Price Fixing...?

Strat54

Seems like the musical instrument industry is coming under scrutiny in relation to price fixing...

https://www.mia.org.uk/2018/04/our-industry-under-investigation/

It certainly didn't used to be like it is now. 

Fuengi

I always suspected a FB cartel, manipulating the prices for used Analog Man pedals! 

JerkMoans

They should just have a look at the classifieds here, paying particular attention to Lazy J amps and Hudson Broadcast pedals.

Whitecat

Wow - I’ve often suspected it tbh (with some players — certainly not endemic) but never thought they had the resources to bother considering action. Brb, buying popcorn futures. 

thebreeze

That's interesting.  I suspect the way the big boys force dealers to take stock will get a bit of scrutiny.  This could be very revealing in all sorts of ways.

richardhomer

No doubt about it in my view. Some years ago, I was looking to buy a Pure Vintage Strat and they were advertised at a ‘street’ price of (iirc) £1341 pretty much everywhere.

Given it was such a weird figure, I was convinced there was some maximum level of discount being applied by the manufacturer.

Whitecat

A fascinating question will be “who blew the whistle” - these things are often instigated by one party to it all who is often granted immunity in return. 

ICBM

The price of Mesa amps has certainly been fixed artificially high by having a restrictive sole-distributor arrangement, backed up by blocking US dealers from selling amps or parts (eg replacement transformers) outside North America. Whether that falls within the remit of the CMA in the UK I'm not sure, but it probably should.

I strongly suspect they aren't the only ones either.

VJIves

I'd be happy for things to just get back to their pre-Brexit state.

Jack_

I'd guess that the amount of collusion going on in all sectors is large. So hard to prosecute, and so much to gain, it's very lucrative.

Hattigol

There is no doubt about it at all. The large brands, particularly Fender and Gibson, have for years insisted that dealers comply with their 'strategy' on pricing - that includes what's called a MAP, or Minimum Advertised Price, meaning that dealers cannot advertise below this. It is usually a percentage under the RRP, hence the bizarre figures that sometimes come up, such as the £1341 referred to above. That's also why some dealers will say "Call for best price" as that way, they are not 'advertising' it.

It's price-fixing, pure and simple. And as I understand it, illegal.

HAL9000

Jack_ said:

...collusion going on...

'NO COLLUSION'
  TheRealDonaldTrump

Musicman20

VJIves said:

I'd be happy for things to just get back to their pre-Brexit state.

Imagine that! I'd have bought a few more things no doubt.

maltingsaudio

Hmm this refers to new prices and manufacturers trying to keep margins up is a bad thing? Proper Dealers have to invest thousands in stock and provide a back up service and therefor need protecting against a Johnny come lately bedroom dealer who manages to blag a trade account, cherry pick what he wants to sell to make pocket money .

Yes the major distributors enforce a minimum retail advertised price for new products or the offending dealer loses his trade account with that distributor . Really don’t see a problem with this, after all try buying a tin of cat o scoff, the price is virtually the same where ever you shop.

The manufacturers and distributors are in business to supply goods and services at a profit and to protect their dealers so they can keep doing it. Gibson take note!

thebreeze

Hattigol said:

There is no doubt about it at all. The large brands, particularly Fender and Gibson, have for years insisted that dealers comply with their 'strategy' on pricing - that includes what's called a MAP, or Minimum Advertised Price, meaning that dealers cannot advertise below this. It is usually a percentage under the RRP, hence the bizarre figures that sometimes come up, such as the £1341 referred to above. That's also why some dealers will say "Call for best price" as that way, they are not 'advertising' it.

It's price-fixing, pure and simple. And as I understand it, illegal.

Oddly, it's not illegal to do this and fairly common in distribution agreements, the argument being that brand owners need to do it to protect the brand/quality/reputation/make back on their R&D etc.  It becomes unlawful if they are abusing their dominant position within the market or are trying to manipulate the market in some way just because they can.  Proving and disproving any of that all that takes a long time to investigate - but the fact that there has been a call for an investigation means there's something to look at certainly. 

impmann

Having been on both sides of the fence, I imagine there are some people who may be a touch "clenched" right now...

I'm not sure what it will achieve though, from a consumer perspective - as I don't think it will improve our experience, long term. I can image who has instigated this (and if so, they'll make themselves even more popular than they already are), plus their reasons for doing so. But frankly, if they do get their way and we see prices in free-fall, the short term consumer gain will then be offset by a lack of long term consumer choice and all that brings in terms of monopolies.

