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SCOTUS Case May End Sale Prices 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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SCOTUS Case May End Sale Prices

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  • by tentimestwenty ( 693290 ) on Monday March 26, 2007 @07:41PM (#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.
    • by SRA8 ( 859587 ) on Monday March 26, 2007 @07:45PM (#18495111)
      Umm...unless all the major manufacturers executed this change together.
    • 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.
    • 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 sel

      • by Zeinfeld ( 263942 ) on Monday March 26, 2007 @08:49PM (#18495751) Homepage
        Once upon a time there was this guy called Adam Smith who observed that whenever people engaged in the same trade meet they almost invariably engage in a conspiracy against the general public.

        That same Adam Smith is the same Adam Smith who is the origin of pretty much everything that has historically been considered a free market.

        In Smith's day state monopolies were a common means of raising revenue. Smith demonstrated that such restraints on trade have hidden costs that are much greater than were imagined at the time. The cost of the tax is much greater than the amount paid raised in revenue.

        In libertopia they do things differently of course, the only evil that can ever exist in libertopia is the result of people consipiring together through the government. The fact that a large corporation has a similar coercive power to government is inconvenient ideologically and is thus ignored.

        Nothing is going to happen here. At worst the SCOTUS redefine the interpretation of the anti-trust acts. But that might well be the best outcome long term for consumers since if Congress revisits price maintenance agreements making them explicitly illegal they wil probably act on advertised price maintenance as well.

        I don't see an argument being made that prohibiting retail price maintenace is unconstitutional. Even though many members of SCOTUS are notorious partisan hacks I don't see that as being very likely.

        • by Maniakes ( 216039 ) on Monday March 26, 2007 @10:03PM (#18496381) Journal
          He also said that attempts to prevent this were doomes, and he went on to say that in the absence of active government support these conspiracies are doomed due to chiselling and competition from those outside of the cartel.

          People of the same trade seldom meet together, even for merriment and
          diversion, but the conversation ends in a conspiracy against the
          public, or in some contrivance to raise prices. It is impossible,
          indeed, to prevent such meetings, by any law which either could be
          executed, or would be consistent with liberty and justice. But though
          the law cannot hinder people of the same trade from sometimes
          assembling together, it ought to do nothing to facilitate such
          assemblies, much less to render them necessary.

          A regulation which obliges all those of the same trade in a particular
          town to enter their names and places of abode in a public register,
          facilitates such assemblies. It connects individuals who might never
          otherwise be known to one another, and gives every man of the trade a
          direction where to find every other man of it.

          A regulation which enables those of the same trade to tax themselves,
          in order to provide for their poor, their sick, their widows and
          orphans, by giving them a common interest to manage, renders such
          assemblies necessary.

          An incorporation not only renders them necessary, but makes the act of
          the majority binding upon the whole. In a free trade, an effectual
          combination cannot be established but by the unanimous consent of
          every single trader, and it cannot last longer than every single
          trader continues of the same mind.
          The majority of a corporation can
          enact a bye-law, with proper penalties, which will limit the
          competition more effectually and more durably than any voluntary
          combination whatever.

          It's pretty clear from context that when Smith says "corporation" here, he means what'd we'd call a guild or an industry association. An organization which everyone in the industry was compelled to join and which had the power to regulate the business activities of everyone engaging in the trade. More like the AMA than, say, Microsoft or Google. Smith was not arguing for government antitrust regulation, but rather for governments to avoid mandating or encouraging industry self-regulation.
          • by timeOday ( 582209 ) on Monday March 26, 2007 @11:25PM (#18496997)

