Battle Over Minimum Pricing Heating Up

The Wall Street Journal is covering developments in the gathering battle between manufacturers and retailers / discounters, especially online ones, over minimum prices. Earlier this year the Supreme Court upheld the right of manufacturers to enforce price floors for their products. Since then, manufacturers have increasingly been employing service companies like NetEnforcers to snitch on discounters who offer goods below "minimum advertised prices" (or MAPs), and to send DMCA takedown notices to the likes of eBay and Craigslist for below-minimum offers. Separately, the Journal reports that a coalition of discounters and retailers is using eBay as a stalking-horse in a campaign to get consumers, and then politicians, fired up enough to pass legislation outlawing MAPs.

Comments

Shouldn't need a new law, but...

[Pokey.Clyde]

From TFA: eBay and discount retailer Costco Wholesale Corp., opponents decided to lobby for a bill now pending in Congress that would make minimum-pricing agreements a violation of antitrust law.

Shouldn't existing law prevent MAPs already? This sounds an awful lot like collusion and price-fixing to me. But since the Supreme Court has already said that manufacturers can enforce price floors, it sounds like new legislation is definitely needed.

Minimal Pricing = Legal Monopoly?

[Manip]

How can minimal pricing be legal or logical?

If I sell you an apple from my apple tree then what right should I have to say that you sell that apple at? Or what rights do I have to then your apple at all?

Obviously the original manufacturer has certain rights like copyright, trademark, but I fail to see how these right extend to something like price further down the supply chain.

This whole system just seems abusive and will make it harder for competition to ensue which last I checked was meant to be what a capitalist society was all about.

Re:Minimal Pricing = Legal Monopoly?

[Urkki]

If I sell you an apple from my apple tree then what right should I have to say that you sell that apple at? Or what rights do I have to then your apple at all?

Simple. Before selling that apple, you make a contract that says what the buyer can do with it. If he does something else with it, it's a breach of that contract.

So if we want to prevent for example these MAPs, or any other similar thing, we need a law specifically saying that such contracts aren't valid.

It's always a trade-off, because here we have two private parties (seller and buyer), and then we make legislation about what kind of contracts they may make between them. Ie. it limits freedom of people and freedom of trade. Then again, it may help prevent monopolies or other bad stuff that would in effect limit freedoms even more.

As far as I can see, it's a slippery slope both ways, and right now it's earthquake season too... We need to try to stay at the top, but it requires constant vigilance.

Price limits

[kvezach]

So price floors are good, but price ceilings are bad? As we all know, "only commies allow price ceilings", so this sounds a lot like socialism for the rich and capitalism for the poor.

Re:Makes for an awkward situation

[Locklin]

Funny. The "nightmare" situation you describe resulting from a retailer ignoring MAP only becomes a problem because of MAP. 1,2,3 and 4 would not have happened if the regular retailers were "allowed" to lower their prices in response to the current (temporary) situation in the marketplace. Its plain and simple legal manipulation of the retail markets by manufacturers, and hurts everyone else.

Re:MAP vs Price Fixing

[billcopc]

You've successfully demonstrated that the problem lies upstream.

If JBL's policies are hurting the customers, then they need to change those policies. If the problem relates to the distribution model, then JBL needs to beef up their distribution accordingly.

The MAP I think is a crutch. Sure, I could save a few bucks online, but at what cost ? If anything, audio guys are aware that gear breaks down (a lot), and a web site isn't going to be of any use when your amp blows up the day before your show - might as well cancel the next 2 months' bookings! A brick and mortar store has customer service (most of the time). They will fix your amp (or ship it back for you), and give you a loaner.

You know what sucks about buying online ? Shipping. The first time you send those cheap speakers out for repair, the shipping will burn whatever you had saved by buying from www.cheapspeakers.cn

Frankly, I think we can do away with MAP. If someone wants to pay a cheaper price for less service, that's their choice. They will probably end up buying another when the first one breaks, so the manufacturer might actually benefit from the crap service.

Re:MAP vs Price Fixing

[Neoprofin]

The problem with that logic, is that it takes a lot more time and investment to open and close up shop than it does to change prices on a website. If an online retailer (or Walmart for that matter) uses low prices, sometimes so low that they aren't even making a profit but are willing to take it on the chin to clear out the market, and then jacks them back up, there will not be a return of the local small retailers. It's not like they just throw all their stuff in storage and wait for the day when they can come back and be competitive, if you're run out of business you're not popping back next week when the market is more favorable.