Headsets: "Minimum Advertised Price"

"Peter" wrote in message
news:yL%bc.182419$_w.1842540@attbi_s53...
MichaelR wrote:

You are half right.
Manufacturers can set _minimum_ sale prices:

http://www.ftc.gov/bc/compguide/question.htm

The above website does not support your assertion. It states:
"If the manufacturer and a dealer entered into an agreement on a resale
price or minimum price, that would be a price-fixing violation. The
agreement could be formal, through a contract, or informal, when the
dealer’s compliance is coerced. However, if the manufacturer has
established a policy that its dealers should not sell below a minimum
price
level, and the dealers have independently decided to follow that policy,
there is no violation."

So a manufacturer coercing a dealer to abide by a minimum sales price
is a violation of price-fixing legislation. But the manufacturer can
suggest a minimum sales price and hope that the dealers abide by it.

If Garmin is telling dealers that they must abide by the minimum price
for the 296 or have their supplies cut off that would constitute
coersion and I expect they would lose in court if Darrel (tvnav) or
other affected dealers decide to fight the policy.

Refusing to deal with a reseller is not considered coercion. The FTC web
site at http://www.ftc.gov/bc/compguide/illegal.htm says:

Resale price maintenance agreements. Vertical price-fixing -- an agreement
between a supplier and a dealer that fixes the minimum resale price of a
product -- is a clear-cut antitrust violation. It also is illegal for a
manufacturer and retailer to agree on a minimum resale price.

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

C J Campbell wrote:

"Peter" wrote in message
news:yL%bc.182419$_w.1842540@attbi_s53...

MichaelR wrote:


You are half right.
Manufacturers can set _minimum_ sale prices:

http://www.ftc.gov/bc/compguide/question.htm

The above website does not support your assertion. It states:
"If the manufacturer and a dealer entered into an agreement on a resale
price or minimum price, that would be a price-fixing violation. The
agreement could be formal, through a contract, or informal, when the
dealer’s compliance is coerced. However, if the manufacturer has
established a policy that its dealers should not sell below a minimum

price

level, and the dealers have independently decided to follow that policy,
there is no violation."

So a manufacturer coercing a dealer to abide by a minimum sales price
is a violation of price-fixing legislation. But the manufacturer can
suggest a minimum sales price and hope that the dealers abide by it.

If Garmin is telling dealers that they must abide by the minimum price
for the 296 or have their supplies cut off that would constitute
coersion and I expect they would lose in court if Darrel (tvnav) or
other affected dealers decide to fight the policy.


Refusing to deal with a reseller is not considered coercion. The FTC web
site at http://www.ftc.gov/bc/compguide/illegal.htm says:

Resale price maintenance agreements. Vertical price-fixing -- an agreement
between a supplier and a dealer that fixes the minimum resale price of a
product -- is a clear-cut antitrust violation. It also is illegal for a
manufacturer and retailer to agree on a minimum resale price.

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

It would make an interesting court case. While true that in general
manufacturers are free to stop dealing with retailers who undercut the
minimum price policy, the courts will apply the "rule of reason" that
takes into account the anti-competitive effects of such an action and the
market share dominance of the manufacturer. Actions by a manufacturer
that dominates the market can be held to be coersive even if the same
actions would be legal for a manufacturer in a more competitive market.
http://www.ftc.gov/speeches/anthony/aliabaps.htm :
"For example, the FTC prevented Nintendo(16) from exercising its Colgate
rights(17) to terminate or suspend retailers that did not comply with its
announced pricing policy. This severe remedy was necessary because Nintendo
commanded 80% of the market and, by virtue of this power, could have
maintained its policy without an agreement because retailers could feel
intim[id]ated."

Vertical price-fixing -- an agreement
between a supplier and a dealer that fixes the minimum resale price of a
product -- is a clear-cut antitrust violation. It also is illegal for a
manufacturer and retailer to agree on a minimum resale price.

The antitrust laws, however, give a manufacturer latitude to adopt a policy
regarding a desired level of resale prices and to deal only with retailers
who independently decide to follow that policy.

Color me stupid, but I don't see a dime's worth of difference between
these two practices, except that the second is enforced from the top
down, which makes it wose than the first, which could in theory be a
mutual agreement.
all the best -- Dan Ford
email: (put Cubdriver in subject line)

The Warbird's Forum www.warbirdforum.com
The Piper Cub Forum www.pipercubforum.com
Viva Bush! blog www.vivabush.org

"Cub Driver" wrote in message
...
Color me stupid, but I don't see a dime's worth of difference between
these two practices

The difference is whether the policy applies to all vendors or just some.

Actually, this was settled in the US Supreme Court in 1919. It's called the
Colgate Doctrine.





"Peter" wrote in message
news:yL%bc.182419$_w.1842540@attbi_s53...
MichaelR wrote:

You are half right.
Manufacturers can set _minimum_ sale prices:

http://www.ftc.gov/bc/compguide/question.htm

The above website does not support your assertion. It states:
"If the manufacturer and a dealer entered into an agreement on a resale
price or minimum price, that would be a price-fixing violation. The
agreement could be formal, through a contract, or informal, when the
dealer’s compliance is coerced. However, if the manufacturer has
established a policy that its dealers should not sell below a minimum
price
level, and the dealers have independently decided to follow that policy,
there is no violation."

So a manufacturer coercing a dealer to abide by a minimum sales price
is a violation of price-fixing legislation. But the manufacturer can
suggest a minimum sales price and hope that the dealers abide by it.

