years ago | (#18495361)

In many states it is already illegal to sell gasoline below cost.

Re:adam smith is rolling in his grave (1)

hike2 (550205) | more than 7 years ago | (#18495101)

Are you serious? Capitalism never calls for the producer to dictate the cost that the 3rd party buys the product at... There is NOTHING in there that states that the shop owner cannot sell the goods at a loss (instead of a total loss by not selling at all). In other words, your statement makes NO SENSE.

Re:adam smith is rolling in his grave (1, Informative)

Anonymous Coward | more than 7 years ago | (#18495145)

But capitalism dictates the freedom to choose who you do business with. The manufacturer will choose not to do business with anyone who does not follow the guidelines set by the manufacturer.

Re:adam smith is rolling in his grave (4, Informative)

profplump (309017) | more than 7 years ago | (#18495295)

And the free-market answer to that is that no manufacturer will be able to sell the price-fixed product because no retailers will do business with them. While I'm sure you could come up with a few counter-examples, in many markets manufacturers are at the mercy of retailers, and exactly the *opposite* problem occurs -- retailers dictate price to manufacturers. This is one of the thing people whine about when the bash Wal-Mart.

No minimum price? Fine. No product for you. (3, Interesting)

tepples (727027) | more than 7 years ago | (#18495153)

Capitalism never calls for the producer to dictate the cost that the 3rd party buys the product at... There is NOTHING in there that states that the shop owner cannot sell the goods at a loss (instead of a total loss by not selling at all).
A retailer has the right to refuse price floor contracts. Likewise, under a pure free market, a producer has the right to refuse to sell its product to retailers that refuse price floor contracts.

Re:No minimum price? Fine. No product for you. (3, Insightful)

maxume (22995) | more than 7 years ago | (#18495267)

In high minded theory land, doesn't a more efficient producer step in in that case?

Re:No minimum price? Fine. No product for you. (2, Insightful)

User 956 (568564) | more than 7 years ago | (#18495349)

In high minded theory land, doesn't a more efficient producer step in in that case?

Well, then you're entering the murky world between the pure capitalism of a commodity market, and the non-price-sensitive premium product space which is driven by marketing.

For example, if Apple wants to lock the price of iPods, there isn't going to be a more efficient producer of iPods that will undercut their price lock. Another type of MP3-player, sure, but the premium consumer product space is not one that responds in the normal way. It's completely different, than say, selling gasoline.

Re:No minimum price? Fine. No product for you. (1)

maxume (22995) | more than 7 years ago | (#18495439)

My instinct is that the 'that's lame' penalty would be quite a bit higher though(econ literacy would be somewhat higher in high minded theory land right?).

Re:No minimum price? Fine. No product for you. (3, Informative)

whoever57 (658626) | more than 7 years ago | (#18495341)

A retailer has the right to refuse price floor contracts. Likewise, under a pure free market, a producer has the right to refuse to sell its product to retailers that refuse price floor contracts.
We are increasing moving away from a free market, the DMCA and other laws have created new government sanctioned monopolies -- for example, you can't buy anything except an iPod and expect it to work with iTunes. Increasingly, products are intangible and as such are protected from competition by copyright law, or they are tangible products that are protected by patent law. Free markets really only work when there are viable alternatives.

Re:adam smith is rolling in his grave (2, Insightful)

nomadic (141991) | more than 7 years ago | (#18495469)

Are you serious? Capitalism never calls for the producer to dictate the cost that the 3rd party buys the product at... There is NOTHING in there that states that the shop owner cannot sell the goods at a loss (instead of a total loss by not selling at all). In other words, your statement makes NO SENSE.

No, it makes a lot of sense. See, the free marketeers/libertarians are really into contracts. These are basically the manufacturers only selling to people who are willing to enter into a contract where they only sell for what the manufacturer mandates.

How is this anti-free market? If the stores don't want to accept the terms, they're perfectly able to go elsewhere for those types of products.

Re:adam smith is rolling in his grave (1)

robyannetta (820243) | more than 7 years ago | (#18495123)

Just imagine what will happen to Wal-Mart if they had to sell retail...

Re:adam smith is rolling in his grave (1, Insightful)

Anonymous Coward | more than 7 years ago | (#18495213)

That's because they're always talking about perfect markets, which is like a communist extolling perfect communism, neither will ever exist. The market fails to optimize profit and cost due to a number of existing issues, such as imperfect knowledge, duplicity, and greed.

It's become obvious that the Republican elites are concerned only with installing an oligarchy. They support a free market less than many "dirty hippies".

Blame the Victim (5, Insightful)

The Monster (227884) | more than 7 years ago | (#18495273)

these are exactly the types of questions that capitalism can't solve by itself
Hogwash. If a manufacturer places rules on retailers that they don't like, they're likely to find those retailers stocking competitors' products instead. All it takes is one player who sees the value of not actively alienating his distribution channels. With a free capital market, such a player can be assembled with little difficulty. But of course, we don't have a free capital market. Everything is regulated by SEC, and every time a large company goes out of business, someone decides There Ought To Be A Law to be sure it doesn't happen again. So they pile on more regulations that act as a barrier to new entrants, stifling competition.

