Dublin25
Well-known member
I heard that starting next month, dealers will no longer be able to discount ML speakers. Has anyone else heard this? This is good and bad news... Just curious though... TIA
No more dealer discounts?
- Thread starter Dublin25
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houstonshark
Well-known member
That is correct.
Price fixing
An agreement among horizontal (vertical price fixing is also illegal) competitors to set prices violates the antitrust laws. Maybe they have been repealed or not enforced by the justice department . If anyone wants to send me a written agreement or order from ML not to discount, I'll be happy to forward it to the Federal Trade Commission.
You might want to bring this to your dealers attention. George W. Bush is no longer president.
An agreement among horizontal (vertical price fixing is also illegal) competitors to set prices violates the antitrust laws. Maybe they have been repealed or not enforced by the justice department . If anyone wants to send me a written agreement or order from ML not to discount, I'll be happy to forward it to the Federal Trade Commission.
You might want to bring this to your dealers attention. George W. Bush is no longer president.
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houstonshark
Well-known member
Martin Logan has always done this but have seldom enforced it. They just reworded the policy to make it more strict. For years they allowed a maximum of a 5% discount on new, in the box products. Bose and Polk Audio have the same policy.
Its not an unheard of practice. Bose, Dyson are two I can think of off the top of my head.
Here is what the state of Michigan's att. gen. says. Note the section highlighted in red.
MIKE COX
ATTORNEY GENERAL
The Attorney General provides Consumer Alerts to inform the public of unfair, misleading or deceptive business practices, and to provide information and guidance on other issues of concern.
Hey! Why Isn't That Price Fixing?
Or
The Real Story of Manufacturer's Suggested Retail Prices.
The Attorney General's Consumer Protection Division receives many inquiries about price fixing on a variety of products, from appliances and home stereo equipment to toys and health care products. A typical question is: "I was shopping for stereo speakers lately and the brand I like is priced exactly the same at every store. When I asked one of the sales clerks about it, he said the store won't reduce the price any lower because it would be below the manufacturer's suggested retail price. Isn't that price fixing?
While the question may seem simple, the answers are complex and specific to every set of facts. Illegal price fixing may occur under a number of different scenarios:
While the manufacturer may suggest a retail price, it cannot coerce the retailer into agreeing to it. If an agreement between the manufacturer and retailer is obtained, then the agreement is illegal.
A number of different manufacturers may not agree to set prices for their products. Agreements between manufacturers to set prices are illegal.
Similarly, a number of different retailers cannot agree to set prices for their products. Agreements between retailers to set prices are illegal.
A manufacturer does have a legal right to set a suggested retail price (a manufacturer's suggested retail price or MSRP). The manufacturer also has the right to unilaterally terminate a retailer who prices below the MSRP. Frequently, when prices are identical for a product at every store, it is because each retailer has decided to adhere to the MSRP.
It is frequently difficult in antitrust enforcement to determine when a retail price is set based upon a manufacturer's unilateral pricing policies and when the retail prices are set based upon an illegal agreement. The basic rule of thumb is: if the manufacturer's decision to set a suggested retail price and the retailers choice to adhere to that price are independent decisions, then it is probably not considered price fixing under the law. But if manufacturers and retailers agree that a certain price will be charged, the agreement will be considered illegal.
For further information about manufacturer's suggested retail pricing policies, contact the Federal Trade Commission's Bureau of Competition at (202) 326-3300 or the Michigan Attorney General's Consumer Protection Division at (517) 373-7117.
Here is what the state of Michigan's att. gen. says. Note the section highlighted in red.
MIKE COX
ATTORNEY GENERAL
The Attorney General provides Consumer Alerts to inform the public of unfair, misleading or deceptive business practices, and to provide information and guidance on other issues of concern.
Hey! Why Isn't That Price Fixing?
Or
The Real Story of Manufacturer's Suggested Retail Prices.
The Attorney General's Consumer Protection Division receives many inquiries about price fixing on a variety of products, from appliances and home stereo equipment to toys and health care products. A typical question is: "I was shopping for stereo speakers lately and the brand I like is priced exactly the same at every store. When I asked one of the sales clerks about it, he said the store won't reduce the price any lower because it would be below the manufacturer's suggested retail price. Isn't that price fixing?
While the question may seem simple, the answers are complex and specific to every set of facts. Illegal price fixing may occur under a number of different scenarios:
While the manufacturer may suggest a retail price, it cannot coerce the retailer into agreeing to it. If an agreement between the manufacturer and retailer is obtained, then the agreement is illegal.
A number of different manufacturers may not agree to set prices for their products. Agreements between manufacturers to set prices are illegal.
Similarly, a number of different retailers cannot agree to set prices for their products. Agreements between retailers to set prices are illegal.
A manufacturer does have a legal right to set a suggested retail price (a manufacturer's suggested retail price or MSRP). The manufacturer also has the right to unilaterally terminate a retailer who prices below the MSRP. Frequently, when prices are identical for a product at every store, it is because each retailer has decided to adhere to the MSRP.
It is frequently difficult in antitrust enforcement to determine when a retail price is set based upon a manufacturer's unilateral pricing policies and when the retail prices are set based upon an illegal agreement. The basic rule of thumb is: if the manufacturer's decision to set a suggested retail price and the retailers choice to adhere to that price are independent decisions, then it is probably not considered price fixing under the law. But if manufacturers and retailers agree that a certain price will be charged, the agreement will be considered illegal.
For further information about manufacturer's suggested retail pricing policies, contact the Federal Trade Commission's Bureau of Competition at (202) 326-3300 or the Michigan Attorney General's Consumer Protection Division at (517) 373-7117.