If Garmin is telling dealers that they must abide by the minimum price
for the 296 or have their supplies cut off that would constitute
coersion and I expect they would lose in court if Darrel (tvnav) or
other affected dealers decide to fight the policy.

"Will Thompson" wrote in message
...


So why is this? Manufacturers *cannot* set actual selling prices, per
federal law (Sherman Act and related) so it is strange that they try to
impose this barrier.

MichaelR wrote:

Actually, this was settled in the US Supreme Court in 1919. It's called the
Colgate Doctrine.

The Colgate Doctrine doesn't apply to your original assertion that
"Manufacturers can set minimum sale prices" since to do that would require
an explicit agreement with the dealer and such agreements are illegal. In
general the manufacturer would have the right to terminate a dealer from
getting products in the future if they sold items below the suggested
price. But that doesn't allow them to "set minimum prices" since the
dealer is still free to sell his current inventory at as low a price as
he chooses.

There have also been exceptions to Colgate in cases where the manufacturer
dominates the market. Whether Garmin would fall into that category is
something the courts would have to decide on the basis of the
facts in this particular case.





"Peter" wrote in message
news:yL%bc.182419$_w.1842540@attbi_s53...

MichaelR wrote:


You are half right.
Manufacturers can set _minimum_ sale prices:

http://www.ftc.gov/bc/compguide/question.htm

The above website does not support your assertion. It states:
"If the manufacturer and a dealer entered into an agreement on a resale
price or minimum price, that would be a price-fixing violation. The
agreement could be formal, through a contract, or informal, when the
dealer’s compliance is coerced. However, if the manufacturer has
established a policy that its dealers should not sell below a minimum

price

level, and the dealers have independently decided to follow that policy,
there is no violation."

So a manufacturer coercing a dealer to abide by a minimum sales price
is a violation of price-fixing legislation. But the manufacturer can
suggest a minimum sales price and hope that the dealers abide by it.

If Garmin is telling dealers that they must abide by the minimum price
for the 296 or have their supplies cut off that would constitute
coersion and I expect they would lose in court if Darrel (tvnav) or
other affected dealers decide to fight the policy.

"Will Thompson" wrote in message
...



So why is this? Manufacturers *cannot* set actual selling prices, per
federal law (Sherman Act and related) so it is strange that they try to
impose this barrier.

Actually, this was settled in the US Supreme Court in 1919. It's called the
Colgate Doctrine.

What was settled? That price-fixing was legal?

Well, so it was, until the 1950s. When I was in high school, just
about everything manufactured item in the U.S. sold for the same price
everywhere, city and country.

Then the good times started.

all the best -- Dan Ford
email: (put Cubdriver in subject line)

The Warbird's Forum www.warbirdforum.com
The Piper Cub Forum www.pipercubforum.com
Viva Bush! blog www.vivabush.org

It's a fine point in the law, but Garmin can legally announce that they will
only sell to dealers who keep a minimum price on their products. Then, if a
dealer undercuts that price, Garmin can stop selling to them. Technically,
it's a unilateral decision by Garmin, and an independent decision by each
dealer. Since there is not an "agreement", it is not considered to be
price-fixing.




"Cub Driver" wrote in message
...

Actually, this was settled in the US Supreme Court in 1919. It's called
the
Colgate Doctrine.

What was settled? That price-fixing was legal?

Well, so it was, until the 1950s. When I was in high school, just
about everything manufactured item in the U.S. sold for the same price
everywhere, city and country.

Then the good times started.

all the best -- Dan Ford
email: (put Cubdriver in subject line)

The Warbird's Forum www.warbirdforum.com
The Piper Cub Forum www.pipercubforum.com
Viva Bush! blog www.vivabush.org

You didn't read down far enough....below that section is this:
Q: I own a small jewelry store and the manufacturer of TimeCo brand watches
recently dropped me as a dealer. I’m sure it’s because my competitors
complained that I sell below the suggested retail price. The explanation was
the manufacturer’s policy: its products should not be sold below the
suggested retail price, and dealers who do not comply are subject to
termination. Is it legal for the manufacturer to dictate my prices?

A: The law allows a manufacturer to have a policy that its dealers should
sell a product above a certain minimum price, and to terminate dealers that
do not honor that policy. Manufacturers may choose to adopt this kind of
policy because it encourages dealers to provide full customer service and
prevents other dealers, who may not provide full service, from taking away
customers and "free riding" on the services provided by other dealers. If
TimeCo got you to agree to maintain the suggested retail price, it would be
illegal. It also would be illegal if TimeCo agreed with your competitors to
drop you as a dealer to help maintain a price to which they had agreed.
However, a complaint from a competing retailer is not sufficient to prove
such an agreement, because the manufacturer may have decided independently
that its interests were better served by sticking with its policy.

=====

Now, what this suggests to me is that it IS legal to coerce a dealer into
compliance under threat of being dropped as a dealer. HOW this isn't
anti-competitive, God only knows.

Aloft wrote:

Now, what this suggests to me is that it IS legal to coerce a dealer into
compliance under threat of being dropped as a dealer.

Actually not. The text you quoted says "If TimeCo got you to agree to maintain the
suggested retail price, it would be illegal.", so they can't legally coerce you by
threatening to drop you as a dealer. They *can* drop you as a dealer, but they can't
threaten to do so.

George Patterson
This marriage is off to a shaky start. The groom just asked the band to
play "Your cheatin' heart", and the bride just requested "Don't come home
a'drinkin' with lovin' on your mind".