The apologists for the Nanny State routinely trot out antitrust as an example of where the free market doesn't work, but in reality it's the industries with the most regulation by government that are the most monopolized. Take telecommunications. For most of the history of telephones, it was illegal to compete for customers. That monopoly was enforced by local governments. But I guess as long as you control the government schools that teach the history of 'Robber Barons', people will believe the propaganda.

Re:adam smith is rolling in his grave (2, Funny)

yoder (178161) | more than 7 years ago | (#18495393)

"these are exactly the types of questions that capitalism can't solve by itself."

User956, you know of course that you are going straight to hell for that kind of thinking. Blasphemer!

Isn't this the definition of the Free Market? (3, Insightful)

tentimestwenty (693290) | more than 7 years ago | (#18495067)

As a retailer, I would simply stop stocking any product that forced me to sell at price higher than the market could bear. This would backfire on manufacturers and have a terrible effect on availability and ultimately amount of goods sold, i.e. recession time... In some cases Internet retailers sell at or below cost as loss leaders, or the volumes are so much higher than a small store could sustain but I don't see how you could apply this equally to all products sold.

Re:Isn't this the definition of the Free Market? (4, Insightful)

SRA8 (859587) | more than 7 years ago | (#18495111)

Umm...unless all the major manufacturers executed this change together.

Re:Isn't this the definition of the Free Market? (1)

TodMinuit (1026042) | more than 7 years ago | (#18495311)

So then I start a manufacturing business that doesn't price fix and become the new overlord.

Re:Isn't this the definition of the Free Market? (1)

High Hat (618572) | more than 7 years ago | (#18495115)

The Problem being, this way other stores can get a competitive advantage over you by stocking the products, in effect probably driving you into ruin long before your boycott has had any noticeable impact on the manufacturer's business decisions...

This impacts botique items the most (2, Insightful)

davidwr (791652) | more than 7 years ago | (#18495131)

Designer merchandise manufacturers will just tell vendors like you "buh-bye."

Ditto vendors who have a lock on their product, such as Microsoft. As it is, it's very difficult to find MS-Windows below MSRP. Under these rules, it would be impossible.

Re:This impacts botique items the most (4, Funny)

Grishnakh (216268) | more than 7 years ago | (#18495149)

As it is, it's very difficult to find MS-Windows below MSRP. Under these rules, it would be impossible.

You've never heard of BitTorrent, have you?

Re:This impacts botique items the most (1)

pluther (647209) | more than 7 years ago | (#18495459)

Or froogle.

I legally purchased my copy of XP-64 for $80, which is considerably below the MSRP of $299. I just had to wait a week for it to arrive.

Until you consider Patents and other G. Monopolies (2, Informative)

twitter (104583) | more than 7 years ago | (#18495303)

I would simply stop stocking any product that forced me to sell at price higher than the market could bear.

This is one of those areas where government regulation protects you. Another area of regulation will make sure you are screwed even worse if this regulation is removed.

Let's imagine they have their way. You can stop selling stuff that's over priced, but you would still be stuck with it. Right now, you can reduce the price to recover part of the money you wasted on something you thought would sell better. This happens all the time. Not being able to recover that money would make more business go bankrupt and then everyone is stuck with the losses.

Really though, this is about what you do with what you own and we should not undo a century of sensible policy. Once you buy something you own it and can do what you want, right down to giving it away. Why give up that right? So McSoft can make more money? No one but monopoly providers will benefit from this.

Finally, the insane state of US patent law means that you may not have a competing product to buy and sell. What can you do then?

Re:Until you consider Patents and other G. Monopol (2, Insightful)

pizpot (622748) | more than 7 years ago | (#18495507)

"Not being able to recover that money would make more business go bankrupt and then everyone is stuck with the losses."

Oh boy, this sounds like a big business plan to get more of the pie. I guess the computer simulation is finished running, and has proven that by fixing prices, big bussiness will get more pie. Why else would the courts be thinking this?

Good news for the black market (2, Interesting)

Anonymous Coward | more than 7 years ago | (#18495085)

Right now, many dealers show "prices too low to list" or "call" to get around distribution rules. You're gonna see creativity like never before if this happens.

Re:Good news for the black market (2, Insightful)

GiovanniZero (1006365) | more than 7 years ago | (#18495117)

It's called MAP(minimum advertised price), I don't think the rule needs to change because MAP is plenty good. You may think it's bad because you may not be able to find what you want for quite as cheap but it allows small scale retailers to compete with the big boys. In the end it's probably a net positive effect for the economy.

Re:Good news for the black market (5, Insightful)

publius1234 (615205) | more than 7 years ago | (#18495253)

Price controls/manipulation are never a long term positive economically speaking. These kinds of things always lead to inefficiencies, which have a net negative economic impact.

They do, however, make excellent fodder for populist politicians and the pathologically uninformed. Bread and circuses, anyone?

Re:Good news for the black market (1)

phoenixzorn (1044960) | more than 7 years ago | (#18495203)

This applies currently to many sales venues, including mail-order, internet sales, and even local retail sometimes. What people don't realize, is that even when Ma & Pa put their 35% off sale on at the end of the year to clear out merchandise, they aren't lowering the price below cost in 99% of the cases. The manufacturers would have to be retarded to force distributors - or even retailers for that matter - to sell their products at anything more than cost. Enforcing such laws would cause Ma & Pa to just go find a different manufacturer.

