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EU Slaps $130 Million Fine on Four Electronics Firms For Fixing Online Prices (cnbc.com)
The European Commission imposed a fine of 111 million euros ($130 million) on four consumer electronic firms Tuesday, for fixing prices on their resold items. From a report: Asus, Denon & Marantz, Philips and Pioneer all limited the ability of online retailers to price items as they saw fit. The four manufacturers apparently threatened or sanctioned the online retailers who wouldn't comply with their price suggestions. "These well-known manufacturers of consumer electronics, they put pressure on online retailers to maintain higher prices. They did so during a period from 2011 and 2015," Margrethe Vestager, the European competition commissioner, said in a press conference Tuesday. "As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hair dryers, notebook computers, headphones and many other products," Vestager said, adding that this behavior is "illegal under EU antitrust rules."
If price fixing nets more than $130 million in additional profit, stay the course!
I read /. there are always people who claim th EU just tsxrs US companies. Oh wait. I live in Europe and do iunderstand that the EU is not after US companies, but after those that break the law.
Correlation is not causation.
Don't fight for your country, if your country does not fight for you.
Next MB to be Gigabyte.
Slashdot, fix the reply notifications... You won't get away with it...
These are surely more smart business practices from the stable geniuses at Trump University. They likely got free Trump Steaks in their bonus packages.
Maybe this is a Canada thing, but I always thought that consumer electronic OEMs set the pricing for retailers to minimize unfair advantages for large companies while also keeping their margins from eroding. In talking to people I know who provide on line web retailers, the same applies there with manufacturers limiting product or raising wholesale costs to companies that offer product at a discount without the OEM's approval.
I didn't think it was done that much with computers (I was surprised to see Asus on the list) but I've heard about this in retail consumer electronics for decades (literally).
Mimetics Inc. Twitter
In this case they didn't bribe the right officials before and after they got caught.
In the US having a Minimum Advertised Price (MAP) is legal, and not considered price fixing under most circumstances.
This is the problem with doing business across continents where those laws may be drastically different. It's hard to stay in compliance on all fronts.
Setting MAPs is legal in Canada: https://www.lexology.com/library/detail.aspx?g=0425169d-f2eb-4f50-aaf3-514aa52f496c
Not sure about Canada but that practise is outright illegal in most countries. OEM's can supply a RRP but cannot take measures to enforce it, it is up to the retailer whether they price above or below that price.
No, it's most definitely not common. Almost every country I know off prevents this sort of retail price control by a manufacturer - it is a key part of competition law. That's why when you see the manufacturer list a price it always qualifies it with 'recommended'. They cannot force a retailer to sell it at that price.
I totally understand why these manufacturers were engaging in this activity though. I had the same issue with a specialists electronics company I ran a few years back. Basically, our retailers all started on about 40% margin because they provided a lot of sales effort and after-sales support for the product. They would pay attention to common problems, allocate a staff member to understand the product deeply so they could help the customer, translate guides, hold spare parts etc. We had a network of geographically separate dealers that served us and the customers well. Then online turned up, followed by the GFC, and some of the more desperate dealers started to target customers in other dealer's areas by cutting price. This basically created a blood bath, where dealer margins fell to about 20-25%.
The problem is that along with these price reductions, all the dealers basically became really rubbish at supporting the customer. We had to take over a lot of that support work, and eventually had to push our own prices to cover it (as did our competitors). It was quite frustrating really, because in the end the customer didn't really get a discount, nor each participant more profit. All that happened is we had to take over the distribution and support services ourselves and the retailers become nothing more than online store fronts.
The next inevitable step would have been direct sales from the manufacturer, but I left the business before we got to that.
In the end, I'm not sure customers got a better 'deal' out of the whole thing, but it sure made running what started as a design and manufacturing business a lot more complicated.
Would the result here not be a higher cost of product to retailer, as a way of keeping prices inflated? If this is the case, this would mean that retailers would either need to increase advertised price or have lower margins?
Of course the alternative is other games to keep prices in line, that work around the law?