            He went on to say that in the absence of active government support these conspiracies are doomed due to chiselling and competition from those outside of the cartel... More like the AMA than, say, Microsoft or Google. Smith was not arguing for government antitrust regulation, but rather for governments to avoid mandating or encouraging industry self-regulation.
            Fair enough, since you mentioned the doctor's union which so effectively restricts supply to raise prices for medical services, what shall we do? Perhaps you're right that the AMA would have no power if not for government regulation, but I'm not in favor of totally deregulating medicine. Like if some hack surgeon kills me, I should go somewhere else next time?
        • Re: (Score:3, Informative)

          by TheGavster ( 774657 )
          I call myself a libertarian, and I think that retailers should most definately be able to set their own price. They bought goods from a manufacturer, and have the LIBERTY to do as the please with them. There's no need to make a stab at libertarianism when the real enemy is a common one (the erosion of property rights).
          • Re: (Score:3, Interesting)

            by Wordsmith ( 183749 )
            Almost, but nope. The only way the distributors can force the retailers into anything is through agreements - ones the retailers enter into through their own volition. The conversation (and contract) goes something like this:

            Big distributor: You soooo want my product. But if I'm going to enter into a deal with you to sell it, you're only allowed to sell if for $99.
            Retailer: I wanna sell it for $95. It'll do better in my store that way.
            Big distributor: And yet, here I am, requiring $99.

            At this point, the ret
            • Re: (Score:3, Insightful)

              by Pfhorrest ( 545131 )
              A real libertarian should be for all of this, though - it's all voluntary agreements, by informed parties.

              If a mugger points a gun at me and says "your money or your life", and I choose to give him my money instead of my life, that is in some sense a voluntary act. I could have just decided to live (brieflly) with the consequences of doing otherwise; but being robbed seems like a better deal than being killed, so I'd choose that instead. But we still call that coercion, and choices made thus are, in a very
      • by vux984 ( 928602 ) on Monday March 26, 2007 @08:51PM (#18495767)
        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.

        Large online clearinghouses benefit from this.

        Local bookstores for example are starting to massively suffer from online competition. Customers walk in, browse, leave and order the book from amazon.com for 10-20% less. How do you combat this? Retail cannot lower their prices to the same level online companies can -- they have prime real-estate leases vs a warehouse in some grungy commercial district. They deal in hundreds of books per week in stead of per hour, etc, etc.

        The proposed legislation prevents amazon.com from lowering the price of the books to less than the retailers can survive.

        I don't know if that is a good idea, but I do think *something* needs to be done to protect retail. Retail is not an obsolete business model - online sales would suffer too if we couldn't kick the tires at retail. The issue here isn't that retail is 'obsolete', its that retail has to figure out how to make money from customrs who just come in to browse and try things on.

        Would you pay 'cover' to get into a retail store? Would you pay a sales person even if you didn't buy something. ie... the bookstore or shoestore could lower their prices and compete with amazon if you paid $20 dollars at the door just to get into the store. There'd be no incentive to buy online as the price in the store would be the same. You could still avoid going into the store, and just buy online directly, and save money, but you lose out on the chance to browse etc.

        Essentially, retail and online provide the same final product. retail costs more because of the extra service of bringing the inventory close to you, and having staff available to work with you with it. Retail needs to figure out how to get paid for that component because whats going on right now is that people use the retail outlet to decide what to buy, and then buy it online.

        Or put another way online retailers are basically letting retail to all work, and bear all the costs, of making the sale, while swiping the actual transaction because their prices are cheaper. Right now retail bundles the cost of making the sale into the product, and are losing out to online competition who don't have that cost.

        Retail needs to unbundle that cost, so they can offer the same product for the same price as online, while somehow charging directly for the service of letting you play with it, try it on, decide what to buy, etc.

        Its sort of a bizarre model, but I can't see a better solution. regulated minimum pricing doesn't strike me as a solution.

        As online shopping grows other markets will be hit by this, like sports equipment (runners (Nike/Addidas/Reebok), weights, skis, etc), electronics, designer clothing, etc. In fact pretty much anything where you can look at the product (at retail) to gauge its fit/quality/comfort/whatever and then order online and expect to receive an identical product.
        • by tkrotchko ( 124118 ) * on Monday March 26, 2007 @09:39PM (#18496183) Homepage
          "Local bookstores for example are starting to massively suffer from online competition. Customers walk in, browse, leave and order the book from amazon.com for 10-20% less. How do you combat this?"

          Offer better services ranging from knowledgeable clerks to coffee bars to author signings to small concerts certain nights of the week.