"Call" online? (4, Interesting)

tepples (727027) | more than 7 years ago | (#18495229)

Right now, many dealers show "prices too low to list"
There is a difference between contractual bans on advertising goods at prices below a price floor (your scenario) and contractual bans on actually selling goods at prices below a price floor (the scenario of The Article).

or "call"
Except the "call" price is incompatible with online retailers that use the shopping cart user interface model. To me, "call our sales department for pricing" appears to mean "If you have to ask, you can't afford it. If you can afford it, we'll make you listen to our sales pitch, which we hope will cushion the sticker shock."

One thing's for sure... (0)

Anonymous Coward | more than 7 years ago | (#18495095)

The RIAA would have a field day with this.

What do you mean "would?" (1)

LunaticTippy (872397) | more than 7 years ago | (#18495205)

The RIAA would have a field day with this.
The RIAA has a monopoly. A monopoly can charge whatever they want. A monopoly sets the prices for everyone.

This legal attempt would make the rest of the market more like the RIAA's market.

Some other monopolies (or near so) are phone, internet, TV, etc.

Re:What do you mean "would?" (1)

harlows_monkeys (106428) | more than 7 years ago | (#18495265)

The RIAA has a monopoly

What makes you think the RIAA has a monopoly?

There are plenty of non-RIAA music providers.

Re:What do you mean "would?" (1)

Ahnteis (746045) | more than 7 years ago | (#18495591)

Yes, but they can't afford to bribe the radio stations like the RIAA can. /me types slower so that /. will let him post.

Re:What do you mean "would?" (0)

Anonymous Coward | more than 7 years ago | (#18495403)

The RIAA is more of a cartel then a monopoly. Tell me that [princeton.edu] doesn't sound like the RIAA.

There are other ways. (5, Insightful)

ScentCone (795499) | more than 7 years ago | (#18495139)

You'd see a vastly improved rebate industry ramp up, and more importantly, you'd see retailers "bundling" things that they would then instantly take back for a substantial credit/refund. Anyone who's worked retail (especially IT supporting retail!) knows how creative someone can get while competing with someone else two doors down in the strip mall. Where this would get ugly is the little stuff... like, toothbrushes.

Another solution? Retailers who thrive on competitve pricing all become like Costco, and sell things "wholesale" to their member customers. It's sort of like those bars where you have to become a "member of the club" (for $0.01) in order to have a drink poured.

This effort will flop, or there will be a legislative cure anyway. Wal-Mart alone would lobby that one right into the stratosphere.

Re:There are other ways. (1)

searchr (564109) | more than 7 years ago | (#18495277)

"Wal-Mart alone would lobby that one right into the stratosphere." uh, no they wouldn't. In fact it's directly in their interests for just such a thing to happen. Walmart doesn't sell below cost, they buy in such huge bulk that they can profitably sell for mere pennies over cost. This would be just the thing to help them crush the remaining small town stores, and without having to use a bulldozer.

Re:There are other ways. (4, Informative)

Martin Blank (154261) | more than 7 years ago | (#18495515)

Walmart doesn't sell below cost, they buy in such huge bulk that they can profitably sell for mere pennies over cost.

But WalMart still sets their own prices. They may sell for eight cents over or twelve cents under their costs, but that is WalMart's call. The worry here is that WalMart would be forced to sell, say, a shirt at $14.98 even if they want to sell it for $6.92, or a mower for $149.99 even if they wanted to price it at $105.96.\

Substitute the name of your favorite local mom-n-pop for 'WalMart.'

Re:There are other ways. (2, Insightful)

searchr (564109) | more than 7 years ago | (#18495579)

Right, but if all things are equal, Walmart wins. If the manufacturer sets a $14.99 pricepoint (which they won't, the point is still for make them money, they just don't want product dumped and sold for LESS than wholesale, which is the point of many sales. but for the sake of argument) then Walmart can sell that for $15.01 and still make money, whereas the smaller shops can't move that much product, and thus have to sell for more, and thus buyers will go to Walmart to buy the thing.

In all things, Walmart would win.

Re:There are other ways. (2, Informative)

nine-times (778537) | more than 7 years ago | (#18495309)

Why would Walmart worry? Apparently, Walmart can strong-arm their suppliers to do whatever they want.

Re:There are other ways. (3, Funny)

kent_eh (543303) | more than 7 years ago | (#18495411)

You'd see a vastly improved rebate industry ramp up,
I'm sorry, but it's never appropriate to use "rebate" and "improved" together in the same sentence.

Questionable (3, Insightful)

seanadams.com (463190) | more than 7 years ago | (#18495143)

it would drive up consumer prices across the board.

Is the submitter suggesting that the periodic sales by mom & pop storesare responsible for keeping retail prices in check "across the board?"

Anti - price fixing laws are actually becoming quite a real problem or manufacturers and retailers, because they have to juggle the retail channel (which really needs 30%) with the online channel, which can be profitable on only about 6% margin. Preventing online from undercutting retail means giving them less margin, which is fair, but even then they can undercut until their margin is absolutely microscopic and still make money, whereas the retailer can not.

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices.

Re:Questionable (0)

Anonymous Coward | more than 7 years ago | (#18495247)

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices.
It sounds like what you're saying is actually: Free market forces => manufacturers can't control their street prices.

