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

Yamaha77 · June 2020

Good luck with that CACK wouldnt buy from them if they were the cheapest in Europe! After my last post purchase experience with those jokers taught me a hard lesson never to make a purchase without credit care for protection. Still left with a bodged repair job on an acoustic that had an issue from manufacturer. Sadly now I won't even touch the guitar and if I were to sell it it would be a huge financial loss.

ICBM · June 2020

I'm sure this won't make me popular, but I would actually be in favour of complete, totally rigid fixing of both the retail price and the trade price. That way the shop that gets the sale would be the one which offers the best service, not the race to the bottom on price which is all most buyers seem to care about. Anything else favours large retailers over smaller ones, and box-shifters over bricks-and-mortar shops.

The existing halfway house which allows manufacturers and distributors to offer discounts to large buyers and not to small ones is the worst of both worlds though.

I also agree with whoever said it earlier that the current business rates model is completely backwards, but that's a different issue.

RaymondLin · June 2020

I look forward to the next guitar hero playing a Harley Benton guitar.

terada · June 2020

skunkwerx said:

When I asked for a discount on my Fender professional the arse end of last year in Pmt, I got told no, Fender set the prices and the retailer cant go below it. They added that the margins were so slim discounts werent possible anyway.

I said for my troubles the store can afford a few quid loss to retain a customer.

I asked fender Uk if this was true. They said no.

I’ve asked on loads of different products, over all the main stores, never been given so much as a pack of strings yet! Lol

Meanwhile PMT gave me about 10% off a PRRI just for asking. The inconsistency is astounding

elusivelight · June 2020

Blueingreen said:

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.

Absolutely this.

Fender Standard Strat 2010 £879 RRP

Equivalent today Performer Strat £999 RRP
After ten years of large sections of society not getting pay rises even in line with inflation this is a bigger problem to me than price fixing for the industry.

Having had a bit of a sabbatical from playing I was quite shocked at the prices of new instruments when I got back into it this year.

TTony · June 2020

elusivelight said:

Blueingreen said:

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.

Absolutely this.

Fender Standard Strat 2010 £879 RRP
Equivalent today Performer Strat £999 RRP
After ten years of large sections of society not getting pay rises even in line with inflation this is a bigger problem to me than price fixing for the industry.

Having had a bit of a sabbatical from playing I was quite shocked at the prices of new instruments when I got back into it this year.

In 2010, the £/$ exchange rate was around 1.50.

In 2020, it's around 1.20.

That accounts for MORE than the change in RRP.

TTony · June 2020

Three-ColourSunburst said:

Consumers have to make a stand and refuse to pay anything like the RRP unless there is a very good reason to do so.

What would you prefer?

Paying £750 RRP for a guitar.
Getting a 10% discount on an £899 RRP for the same guitar?

If you like a guitar, and can afford it, pay the price.

If you like a guitar, but can't afford it, find a cheaper one or save some cash until you can afford it.

ICBM said:

I'm sure this won't make me popular, but I would actually be in favour of complete, totally rigid fixing of both the retail price and the trade price. That way the shop that gets the sale would be the one which offers the best service, not the race to the bottom on price which is all most buyers seem to care about.

Because buyers aren't stupid - they know that cheaper is always better.

"Know the price of everything and the value of nothing".

idiotwindow · June 2020

elusivelight said:

Blueingreen said:

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.

Absolutely this.

Fender Standard Strat 2010 £879 RRP
Equivalent today Performer Strat £999 RRP
After ten years of large sections of society not getting pay rises even in line with inflation this is a bigger problem to me than price fixing for the industry.

£:$ exchange rate in 2010 was vastly different to what it is now. I agree that large sections of society have got poorer during the last ten years but I'm not sure the price of US Strats tells much of a story. You can buy a perfectly decent playing Strat for £350 and a very good one for £700 if you are not fussy about things like nitro or being made in Corona.

Sassafras · June 2020

What next, the EEC?

elusivelight · June 2020

idiotwindow said:

elusivelight said:

Blueingreen said:

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.