Isn't this a self-contradiction, at least in spirit? How can manufacturers impose a price and not have the practice constitute price fixing?
voice of expereince
As someone who has a current order for price fixing(FTC v Superior Court Trial Lawyers, Assn.See Also Michigan Doctors v Medicaid) I can assure you that refusing to discount because the manufacture told you so is vertical price fixing. price fixing is a naked restriant of trade
gregadd
As someone who has a current order for price fixing(FTC v Superior Court Trial Lawyers, Assn.See Also Michigan Doctors v Medicaid) I can assure you that refusing to discount because the manufacture told you so is vertical price fixing. price fixing is a naked restriant of trade
gregadd
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There isn't an agreement because the seller has the ability to sell below the MSRP...once.
I'm very upset at this decision. I was just about to get back into Martin Logan's, which I've been drooling over for years, and this will probably put them just out of reach.
It was hard enough to accept all the compromises that come with the ML sound, I may just opt for the easy and still completely satisfying route of some nice THX certified Atlantic Technology speakers and just be happy. Or of course the used market.
I am just quoting the State of Michigan's Att. General. I think he would have a handle on it probably better than anyone here.
Link below:
http://www.michigan.gov/ag/0,1607,7-164-34739_17343_18163-44650--,00.html
robertawillisjr
Well-known member
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Given the state of the economy and the fact that the number of audiophile stores is rapidly decreasing, I don't think getting a discount will be a problem. If it is, there are more manufacturers that make speakers.
However, I think that specialty companies like ML really have to protect their dealers. Ensuring that the dealer gets a realistic profit is one way of doing this. But isn't it up to the dealer to decide how much to discount a product? Selling a big ticket item at a hefty discount may allow one to pay the rent!
However, I think that specialty companies like ML really have to protect their dealers. Ensuring that the dealer gets a realistic profit is one way of doing this. But isn't it up to the dealer to decide how much to discount a product? Selling a big ticket item at a hefty discount may allow one to pay the rent!
Gordon Gray
Well-known member
If a client is buying several items from a store, including ML speakers, I would think the Owner can adjust the final "out the door" price for all the items and still provide a reasonable discount for a client.
All that changes is the price for each piece shown on the invoice.
From my experience, that's pretty common practice and is justifiable from a seller and buyer perspective.
I understand the intent of their policy but if ML, or other high end manufacturers, do not anticipate / allow for that type of sale, I think they are shooting themselves in the foot, especially in light of the current economic situation.
GG
All that changes is the price for each piece shown on the invoice.
From my experience, that's pretty common practice and is justifiable from a seller and buyer perspective.
I understand the intent of their policy but if ML, or other high end manufacturers, do not anticipate / allow for that type of sale, I think they are shooting themselves in the foot, especially in light of the current economic situation.
GG
price fixing is when competitors selling basically the same item that competes together in the market place get together and knowingly agree to fix the minimum price for their good or service. this is done to keep profit margins as high as possible.what Martin Logan does is a good thing and is totally legal! the last thing you want is a bunch of third rate dealers whoring out your state of the art product and running your strong dealers out of biz.if Logan gets to out of line a competitor will soon emerge setting the scales back to what they should be
The only "benefit" to ML is the cachet of a solid price. They certainly don't benefit monetarily as the dealer cost is fixed and they won't move as many units at retail (who pays retail!). In the end this is probably to support the dealer who can blame the lack of discount on ML, though in reality the practice of double invoicing (the real one and one for ML) will cover up many 10% discounts. If the dealer is really hurting, as many I know are, then 15% won't be out of line. It is a buyer market!
We've seen the efficiency of the free market a lot lately.
only one thing worse
There is only one thing worse than fixing a price, a concerted refusal (Martin Logan is a monopsonist thus requiring no co-conspirators)to deal because of the parties failure to adhere to the price. See Section five of the Shreman Antitrust Act.
While Davinci may not be subject to federal regulation, Martin Logan is a multinational corporation.
gregadd
There is only one thing worse than fixing a price, a concerted refusal (Martin Logan is a monopsonist thus requiring no co-conspirators)to deal because of the parties failure to adhere to the price. See Section five of the Shreman Antitrust Act.
While Davinci may not be subject to federal regulation, Martin Logan is a multinational corporation.
gregadd
favrefan
Member
Gordon has the right idea. I recently bought a pair of Spires. When I first started discussing price with the dealer, he told me he was contractually forbidden from providing a greater than 5 percent discount. I then countered by also offering to buy a couple of power cords for the Spires. The package price meant I either got the power cords for free, or the Spires and the power cords at a decent discount.
Another way to beat the dealer agreement is to offer to buy "demo" or "open box" speakers.
Bottom line: don't give up because someone tells you they are contractually restricted. A little creativity can solve the problem.
Another way to beat the dealer agreement is to offer to buy "demo" or "open box" speakers.
Bottom line: don't give up because someone tells you they are contractually restricted. A little creativity can solve the problem.
houstonshark
Well-known member
Like I said earlier this is not a new practice for ML. Previously the maximum discount allowed was 5%. It is now 0 and it sounds as if they are willing to enforce it now. This will have little to no effect on my business. Many of you (based on previous comments on this forum) seem to be astonished that anyone would pay retail for consumer electronics. Far more customers than not who walk into my store do pay full retail including every Martin Logan customer.
political appointment
How could the threat of losing a franchise result in voluntary activity?
gregadd
How could the threat of losing a franchise result in voluntary activity?
gregadd
you described horizontal price fixing only. vertical price fixing is when the manufacturer muscles his dealers to accept his price. This is especially bad when the manufacturer is the only provider of the product.
Believe me you all make good arguments. The same ones that I made.
ALL OF WHICH WERE REJECTED OUT OF HAND ALL THE WAY TO THE US SUPREME COURT.
gregadd
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