Re:Questionable (1)

seanadams.com (463190) | more than 7 years ago | (#18495365)

It sounds like what you're saying is actually: Free market forces => manufacturers can't control their street prices.

No that's not what I'm saying. In a free market, as a manufacturer I could say "if you want to sell my product, you must charge this much." However, what we have currently is restrictions that prevent them from dictating street price to their channel. I'm suggesting that while this might have been a reasonable thing before e-commerce, it should probably be reevaluated now.

Re:Questionable (1, Funny)

Anonymous Coward | more than 7 years ago | (#18495291)

Justice Roberts, is that you?

I'm OK with it (5, Insightful)

LunaticTippy (872397) | more than 7 years ago | (#18495301)

If online retailers can provide the same thing for 24% less then we should have very few brick and mortar retailers.

Grocery stores would still exist, as would convenience stores. Clothing shops might do OK since people like to try things on. There are always impulse/emergency items, in many categories. I can see the need for a handful of electronic/computer retailers in a large city.

Can you give me a good reason we should prop up an obsolete business model besides nostalgia or personal preference?

The way I've shopped in the last 10 years is: Online comparison/research. Online purchase unless shipping is more expensive than local, I want an easy return, I need to touch/smell/hear/taste the item first, or I'm in a big hurry.

I always assumed that eventually everyone would adopt this model of shopping and we'd see a massive collapse of brick-and-mortar retailers. Retailers that are smart will be able to adapt. Lots of opportunities, like partnering with an online retailer, offering amenities that aren't possible online, etc.

Re:I'm OK with it (1)

seanadams.com (463190) | more than 7 years ago | (#18495519)

Can you give me a good reason we should prop up an obsolete business model besides nostalgia or personal preference?

I'm not talking about propping up anyone. The situation is kind of counter-intuitive. Right now we have laws which were originally designed to force competition to exist (between dealers who have similar cost structures) where it naturally might otherwise be controlled through agreements between manufacturers and their dealers. Now the situation is different because we have two channels with vastly different cost structure, and we should maybe let the free market do it's thing. You seem to be in favor of a free market but also in favor of the anti price fixing laws. You can't have it both ways.

Re:I'm OK with it (1)

pizpot (622748) | more than 7 years ago | (#18495589)

"Can you give me a good reason we should prop up an obsolete business model besides nostalgia or personal preference?"

1. A semi-trailer with 10000 boxes costs less pollution to ship than 10000 separate courrier shipments. There is no contest.

Re:Questionable (1)

P3NIS_CLEAVER (860022) | more than 7 years ago | (#18495313)

What are they going to do with merchandise they absolutely can't get rid of? Maybe it's out of fashion or there was a scandal about the product? They will have to write them off as shrinkage and throw them in the trash. Sounds like a recipe for higher prices to me.

Re:Questionable (1)

HTTP Error 403 403.9 (628865) | more than 7 years ago | (#18495451)

What are they going to do with merchandise they absolutely can't get rid of? Maybe it's out of fashion or there was a scandal about the product? They will have to write them off as shrinkage and throw them in the trash. Sounds like a recipe for higher prices to me.
The owners could torch the store and collect the insurance money for the full price of the merchandise.

Re:Questionable (2)

rewt66 (738525) | more than 7 years ago | (#18495381)

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices.

Um, forgive me, but "because manufacturers can't control their street prices" sounds to me exactly like "free market forces". "Price control" is the antithesis of a free market.

Re:Questionable (1)

seanadams.com (463190) | more than 7 years ago | (#18495569)

Um, forgive me, but "because manufacturers can't control their street prices" sounds to me exactly like "free market forces". "Price control" is the antithesis of a free market.

Sorry but that is dead wrong. In a FREE market, manufacturers are FREE to make pricing agreements with their dealers. Dealers in turn, a FREE to refuse to carry products if they don't like the terms, and consumers are FREE to not buy the products if they feel they are overpriced.

I'm not saying that a free market is a panacea. But you are really confused if you think that's what we have now!

Re:Questionable (1)

etymxris (121288) | more than 7 years ago | (#18495461)

There are two responses:
1) So be it. That's the market at work.
2) Speed and convenience will still win out much of the time. For example, people can buy chicken from the grocer and bake it themselves much cheaper than they can pick up food at KFC, but people still buy chicken at KFC. Similar with all types of products. I may be able to get an RJ-45 cable a little cheaper online, but I often don't feel like waiting a week for it.

Computer equipment is an extreme example anyway. Other that time and ease of return, there is little advantage to buying most computer products in a brick and mortar. Does being able to pick up and handle the video card box make for any more compelling a shopping experience than simply reading its specs online?

Re:Questionable (1)

nine-times (778537) | more than 7 years ago | (#18495465)

I'm not entirely sure that online retailers undercutting brick-and-morter is a horrible thing. I'll think about this one for a while, but for the most part, this seems to be a case where the free market is preferable.

For one thing, it seems to me that price-fixing might harm brick-and-morter stores. If you set it so online stores necessarily make a much larger profit margin, it seems to me that many people might be more likely to try to push business online for those higher profit-margins. Since their costs are lower, the prices are the same, investors would then get a better return on online business and so they might try to figure out ways to close brick-and-morter shops in order to push the purchases to their online store.