Jumpstart the tartan drive.
Thank you for the link. That was instructive.
Mimetics Inc. Twitter
Apple and Hewlett Packard get a free pass? Come on, EU, how about some consistency?
The fines are partly based on size. Thus, google, being big, is asked to pay more. It seems reasonably to me that this is a way around the gpâ(TM)s problem.
The linked story is very light on details, but my first thought was also that it sounded like they were enforcing a minimum advertised price, which is common in the US at least. It is generally seen as a way to ensure online retailers don't undercut the pricing of brick and mortar stores.
It would be surprising that this behavior is consider anti-trust in the EU, but I wonder if their are specific details that makes these companies' actions illegal. Perhaps they cannot threaten the retailers, but instead would have had to simply pull their products from the shelves. Another story about these fines confirms there was no collusion between the companies so that isn't the issue either.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
This actually drove up prices for EU consumers, where Google provided a free product and got a fine an order of magnitude higher for having an order of magnitude greater net worth.
FTFY
If you want to punish Alphabet/Google, do you think a piddling €5M fine is going to work?
Making the punishment actually hurt seems to be an idea whose time has come. If you get caught speeding in Finland, and you're rich, you're going to get a much higher fine than the poor guy caught doing the same thing. Don't get caught speeding in Switzerland either.
And now the newcomer: if there was a typo in your online price and you fix it, then you get a fine!
How is this different than printing an MSRP on a book?
You may be right with your comment. But in some cases I don't see the benefit for the market.
For example in Germany (and maybe other EU-countries as well) all ebike manufactures press their resellers to keep a certain price. Its just very obvious, because all local shops and online resellers stick to the same price. There is no benefit for the customer, when I look at the online reviews of the ebike shops. Bad customer service everywhere. After some consideration I bought an ebike with Chinese components directly from an importer for half the price of big brands. And after changing some minor components I'm extremly happy with it.
My experience with Pioneer. As a reseller I get a "price advice" from my distributor as a warning. If I don't stick to it, they won't sell to me next time.
That's for what PRISON should be used (people committed these crimes, not busines). Fine, fine the business. But then, LOCK! THEM! UP! That WILL deter future crimes.
It is generally seen as a way to ensure online retailers don't undercut the pricing of brick and mortar stores.
That's just spin. I think the real reason is that they don't want their brand devalued by a lower visible price. This is especially true of Apple. You literally never see a discount on a current-model iPad, though retailers often throw in free gift cards to make the deal better. They do not ever show a lower price than MSRP.
You can print it on the book, but then Barnes and Noble can put a giant 30% off sign right above the display. The retailer wins because people don't behave rationally when shopping and think they are getting a "deal" and the publisher wins because they keep the perceived value of a fancy photocopy high. To some extent, the larger and more ridiculous the printed price, the better.
Amazon does something similar with their stupid crossed-out list price, when in practice their prices are usually competitive-to-high.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
It's different because in addition to having an MSRP, they were forcing the retailers to abide by it.
No. As a manufacturer you can suggest a retail price (MSRP), but once the product is bought by the retailer, they can set whatever price they want, as it is theirs.
Somehow Best Buy in the US is allowed to advertise Apple stuff for below retail. Our local Best Buy is a mile or so from an Apple store and they undercut almost every price. Not sure how that works out. As an example, the latest circular has current-model iPads for $30 off. The Apple store is selling them for $329 (full retail) and Best Buy is selling them - advertised - for $299. I guess some people won't travel a mile for $30, but I certainly will :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
You know, most European countries calculate their fines based on your wealth rather than a "flat" fee. The idea is that you don't just get to flaunt your contempt for the law if you're rich because a fine of 500 bucks that would be crippling for someone who makes 1000 a month is pennies for someone who makes millions in bonus payments alone.
So you might want to be careful where you speed, thinking that you can easily pay any fine since you're rich...