          Or maybe the local bookstore's days are at an end. It hardly seems worthy of laws or court actions. Times change. We all adapt or end.
        • by sydb ( 176695 ) <michaelNO@SPAMwd21.co.uk> on Monday March 26, 2007 @09:47PM (#18496245)
          I don't think it's quite as biased against bricks and mortar as you suggest.

          If I browse in a bookstore and find something interesting I am very likely to buy it right there and then, because I'm excited by it. I'm not thinking about how I could order it online for less because I want to read it now. I don't want to wait a few days while Amazon packs it and sends it to me, and maybe it's not in stock at Amazon and I'll have to wait a week or more.

          If I am going out on the town tonight and I need new shoes I don't have the luxury of waiting while some online store delivers them to me.

          Maybe there are people who plan all their purchases days or weeks in advance, but for a large number of people most small to medium purchases are done on impulse or at short notice.

          For goods like cars or high-end stereo equipment which require research, trial and considerable investment, I can see more of a problem. If I can't test-drive a car, there's no way I'm going to buy it. I think I would be willing to pay 0.5 - 1% of purchase price to test-drive a car for a couple of hours, or listen to an amplifier and speaker combination to decide that I'm happy with it.

          Also, Borders has found a way to make money from browsers, by having Starbucks in their stores, and caffeine-addled shoppers are more likely to spend.

          The manufacturers have a big interest in making sure retail outlets survive - because people are more likely to buy something they can touch and test. Maybe manufacturers can subsidise retail stores to make them more competitive.

          Finally, the advantage of purchasing online isn't just about price. I have access to a much wider choice of products from the comfort of my keyboard, I can do research on specifications and customer experiences, and I can make my purchase more quickly (and more economically) than if I have to drive to various stores to inspect there offerings. Maybe retailers can do some work here to level the playing field - like providing internet access so I can check if this wireless card works in the latest Ubuntu, or whatever. That last item is one of the biggies for me, I've walked out of stores where I might have a purchase because it's not possible to get all the information about a product from the shop floor, and shop assistants are rarely knowledgeable about their products or my needs.
          • Re: (Score:3, Interesting)

            I think I would be willing to pay 0.5 - 1% of purchase price to test-drive a car for a couple of hours, or listen to an amplifier and speaker combination to decide that I'm happy with it.

            Few people, if any, purchase cars sight unseen on the internet now (ebay's automotive section is more of a big classified ads, just like their real estate section), I don't see that changing in the near future either. For other big-ticket items like home entertainment equipment, the majority of retail sales are at big-box

      • So McSoft can make more money? No one but monopoly providers will benefit from this.

        You couldn't be more wrong. The little guys would benefit from this. Right now, the stupid masses (Slashdotters included) tend to shop only based on price. Price and price alone. If you can get your widget for $0.01 cheaper online from Omni Mega Corp, you will. You wouldn't care if they were cheaper because they used children for labor. If this thing went through (it won't), people wouldn't be able to pay so much
        • Re: (Score:3, Interesting)

          by kocsonya ( 141716 )
          > Price and price alone. If you can get your widget for $0.01 cheaper online from Omni Mega Corp, you will.

          No, I won't. I go back to the same retailer even if it is a little bit more expensive. Now if Omni Mega Corp offers it significantly cheaper, that's different. Most people do not buy stuff based on price alone, for if they did noone would buy brandname products - the no-name shop product is quite often contains exactly the same stuff as the brandname, just in cheaper and less flashy packaging (think
    • Re: (Score:3, Interesting)

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

      So what? I'm pretty sure the idea is to force you out of the market so they can sell their products directly, taking home the full retail margin instead of mere wholesale.