I'm not saying that it will happen this way, but rather that there's room for this to backfire. On the other hand, I have a clear division between what I buy at the store vs. online. Do I want it today, in 2 hours, or now? Then I'll have to go to the store. Am I going to want to see the product, try it out, talk to a salesman? The store. Do I want to have a physical location where I can go and talk to people if I have a problem with the product? Store. The only things I buy online are general commodity parts where I'm getting a predictable product that I don't need within the next few days.

In this sense, it seems to me that it's perfectly possible for many brick-and-morter stores to keep on going without price-fixing. In fact, in those instances where brick-and-morter is just completely, flat out, no question, less efficient than online, and inefficient without any benefit that customers aren't willing to spend an extra dollar or two, then why not let those products/services move online? What's wrong with efficiency? What's wrong with obsolete business models going out of business, so long as they're truly obsolete.

Re:Questionable (1)

bigdavex (155746) | more than 7 years ago | (#18495517)

Anti - price fixing laws are actually becoming quite a real problem or manufacturers and retailers, because they have to juggle the retail channel (which really needs 30%) with the online channel, which can be profitable on only about 6% margin. Preventing online from undercutting retail means giving them less margin, which is fair, but even then they can undercut until their margin is absolutely microscopic and still make money, whereas the retailer can not.

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices.

If people aren't getting a service they value, why [i]should[/i] there be a B&M?

Re:Questionable (2, Insightful)

raehl (609729) | more than 7 years ago | (#18495525)

Is the submitter suggesting that the periodic sales by mom & pop storesare responsible for keeping retail prices in check "across the board?"

They may be, but the point they should be making is that internet retailers are responsible for offering a much lower price to consumers who don't want to pay for the benefits of a brick and mortar store. If you let manufacturers dictate pricing, you eliminate the ability of internet retailers to undercut brick and mortar stores, and we're all forced to pay more money for an inefficient (as defined by what the market is willing to spend resources on) means of distribution.

For an example of what will happen with this... (4, Insightful)

badboy_tw2002 (524611) | more than 7 years ago | (#18495147)

Check out the scuba equipment market. Most stores that stock scuba gear are mom & pop's - the big box stores don't bother with this niche stuff. The mom & pop's sign price floor agreements with the manufacturers in order to sell the gear and get the warranty. Now they're getting slammed by oversea's "grey" marketeers that are shipping stuff over the Internet for half the costs. They aren't under warranty, but the retailers themselves have provided an aftermarket warranty to get around it, as they're making enough cash that its worth it just to replace the item. You just can't have these kinds of agreements anymore with the transparency and information exchange the internet allows. New business model time boys! Oh, wait, I'm sorry, I mean -- call the lawyers!

Re:For an example of what will happen with this... (3, Interesting)

electrosoccertux (874415) | more than 7 years ago | (#18495275)

So my friend owns and operates his own lighting and audio equipment online retailer. I remember a discussion we had where he was telling me about the minimum price he's allowed to sell his products for, or the manufacturer and others in league with that manufacturer won't sell him anything more. Something like he buys a given product from them for ~$40 but he's not allowed to sell it for less than $80. The manufacturers require all businesses looking at selling their audio and lighting equipment to agree to do the same. This is why you can't find anything cheaper than $80 for a given product, even though the seller could go much lower.

I don't know if this is illegal or not, but is this not what the article is discussing?

Sort of. (3, Informative)

Chmcginn (201645) | more than 7 years ago | (#18495371)

Under current law:

a.)Manufacturer telling retailer "You must sign a contract to sell at this price, and if you sell below that afterwards, we sue you" is illegal.

b.)Manufacturer telling retailer, "You can't advertise at cheaper than this price, or we won't sell to you anymore" is legal. According to the ACSBlog people, the net effect of the case in point would be to make both legal.

Re:For an example of what will happen with this... (1)

nomadic (141991) | more than 7 years ago | (#18495561)

Now they're getting slammed by oversea's "grey" marketeers that are shipping stuff over the Internet for half the costs. They aren't under warranty, but the retailers themselves have provided an aftermarket warranty to get around it, as they're making enough cash that its worth it just to replace the item.

But honestly, does it really matter that every once in a while your regulator fails at 120 feet below sea level?

Re:For an example of what will happen with this... (1)

NetJunkie (56134) | more than 7 years ago | (#18495573)

I hate this. You run in to this a lot in higher end home theater gear. I'm looking to buy a new receiver and would love to get a Pioneer Elite except they only sale through authorized dealers. If I go grey market I lose my factory warranty, including firmware updates to fix known issues.

goodbye eBay! (i.e. wont happen) (2, Insightful)

Bluedove (93417) | more than 7 years ago | (#18495167)

If this preposterous case turns out with manufacturer set floor prices, would this also end auctions across the USA, including eBay?!

Re:goodbye eBay! (i.e. wont happen) (1)

Hrothgar The Great (36761) | more than 7 years ago | (#18495243)

You would have to actually sign a contract with the manufacturer in order for this to affect your eBay sales. So, it would only affect you if you were buying 10,000 of the same item from someone and selling ALL of them on eBay.

Re:goodbye eBay! (i.e. wont happen) (0)

Anonymous Coward | more than 7 years ago | (#18495289)

"If this preposterous case turns out with manufacturer set floor prices, would this also end auctions across the USA, including eBay?!"

Only of items purchased wholesale and sold as new. This wouldn't affect the sale of used goods.