Absolutely this.

Fender Standard Strat 2010 £879 RRP
Equivalent today Performer Strat £999 RRP
After ten years of large sections of society not getting pay rises even in line with inflation this is a bigger problem to me than price fixing for the industry.

£:$ exchange rate in 2010 was vastly different to what it is now. I agree that large sections of society have got poorer during the last ten years but I'm not sure the price of US Strats tells much of a story. You can buy a perfectly decent playing Strat for £350 and a very good one for £700 if you are not fussy about things like nitro or being made in Corona.

That's all true, fair point. I suppose there is an inherent snobbery over what's on the headstock. Picked up a CV Jazzmaster and am shocked at the level of quality out of the box. Have an MIM Charvel coming this week as people have been raving about them.

guitars4you · June 2020

TTony said:

elusivelight said:

Blueingreen said:

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.

Absolutely this.

Fender Standard Strat 2010 £879 RRP
Equivalent today Performer Strat £999 RRP
After ten years of large sections of society not getting pay rises even in line with inflation this is a bigger problem to me than price fixing for the industry.

Having had a bit of a sabbatical from playing I was quite shocked at the prices of new instruments when I got back into it this year.

In 2010, the £/$ exchange rate was around 1.50.

In 2020, it's around 1.20.

That accounts for MORE than the change in RRP.

And it is made worse when everything is compounded up, especially when the government vat/import duty and dealer margin are all added on as a % on the new cost price

ie just for now assume no factory price change from 2010 to 2010 and the Strat costs $1000 to leave the factory

$1000 at 1.5 exchange rate ='s £666 now add 24% to cover vat + import duty and you are now at £825

$1000 at 1.2 exchange rate ='s £833 now add 24% to cover vat + import duty and you are now at £1032

So with no additional costs involved at all regarding materials/factory price change etc other than a £v$ exchange rate and the differential is vast and the government make an extra £40 for doing nothing - In short, in this exercise the cost of the guitar has not changed price at all, it is just the cost of buying the dollars that has changed, but yes it is you/us that pays for it

Blueingreen · June 2020

idiotwindow said:

elusivelight said:

Blueingreen said:

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.

Absolutely this.

Fender Standard Strat 2010 £879 RRP
Equivalent today Performer Strat £999 RRP
After ten years of large sections of society not getting pay rises even in line with inflation this is a bigger problem to me than price fixing for the industry.

£:$ exchange rate in 2010 was vastly different to what it is now. I agree that large sections of society have got poorer during the last ten years but I'm not sure the price of US Strats tells much of a story. You can buy a perfectly decent playing Strat for £350 and a very good one for £700 if you are not fussy about things like nitro or being made in Corona.

My own point was about the difficulties caused by prices rising fast when incomes are falling. I'm not looking to apportion blame: I'm just saying I can't see how the industry can fail to shrink significantly if its product is becoming affordable to fewer people. Whether the problem is caused by exchange differences or other factors isn't the point at issue. If you're forced out of business owing to factors beyond your control, it isn't necessarily a huge consolation that it wasn't your fault.

The question of whether you can still buy a decent, affordable guitar is interesting, but again not the point at issue. For the industry to survive in its current form it needs demand at a wide range of price points. If more people feel they have no option but to buy basic, lower margin instruments that is not good news.

I'm reminded of the situation in the local restaurant business when the local economy went through a trauma a few years ago. First stage, restaurants bumped prices up: the only way they thought they could survive with fewer covers was more income per customer. Inevitably this killed low demand even further. Second stage, a big percentage of the local restaurant trade was wiped out.

I can't help but think we're going to see something similar in the guitar business. The American Strat prices quoted above amount to a 14% rise over nearly 10 years. That's not bad. But I'm seeing examples where guitars are being priced between a quarter and a third more than they were 2 or 3 years ago. The effects of Covid will reduce peoples' ability to spend. The semi-pro who relies on gigs to fund his gear habit will be particularly badly hit. Something's got to give.