Sometimes, its best not to tickle a sleeping dragon...

Hattigol

thebreeze said:

Hattigol said:

There is no doubt about it at all. The large brands, particularly Fender and Gibson, have for years insisted that dealers comply with their 'strategy' on pricing - that includes what's called a MAP, or Minimum Advertised Price, meaning that dealers cannot advertise below this. It is usually a percentage under the RRP, hence the bizarre figures that sometimes come up, such as the £1341 referred to above. That's also why some dealers will say "Call for best price" as that way, they are not 'advertising' it.

It's price-fixing, pure and simple. And as I understand it, illegal.

Oddly, it's not illegal to do this and fairly common in distribution agreements, the argument being that brand owners need to do it to protect the brand/quality/reputation/make back on their R&D etc.  It becomes unlawful if they are abusing their dominant position within the market or are trying to manipulate the market in some way just because they can.  Proving and disproving any of that all that takes a long time to investigate - but the fact that there has been a call for an investigation means there's something to look at certainly. 

I'm pretty sure it is illegal if you read this:

https://www.gov.uk/cartels-price-fixing/types-of-anticompetitive-activity

I'm not entirely sure how high up this should be on the government's agenda though really. Personally, and it may just be me, I'd prefer them to put some more effort into unfucking the country.

kt66

Some contracts between manufacturers/distributors and retailers will have pricing elements.
It's there to protect the shops, and to stop online official dealers undercutting the shops. 
Online only dealers can afford to make much less margin. If we didn't have this, we'd have no shops.
A manufacturer controlling the RRP is as far as I know not illegal and happens in every industry.

thebreeze

TBH I'd be surprised if the larger corps hadn't got this covered legally - surely this is something they must have been watching.  I think you can make a good argument to suggest that their is plenty of competition in the market (they'll have to decide what that is; UK, Europe, Global) and that prices reflect normal economic practice within these markets.

thebreeze

Hattigol said:

thebreeze said:

Hattigol said:

There is no doubt about it at all. The large brands, particularly Fender and Gibson, have for years insisted that dealers comply with their 'strategy' on pricing - that includes what's called a MAP, or Minimum Advertised Price, meaning that dealers cannot advertise below this. It is usually a percentage under the RRP, hence the bizarre figures that sometimes come up, such as the £1341 referred to above. That's also why some dealers will say "Call for best price" as that way, they are not 'advertising' it.

It's price-fixing, pure and simple. And as I understand it, illegal.

Oddly, it's not illegal to do this and fairly common in distribution agreements, the argument being that brand owners need to do it to protect the brand/quality/reputation/make back on their R&D etc.  It becomes unlawful if they are abusing their dominant position within the market or are trying to manipulate the market in some way just because they can.  Proving and disproving any of that all that takes a long time to investigate - but the fact that there has been a call for an investigation means there's something to look at certainly. 

I'm pretty sure it is illegal if you read this:

https://www.gov.uk/cartels-price-fixing/types-of-anticompetitive-activity

I'm not entirely sure how high up this should be on the government's agenda though really. Personally, and it may just be me, I'd prefer them to put some more effort into unfucking the country.

I agree with you on the last point.  That link sets out the basic premises of what constitutes anti-competitive behaviour but there are a number of exceptions and circumstances where they don't apply or that have there own rules etc.  Distribution agreements/dealerships being one, brands, copyrights, certain markets etc.  If you read the CMA link in the original post they make it clear that people shouldn't jump to any conclusions for these reasons - all might be well but the fact that they're bothering to investigate is indicative that something needs to be looked at.

Whitecat

kt66 said:

Some contracts between manufacturers/distributors and retailers will have pricing elements.
It's there to protect the shops, and to stop online official dealers undercutting the shops. 
Online only dealers can afford to make much less margin. If we didn't have this, we'd have no shops.
A manufacturer controlling the RRP is as far as I know not illegal and happens in every industry.

RRPs are legal - MAPs actually usually aren't despite being prevalent across many sectors as you infer.

https://www.gov.uk/government/publications/resale-price-maintenance-advice-for-retailers/resale-price-maintenance-advice-for-retailers

My musings above are very much related to that link and I do wonder if it's the crux of all of it.