Re:goodbye eBay! (i.e. wont happen) (1)

Bluedove (93417) | more than 7 years ago | (#18495499)

Only of items purchased wholesale and sold as new. This wouldn't affect the sale of used goods.

I see the point you make, but here's what worries me, posed as a personal example. I recently bought a bunch of stuff in an auction from a company that went belly-up. In the sale, I got a LOT of stuff (pun intended ;) that was brand-new-never-been-opened that originated with 3rd-party suppliers. Would resale of this apply under such a ruling? I am going to be selling this stuff on eBay as BRAND NEW (because it is).

In the end, it doesn't affect me directly as I don't live in the USA, but preventing its sale on eBay would probably affect me in some way.

Re:goodbye eBay! (i.e. wont happen) (1)

BillX (307153) | more than 7 years ago | (#18495529)

If not (e.g. First Sale Rule), could PriceCo simply set up a sister corporation (CostPlace) where each buys 50% of the goods, then sells them back to the other at MSRP in exchange for the reciprocal service? I guess it would be amusing to see aisle after aisle of product marked "Previously Purchased, Unused Condition" or somesuch.

Isn't Apple doing this? (3, Interesting)

stefanb (21140) | more than 7 years ago | (#18495209)

I'm confused: I was under the impression that Apple pretty much dictates the sale price for the iPod and other consumer gear to the dealers? It sounds like such contracts would be massively illegal currently?

Re:Isn't Apple doing this? (1)

iPaul (559200) | more than 7 years ago | (#18495281)

It's not specific to Apple. You find it in a lot of consumer electronics.

Re:Isn't Apple doing this? & Bose? (1)

spiedrazer (555388) | more than 7 years ago | (#18495293)

I agree (see below).

How have Apple & Bose & others been able to dictate their MRP's to retailers for years. You can't find an iPod or Bose system discounted anywhere except for close outs etc.

What is their loophole, or do the retailers just not fight them because the demand is so high they will sell X products at any price?

Re:Isn't Apple doing this? & Bose? (3, Informative)

silverhalide (584408) | more than 7 years ago | (#18495409)

Apple and Bose maintain tight control over their distribution. As such, they control directly the price the retailer pays for the goods. Other companies use third party distributors which introduce more padding into the pricing, and as such more flexibility. If you violate Apple's pricing policies, well, no more iPods for you to sell, and you can't get them anywhere else for less than the retail price. With other companies, you could simply call up another distributor and continue selling the goods for whatever price you wanted (even if it's below retail).

The practice of selling things too cheap will lessen as more and more companies take control of their distribution, cut out distributors, and enforce their pricing policies.

Re:Isn't Apple doing this? & Bose? (1)

larry bagina (561269) | more than 7 years ago | (#18495485)

the "loophole" is that Apple/Bose/etc will stop supplying retailers that don't follow MRP guidelines.

Re:Isn't Apple doing this? & Bose? (2, Interesting)

Omnifarious (11933) | more than 7 years ago | (#18495487)

Well, I've never bought an iPod or a Bose product. I've bought a laptop from Apple, but I think I will stop doing that now. Now I know why prices for Bose and Apple products don't drop like they do for everything else.

In my opinion, instead of making Apple's practices even more legal, it should shift to trying to figure out a way to make them illegal while doing as little as possible to reduce any other freedom Apple has.

I didn't realize that competition among retailers was one of the big reasons you see price drops on consumer electronics stuff. But now that it's been pointed out it makes perfect sense. The product competes with itself to drive its own price down.

Re:Isn't Apple doing this? (1)

maxume (22995) | more than 7 years ago | (#18495307)

They have their own customer facing sales chain. If someone doesn't want to sign a contract when making wholesale purchases from them, they can go ahead and tell em to eff off. (the essence of it being that the stores 'need' the iPod more than Apple 'needs' the stores)

Re:Isn't Apple doing this? (2, Interesting)

Frogbert (589961) | more than 7 years ago | (#18495329)

Apple sells the iPods to the stores at pretty much the price you pay for it. There is very little profit in selling them, with the exception of all the indirect profit from people buying other stuff while they are there. They could drop the prices as much as they wanted but they would be losing money then.

Re:Isn't Apple doing this? (1, Informative)

Anonymous Coward | more than 7 years ago | (#18495363)

Not quite.

Apple and other manufacturers and distributors use various carrots and sticks to enforce the MSRP, such as providing rebates and advertising subsidies for retailers who comply.

Re:Isn't Apple doing this? (4, Insightful)

mp3phish (747341) | more than 7 years ago | (#18495379)

No, apple sells their product at such a high cost compared to MSRP that no retailer can afford to discount them. Try 8% margin on ipods that cost 150$. That barely covers the credit card swipe and the time it takes someone to stock it on the shelf and scan it at the register. Much less pay invoices, track shipments, pay the light bill, and hire supervisors/managers to oversee all that.

Move it to the internet sales, and its the same story. internet retailers survive off 5-10%. 8% isn't really that high a margin. Even if someone wanted to discount it to sell for cost and make up the money on upsells, WOO HOO, they sell it for 12$ off. Not much there in the way of discounting now is there?

Sure, the larger retailers can sometimes cut a slightly better margin deal with apple if they agree to purchase pallets at a time, and they do. But that is their competative advantage, and there is no reason for them to sell below MSRP (or a dollar below) when all their competitors are barely breaking even. It is much better for the Best Buy's of the world to bundle a free product like iTunes card or accessory discount with the full priced iPod.