      Step two will be to announce "tiered" pricing floors, where retailers with monthly volumes of 0 to 10 units are required to have a floor of 1.0*x, with 11 to 999,999 units have a floor of 0.99*x, and Wal*Mart has a floor of 0.75*x. Oh, they'll find a way around public outrage, like offering absolutely identical Silver, Gold and Platin

  • by Anonymous Coward
    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: (Score:3, Insightful)

      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.
    • "Call" online? (Score:4, Interesting)

      by tepples ( 727027 ) <tepples@gmail.BOHRcom minus physicist> on Monday March 26, 2007 @07:55PM (#18495229) Homepage Journal

      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."
  • by ScentCone ( 795499 ) on Monday March 26, 2007 @07:48PM (#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: (Score:3, Informative)

      by nine-times ( 778537 )
      Why would Walmart worry? Apparently, Walmart can strong-arm their suppliers to do whatever they want.
    • by kent_eh ( 543303 ) on Monday March 26, 2007 @08:13PM (#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.
    • by adrianmonk ( 890071 ) on Monday March 26, 2007 @09:52PM (#18496281)

      Wal-Mart alone would lobby that one right into the stratosphere.

      Wal*Mart won't give a flying fuck whether, on paper, its suppliers gain the legal right to walk away if Wal*Mart won't agree to minimum price rules. Wal*Mart has its suppliers firmly by the balls, and if they want to continue selling to Wal*Mart, they do whatever Wal*Mart says. And they do want to keep selling to Wal*Mart, because Wal*Mart is literally the largest retailer that has ever existed in the known universe, and no longer being able to sell to them is not good for business.

      • Re: (Score:3, Interesting)

        ...Wal*Mart is literally the largest retailer that has ever existed in the known universe, and no longer being able to sell to them is not good for business.

        Not always. [fastcompany.com]
  • Questionable (Score:3, Insightful)

    by seanadams.com ( 463190 ) * on Monday March 26, 2007 @07:48PM (#18495143) Homepage
    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.
    • I'm OK with it (Score:5, Insightful)

      by LunaticTippy ( 872397 ) on Monday March 26, 2007 @08:03PM (#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: (Score:3, Insightful)

        by tverbeek ( 457094 ) *
        The general collapse of brick-and-mortar stores would entail the end of small, locally-owned businesses. In the price-driven online market, large vendors like amazon.com will always have an advantage over momandpop.com. This means that the primary remaining opportunties for middle-class citizens to own businesses will be as microminority investors in megacorps in which they have about as much voice as they do with their bank. So instead of a nation of small businesses, we'd have a nation of employees, wh
    • by rewt66 ( 738525 )
      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: (Score:3, Insightful)

      by raehl ( 609729 )
      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 m
    • Re: (Score:3, Insightful)

      by asninn ( 1071320 )

      If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system

      If you're happy with a world where horse carriage manufacturers just can't exist, then by all means keep the current system where car manufacturers are not being regulated so that horse carriages can still compete with cars.

  • by badboy_tw2002 ( 524611 ) on Monday March 26, 2007 @07:49PM (#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!
    • by electrosoccertux ( 874415 ) on Monday March 26, 2007 @08:01PM (#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. (Score:4, Informative)

        by Chmcginn ( 201645 ) on Monday March 26, 2007 @08:11PM (#18495371) Journal
        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.

  • by Bluedove ( 93417 ) on Monday March 26, 2007 @07:50PM (#18495167) Homepage
    If this preposterous case turns out with manufacturer set floor prices, would this also end auctions across the USA, including eBay?!
    • 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.
  • by stefanb ( 21140 ) * on Monday March 26, 2007 @07:53PM (#18495209) Homepage
    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: (Score:3, Interesting)

      by Frogbert ( 589961 )
      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.
    • by mp3phish ( 747341 ) on Monday March 26, 2007 @08:11PM (#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 (Score:2, Interesting)

    by ardyer ( 816606 )
    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.
  • 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: (Score:3, Insightful)

      by mp3phish ( 747341 )
      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
  • 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?
  • Since 1911, my ass (Score:4, Interesting)

    by overshoot ( 39700 ) on Monday March 26, 2007 @08:05PM (#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

  • by djaxl ( 543958 ) <aweslowski&bluelavagroup,com> on Monday March 26, 2007 @08:07PM (#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]
  • by P3NIS_CLEAVER ( 860022 ) on Monday March 26, 2007 @08:11PM (#18495373) Journal
    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).
  • by kent_eh ( 543303 ) on Monday March 26, 2007 @08:11PM (#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.
  • by hoeferbe ( 168081 ) on Monday March 26, 2007 @08:11PM (#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.