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
This is a huge problem in the US, as well. Unfortunately, we have no real laws that protect non-Amazon sized businesses. In our industry (retail pet supplies), just about every manufacturer has fixed prices that we cannot go any lower than. If we do, then they stop selling to us. It should be illegal. Unfortunately, we're not big enough to be able to afford to buy any Congresspeople.
I don't respond to AC's.
No, it's most definitely not common. Almost every country I know off prevents this sort of retail price control by a manufacturer - it is a key part of competition law. That's why when you see the manufacturer list a price it always qualifies it with 'recommended'. They cannot force a retailer to sell it at that price.
It's not that they're price fixing (setting their prices and not permitting sales below those), it's that they're enforcing a form of MAP (Minimum Advertised Price), which is illegal in the EU (from my understanding, IANAL).
"Don't meddle in the affairs of a patent dragon, for thou art tasty and good with ketchup." ~ohcrapitssteve
Your use of the word "never" and your "new coke" example make your text just a complete waste of time.
Your thinking that people should be able to know everything about everything is completely dillusional as shown by you as you don't know what you are talking about.
And if they set it too low, I don't deal with them anymore.
Why do companies need nanny police state?
Voluntary contracts between adults are now foreign to the EU.
Yes, but the manufacturers and the suppliers are in cahoots with each other. Small retailers don't have any option. Sell the item at below the manufacturer decided price and they risk getting cut off by the supplier.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
I suspect musical instrument/pro audio is one of the few retail areas where people still haggle. In most retail (especially on-line), the minimum advertised price is the minimum price, period.
Support Right To Repair Legislation.
This is probably one of the most sensible things I have heard in this regard. The human race is birthing itself out of the strongman-as-leader age into one where we work together to help each other and leaders are merely servants who watch after the people and help facilitate the collective will. We have a ways to go but this seems to fit that direction of progress. We must demand that those who attain great wealth must also act responsibly in service to that privilege. With great wealth comes greater levels of responsibility as well.
I object to power without constructive purpose. --Spock
That must have been some expensive shit. I would never bother with anything that didn't yield at least 100% margins. Retail is generally 200-300% margins.
I object to power without constructive purpose. --Spock
"If I don't stick to it, they won't sell to me next time."
This has always bothered me. Why should someone be dictating who they sell to if you are operating in a market. Don't bother with "free" market since a market is just a place everyone can go and pay the same posted price. I see the same problems with discounting volume for one retailer. If a company sells to Wal-Mart cheaper than they sell to me then it usually just leads to a cabal. Overall, aside from logistics, the volume is the same and Wal-Marts' participation should lower the price for me as well. If I have to pay a higher price then I just won't bother--lowering manufacturer volume. This would follow the theory of supply and demand and it would help ensure that Wal-Mart provides the same level of service as a small retailer.
I object to power without constructive purpose. --Spock
Asshole? Maybe. Condescending? Probably. But he's still right about you.
Right. Because Google's cell phone monopoly eliminated the 20% of iPhones and banned the Kindle Fire app store and forced Microsoft to make horrible decisions with the remains of Nokia and prevented feature phone sales.
No, Google got fined for being a successful American company.
so much for a reputation ... dumb move for a company which owned an entire segment of an industry ... sigh
Yes, but the manufacturers and the suppliers are in cahoots with each other. Small retailers don't have any option. Sell the item at below the manufacturer decided price and they risk getting cut off by the supplier.
this is the truth, plus small businesses get the worst wholesale price, indeed,the big sellers get subsidized by the small sellers because the sales peeps are fixated on the major accounts
Apple have previous:
https://www.theguardian.com/bo...
On hardware too:
https://www.wired.co.uk/articl...
"Google got fined for being a successful American company." - sit down and give your mouth a chance
"The hands that help are better far than lips that pray." - Robert Ingersoll (1833-1899)
You used to be a time when shopping in Harrods in London, they'd charge more than the RRP even when its printed on the packaging
"The hands that help are better far than lips that pray." - Robert Ingersoll (1833-1899)
The right shouts that the EU is socialist, the left complains it is corporatist... ,