Just a Presumption (2, Interesting)

ardyer (816606) | more than 7 years ago | (#18495215)

IANAL, but businesses are already allowed to set minimum prices, there is just a presumption that it violates anti-trust laws. However, this presumption can be rebutted. All this case would do is remove the presumption that it violates the anti-trust laws.

Benefit (1, Funny)

Anonymous Coward | more than 7 years ago | (#18495221)

It it'll get my wife to stop impulse-buying stupid shit, then I'm all for it!

You hear that giant sucking sound? (1)

Anonymous Coward | more than 7 years ago | (#18495225)

That's the sound of everyone going overseas for their consumer goods.

Would this kill all sales? (1)

Katmando911 (1039906) | more than 7 years ago | (#18495239)

Oh no! It's the end of Black Friday.

What About Apple, Bose etc. (1)

spiedrazer (555388) | more than 7 years ago | (#18495251)

So how have Apple and Bose etc. been able to circumvent the apparent existing laws restricting minimum price levels. You almost never find thier products at anything other than the manufacturers suggested retail, except on closed out items etc.

What loophole or other back side contractual agreement have they been making with their retailers to keep them from discounting products?

Re:What About Apple, Bose etc. (1)

MBCook (132727) | more than 7 years ago | (#18495401)

I think that Apple and such do this one of two ways. First is supply control. If you decide to sell Apple stuff to low, Apple can always "lower" your supply. You'd learn.

More likely though is profit margin. Everyone wants to sell iPods. The things just sell and sell. Well if Apple sells them to you so you only make $20 or so on each one, you're unlikely to try to discount them $15 to get more sales. This essentially forces a price floor.

As for this case, what I heard about it (on NPR, just a blurb, haven't read summary yet) was that a company found someone online selling their product at below the invoice. This would be like my Apple example above, only someone was online selling brand new iPods for $50 under retail prices and still making money, and in this example this is below the price even Apple could afford to sell it at. I don't know how the other store managed to do this, but this is what they are trying to prevent. The ability to set a price floor at whatever you want and artificially hold prices up is just a nice benefit of this ruling, should it be made.

That is, if you're a manufacturer.

Re:What About Apple, Bose etc. (2, Insightful)

mp3phish (747341) | more than 7 years ago | (#18495455)

Apple circumvents it by giving extremely low margin possibilities to their retailers. Mom and pop make at most 8% regularly and maybe seasonally they get a slightly better incentive to stock up on a thousand ipods for a few extra percent margin.

Bose doesn't circumvent it, but instead applies a (perfectly legal) MAP (minimum advertised price) contract to its resellers. This way you still follow the law (retailers can sell for whatever price they want) but they can't advertise any price below MAP. This is why you see stuff like "add to cart to see price" because they are contractually obligated to only show you the discounted price once you have "decided to buy it" per se.

Lots of brands do this, seinnheiser, bose, and lots of AV and other companies have done this type of thing for a long time.

Pair this MAP with extremely low margin opportunity, and you see why nobody sells below MSRP (because the image of bose is that you pay MSRP and nothing less). Most stores make probably 10% max on a bose system if sold at MSRP so there is not any room for them to move any lower.

Now, at the end of the quarter, if you make your sales projections and all sorts of other fancy stuff, you can get a quarterly rebate on your revenue (kindof like car dealerships get) but that is only for higher volume shops. And you can't built that into your price because you don't know for sure your sales will be up.

Hope that explains a little bit for you.

Try to look at the upside.... (1)

mark-t (151149) | more than 7 years ago | (#18495255)

Maybe I'm grasping at straws here, but wouldn't this mean that microsoft wouldn't be able to offer "discounted versions" of its OS to computer manufacturers while simultaneously charging several hundred for the retail version?

Re:Try to look at the upside.... (1)

TheAwfulTruth (325623) | more than 7 years ago | (#18495471)

Microsoft is selling their own product, so no, that would not apply. In fact it would allow Microsoft to specifically FORBID stores to sell their software at below net cost.

Something that is probably enforced currently through the age old practises used by every other manufacterer as outlined by many of the other posts here...

Though as some others have pointed out, there are two sides to the story, and a lot of retaiors actoully LIKE it this way. They don't ALL have to compete at a razor-thin cut-throat margin levels with the biggest retialer in their sector. Not doing it can lead to there NOT being any mom and pop stures ebcause they could nto possible compete with ten cent per package margin stores like wallmart.

Price Fixing in the dive industry (1)

MikeHunt69 (695265) | more than 7 years ago | (#18495279)

Manufacturers may not be able to legally set the minimum price, but in the SCUBA diving industry it happens a lot. The manufacturer refuses to sell you stock if you do not agree with their pricing structure and there is a minimum initial purchase. A lot will also not sell you stock if you are already selling a competitors product or if you are running an internet business.

If course, many of the internet dive equipment suppliers get around this by doing deals with legit shops and cutting them in on the deal.. or even waiting for a dive shop to go under (because they are trying to compete with discounts of over 20% when bought over the net) and buy all their outstanding stock at knock down prices.