  • by jcr ( 53032 ) <.moc.cam. .ta. .rcj.> on Monday March 26, 2007 @08:14PM (#18495427) Journal
    Is if any manufacturer who set a limit on pricing were also obligated to take back any stock the retailer couldn't sell.


  • Libertarians (Score:5, Insightful)

    by guinsu ( 198732 ) on Monday March 26, 2007 @08:30PM (#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.
  • The market will move (Score:3, Informative)

    by Cyphertube ( 62291 ) on Monday March 26, 2007 @09:54PM (#18496305) Homepage Journal

    If this happens, then it will be a simple matter of resellers and such moving their product internationally, and then selling it from either Canada or Mexico, both members of NAFTA.

    Yeah, it'll really hurt mom and pops, but many companies are now auctioning off their excess on eBay, and this would just encourage a new infrastructure, which will inevitably move more capital out of the U.S.

  • by Markmarkmark ( 512275 ) on Tuesday March 27, 2007 @06:38PM (#18508801) Homepage
    Having actual lived (and suffered) under this rule as a smaller manufacturer operating on a national level for decades. It has a real and, in some cases, severe financial impact on my life.

    This rule caused us lots of harm and prevented the growth of our small, self-funded entreprenuerial business. As a manufacturer, having local resellers is a less expensive alternative to hiring our own sales force. The distribution channel is essentially a way to outsource sales, which if you are a small start-up is often a key enabler to getting your business off the ground. Resellers are crucial to us because they call on customers, demonstrate our products, answer questions, do local support and even run local ads. That's why they are worth the ~30% margin I build in to our business model to pay them. Dealers also assume credit cost/risk and aggregate a bunch of onesy/twosy orders into volume purchases that our small company can handle. To me that 30% is a necessary cost of making and selling my product just as much as parts and assembly. If the dealer didn't make that investment on my behalf, then I would have to raise that much more money and pay to do that work myself. That's the beauty of a distribution channel. I don't have to fund that pre-sales and distribution expense upfront out of my pocket. My reseller partners essentially go into business with me, do the work and get paid for their work by adding that cost downstream of me. It's a wonderful enabling option for me as an entreprenuer - except it doesn't work because of this law. It makes it so that I can't ensure that my reseller will actually be repaid for their investment and work to build our mutual business.

    The problem is that as soon as my product starts to get any momentum, an internet or mail-order 'box house' buys a little inventory from a distributor and marks the product up only 15%. Prospects still learn about the product from the local sales calls, ads or shows our 'real' dealers invest their money to do, and prospects still phone the 'real' dealers for pre-sales questions and demos but then many of the prospects buy from the box house because it's cheaper. But it's only cheaper because those box houses 'cheat' by not doing the market development and support work that we need them to do (and built into the margin to pay for). In that case I'd rather lower my product's selling price and split the difference directly with the consumer. The problem is that then I don't have anyone doing local demos, sales, support etc. Some products need those things to succeed and those products (like mine) are harmed by this law.

    When I design, cost-estimate and raise capital to build a product, I always have a projected ASP (Average Selling Price). This is what we think a typical consumer will typically pay for the product. We use this to figure out if the product will be a good competitive alternative in the market and if enough customers will actually buy the product. We balance the bill of materials, advertising, cost of sales and customer acquisition costs. In our ASP there is an average expected reseller margin which is there to pay the resellers to do the work we need them to do to make the product successful. Those box houses are essentially 'leeching' the value of the pre-sales work and investment I asked my 'real' reseller partners to make. It sucks that I make this product by my own hand and the "sweat of my brow" so to speak, but then this law limits how I bring my product to the marketplace, how I implement my distribution partnerships, and how I grow my business.

    In my view the law is a government intrusion into my right to enter into certain kinds of mutually agreed contracts with my distribution partners. It also quite literally limits what products I can consider creating and offering to consumers. I have to stay away from products that I feel need a lot of face-to-face explanation, demonstration and support to succeed. There's no way I can justify raising the capital from my investors to fund local sales offices and this law make

Who goeth a-borrowing goeth a-sorrowing. -- Thomas Tusser