GAK fined more than a quarter of a million pounds by price-fixing watchdog

oh_pollo

https://www.musicradar.com/news/roland-korg-and-gak-fined-pound575m-by-uk-price-fixing-watchdog

From the CMA's full statement:

"Separately, a retailer of musical instruments, GAK, has also admitted to engaging in RPM with Yamaha and agreed to pay a maximum fine of more than a quarter of a million pounds to settle the case. This is the first time the CMA has taken enforcement action against a retailer in a resale price maintenance case."

https://www.gov.uk/government/news/musical-instrument-firms-to-pay-millions-after-breaking-competition-law

Whitecat

Trouble on the horizon for, well, everyone? 

"The strongly worded letter, which you can read in full here, warns "We continue to receive complaints suggesting that some industry participants think that, because they were not investigated, they may have ‘got away with it’. 

"Therefore, we have sent warning letters to almost 70 other musical instruments suppliers and retailers where we already have sufficient evidence to suspect they have broken the law by engaging in RPM.""

 

Probably couldn't be worse timing with everything else going on. Interesting times ahead.

Hattigol

Am I the only one that thinks this will be doomsday for almost all guitar shops? 

Having busted GAK for that sort of figure, they will, I assume, have to dish out similar (proportionate) fines for others? How the hell with they afford it?

Price-fixing is everywhere. Not just with guitars. Not sure how I feel about this - it irritates me but not half as much as the further closure of guitar shops....

guitartango

Rather than fine them, the money should go towards the customer and not the government.

Brize

Is this really a problem that causes consumer detriment? With all of the problems in the world, a government agency chooses to focus on this?

I wonder if GAK have the financial reserves to pay this fine and continue trading.

fretfinder

Who owns GAK I wonder, and do they have a quarter mill available to pay the fine, or will they have to go bust? And does this mean that anyone who’s bought a brand new Fender or Yamaha in recent years might have saved a few (hundred?) quid if this price fixing hadn’t been going on?

JezWynd

Shouldn't Yamaha be on the receiving end of some of this penalty? I presume it was pressure from them that pushed GAK to go down this path. Seems a bit unfair as, in my experience, GAK have always been open to giving discounts on purchases.

Caffeine_Vampire

The words 'nail' and 'coffin' spring to mind.

Whitecat

JezWynd said:

Shouldn't Yamaha be on the receiving end of some of this penalty? I presume it was pressure from them that pushed GAK to go down this path. Seems a bit unfair as, in my experience, GAK have always been open to giving discounts on purchases.

Yamaha were given total immunity - https://www.gov.uk/guidance/cartels-confess-and-apply-for-leniency - I guess they chose to throw GAK under the bus because they knew they were about to be caught?

would it be cheeky to ring up GAK today asking for a deal on some Yamaha gear?

pmg

Will be interesting to see if any other cases cone forward.  It feels like it’s rife

gusman2x

Seems like there's better industries and sectors to go after. Like car insurance and energy tariffs? I always thought that MRP was legal? And I must admit, I don;t really know why it shouldn't be legal.

Hopefully GAK have an insurance policy that covers this.

Funkfingers

RPM has been a common practice within UK musical retail for decades. Some of it was stipulated by the product manufacturers. The theory was to make the guitars, amps or pedals available nationwide, at the same price, regardless of how big or small the retail outlet. 

To discourage unofficial discounting, punitive measures were written into the account agreements. The ultimate sanction was termination of future supplies and aftersales support.

Any similarity to organised crime and protection rackets is entirely coincidental. 

Blueingreen

The bigger threat to the industry seems to me that prices of guitars in particular are rocketing while peoples' capacity to pay for them is shrinking.  I can't see how that ends well.

sunshinewelly

good news as far as i am concerned - its a bloody nuisance having every guitar shop selling the same thing at the exact same price

Funkfingers

Exactly. 

Without the rigged system, small shops in small towns would wither and die. A punter in the South Wales valleys would be obliged to travel to Swansea, Cardiff or Bristol to obtain supplies.

pmg

Apple.

Hattigol

Funkfingers said:

Without the rigged system, small shops in small towns would wither and die. 

Yeah, imagine if that happened....

ICBM

Has someone in government got it in for the musical instrument trade? First Fender are fined a record amount, now this...

An easy target? A business without the resources to fight the cases?

It also seems a bit unjust when some of the most heinous culprits are Westside and Mesa/Boogie, too.

RaymondLin

It won’t change, I remember Dixons got fined like 20 years ago for it. This won’t stop GAK or any retailer, they will continue to do it, either by market forces or driven by profit.

crunchman

If the suppliers want to keep prices similar, then they need to sell to all the stores at the same price.  Giving Andertons or GAK a 10% discount because they order 200 of something while the independent shop only orders 5 is probably the issue.

Funkfingers

Hattigol said:

Funkfingers said:

Without the rigged system, small shops in small towns would wither and die. 

Yeah, imagine if that happened....

As I posted earlier, any resemblance to organised crime and racketeering is entirely coincidental.

Large scale retailer requests bulk discounts from manufacturer. Manufacturer politely declines. Large scale retailer threatens to undercut manufacturer by setting up own overseas production base. Manufacturer calls large scale retailer’s bluff. Hey, presto, ugly new Korean or Chinese-made mid-price guitar brand with English name on its headstock. Temporary disturbance of the norms until customers revert to the usual old favourites.