Since 1911, my ass (3, Interesting)

overshoot (39700) | more than 7 years ago | (#18495323)

I'm not that old. Manufacturer-set minimum prices were more the rule than the exception until the 1980s (as I roughly recall.)

That's where the "membership stores" like Costco really got going: they could, through a legal fiction, sell at below the set price. When the law changed, they lost (at least some of) their advantages, and quite a few (anyone remember FedCo?) went Tango Uniform. Costco (or, as it was here, Price Club) was one of the survivors.

Well, if the Court votes price fixing back in then I guess a lot of Wally Worlds will turn into Sam's Clubs.

Won't Get Fooled Again [thewho.net]

There's nothing in the streets
Looks any different to me
And the slogans are replaced, by-the-bye
...
Meet the new boss
Same as the old boss

This already happens to us indirectly (2, Informative)

Mr. Stinky (753712) | more than 7 years ago | (#18495325)

As a retailer of the some of the biggest brands in the snowboard industry, I can say that this already happens to us. We sign agreements to keep our prices at suggested retail through the peak of the season. If you sell "off-price" you jeopardize your account in the next season. Our accounts and credit lines are reviewed yearly. These indirect means of "persuasion" are actually good because it keeps a level playing field for all authorized dealers. Like with most consumer electronics, if you do not buy your product from an authorized dealer, your product warranty is void. -=DG

Would the U.S. Government really do this? (1)

FMota91 (1050752) | more than 7 years ago | (#18495327)

I can't see how this could possibly be a good thing...

I'm starting to think that the U.S. Government has the companys' best interests in mind?!?!

okay what is the counter argument? (1)

CPE1704TKS (995414) | more than 7 years ago | (#18495331)

I can understand why I do not want price-floors, but can someone explain what the counter argument is? Why has this made it all the way to the Supreme Court if it is so obviously flawed?

Doesn't this already exist as MAP? (3, Interesting)

djaxl (543958) | more than 7 years ago | (#18495335)

Under MAP, the price is allowed to be anything, as long as it is not advertised (MAP stands for Minimum Advertised Price). MAP appears to be legal, if the penalty is "you can no longer carry our products." If the penalty is "we won't pay you co-op advertising dollars" (see second link), it might be illegal.

Jan 2004 commentary on legal uncertainty of MAP:
http://www.fredlaw.com/articles/marketing/mark_040 1_qtj.html [fredlaw.com]

May 2000 FTC "analysis to aid public comment" on MAP policies of "the five largest distributors of prerecorded music," Sony, Universal, BMG, WEA, and EMI:
http://www.ftc.gov/os/2000/05/mapanalysis.htm [ftc.gov]

SCOTUSblog comments, link to oral arguments (1)

SpaceLifeForm (228190) | more than 7 years ago | (#18495369)

Link [scotusblog.com]

Put you tinfoil hats on (2, Interesting)

P3NIS_CLEAVER (860022) | more than 7 years ago | (#18495373)

This will give branded stores (Old Navy) a huge advantage over stores that carry other manufacturers merchandise (Sears). The branded stores will have no problem at all clearing out old inventory, and Sears will get stuck with a bunch of unwanted stuff (not that they already are).

Announcing... (2, Funny)

kent_eh (543303) | more than 7 years ago | (#18495377)

Announcing the grand opening of www.everythingalwaysonsale.ca

That's right!
Just because your government won't let you shop around for the best deal, doesn't mean that you can't save money.
Stop buying from those overpriced American stores, and get started cross-border shopping!

Our friendly agents are standing by to serve you, eh.

For The Other Side Of The Argument... (4, Interesting)

hoeferbe (168081) | more than 7 years ago | (#18495387)

TFA is not a news article, it is a guest editorial by a friend ("amicus") of the defendants. So, it is very slanted as to why minimum resale price agreements should continue to be in violation of antitrust laws. Knowing there is always two sides to a story, I sought out that other side and found this from the Ayn Rand Institute:

Legalize "Price-Fixing" [aynrand.org]

Please note that by posting this, I am not saying I support the Ayn Rand Institute's side; I mearly think it is important to hear both sides of the debate. In this case, I think the Institute does a poor job of convincing the public that their position in in our best interest.

Would Walmart balance it out? (0)

Anonymous Coward | more than 7 years ago | (#18495391)

I'm sure if a manufacturer tried to go up against Walmart, they would lose, so even if this ruling were to swing the business interests way, wouldn't Walmart force them to set the prices to what Walmart wants?

oh yeah, make a big stink over this (0)

Anonymous Coward | more than 7 years ago | (#18495407)

you don't think raising minimum wage did more damage to the middle class than this? you're just an idiot if you don't see it.

What could actually make this fair.. (2, Insightful)

jcr (53032) | more than 7 years ago | (#18495427)

Is if any manufacturer who set a limit on pricing were also obligated to take back any stock the retailer couldn't sell.

-jcr

This will happen. (0)

Anonymous Coward | more than 7 years ago | (#18495501)

Seriously, recent Supreme Court rulings show that some of these people are out of their fucking minds. Buy everything for cheap while you can!

Libertarians (4, Insightful)

guinsu (198732) | more than 7 years ago | (#18495577)

I hope the slashdot libertarian crowd is coming out of the woodwork in support of this one. I mean individuals should be able to enter into any sort of contract they want right? And its not the free hands fault when every vendor forces this upon the merchants, thereby driving up costs to all consumers.
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