TTony · June 2020

Blueingreen said:

My own point was about the difficulties caused by prices rising fast when incomes are falling.

Hence the emergence of brands like Harley Benton, or sub brands like PRS SE, or dealer margins being squeezed (etc).

Manufacturers will always find a way of putting a product at a cheaper price point.

And not all incomes have fallen in the period. Hence there’s still a market for £5k PRS, and Gibson custom shops, etc.

Rob1742 · June 2020

In the fashion industry a couple of the huge brands insist on a consistent retail price, but also stipulates that if the retailer ever dare reduce the price, even at the end of the season, they won’t supply them ever again.
Price fixing is rife, but generally the manufacturer gets away with it, but there have been several cases where the authorities have come into the businesses and gone through emails.

I am surprised GAK have got done and not the manufacturer as that is where the issue generally is, so I can only suspect they have been busted through them sending out emails or something similar to a wrong person.

Rob1742 · June 2020

Think in 2019 they made a profit after tax of around £150k, and took dividends of £250k, so £250k fine wipes out a huge chunk of their annual profits.

Their shareholders funds are at around £2.5m to 2019 so another way to look at it authorities have taken away 10% of that.

BeardyAndy · June 2020

I despise the phrase "price fixing" sounds so dodgy, where in truth it's just trying to keep a level playing field for retailers. The big boys get rich and the little ones stay afloat. Accountant can get off charging £100 to send a letter or an estate agent can charge a couple of grand for taking a photo but an independent retailer has to cut his margins to the bone or risk a crippling fine!

rossi · June 2020

Probably a cheque from Yamaha to GAK is in the post .

guitars4you · June 2020

Rob1742 said:

In the fashion industry a couple of the huge brands insist on a consistent retail price, but also stipulates that if the retailer ever dare reduce the price, even at the end of the season, they won’t supply them ever again.
Price fixing is rife, but generally the manufacturer gets away with it, but there have been several cases where the authorities have come into the businesses and gone through emails.
I am surprised GAK have got done and not the manufacturer as that is where the issue generally is, so I can only suspect they have been busted through them sending out emails or something similar to a wrong person.

So was I until I saw the notes from CMA and did not realise the point marked in bold

It is illegal for a supplier to prevent a retailer from discounting prices. •
Both the supplier and the retailer are potentially breaking the law if they agree that the retailer will not price below a minimum level. •
An agreement does not have to be explicit – it can be achieved by threats or financial incentives not to sell below a particular price. •
Cheating on an agreement – by a retailer sometimes reducing prices – does not prevent such arrangements being illegal.

earwighoney · June 2020

RaymondLin said:

I look forward to the next guitar hero playing a Harley Benton guitar.

I hope there will be a cheat in the game so you can have the Harley Benton's pickups upgraded in the Guitar Hero.

rossi · June 2020

mcsdan said:

skunkwerx said:

When I asked for a discount on my Fender professional the arse end of last year in Pmt, I got told no, Fender set the prices and the retailer cant go below it. They added that the margins were so slim discounts werent possible anyway.

I said for my troubles the store can afford a few quid loss to retain a customer.

I asked fender Uk if this was true. They said no.

I’ve asked on loads of different products, over all the main stores, never been given so much as a pack of strings yet! Lol

I’ve got a PMT local to me and always been hard to get a discount out of them. Ive had it a couple of times over many years and last t I’ve I looked at an amp in there I was given the same line you got and I decided not to buy from them. I tend to not bother with them any more and go slightly further to a much better music shop where I’ve purchased 3 fenders in the last 2 years (2 American originals and 1 custom shop) and each time I’ve been given a discount when asked.

I always thought that they had to display MRP to satisfy the suppliers and keep consistent prices across the country but could negotiate a discount when doing a deal.

I often buy from PMT and usually get a decent new strap and leads maybe a case discounted in a deal .No discount on the Fenders I have bought though a such though no USA or custom shop .

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

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