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The Fight Over Who Sets Prices at the Online Mall (corporate price fixing)
NY Times ^ | February 7, 2010 | BRAD STONE

Posted on 02/08/2010 12:38:49 PM PST by a fool in paradise

...To see how much these items cost, shoppers must add the merchandise to their shopping carts — in effect, taking it up to the virtual register for a price check...

In many cases that freedom stems from a 2007 Supreme Court ruling in the case of Leegin Creative Leather Products v. PSKS. The ruling gave manufacturers considerably more leeway to dictate retail prices, once considered a violation of antitrust law, and it set a high legal hurdle for retailers to prove that this is bad for consumers.

...retailers say manufacturers have become increasingly aggressive with one tool in particular: forbidding retailers from advertising their products for anything less than a certain price.

...Manufacturers consider the product pages on sites like eBay and Amazon.com to be ads, and they complain whenever e-commerce sites set prices below the minimum price...

..The trend has arguably weakened one of the implicit promises of e-commerce: that quick searches and visits to comparison shopping sites will yield the best deals.

...the practice of enforcing minimum advertised prices has gradually spread from the consumer electronics business to companies in other industries like sporting goods and jewelry, which are also trying to stem the downward pressure of prices online...

“At the end of the day, it will become a race to zero if you don’t do anything to manage the issue,” said Jon C. Jordan, chief executive of Southern Audio Services. “Then you’ve devalued your product to the point where it’s difficult to get distribution and consumers lose interest in it.”

...One bill that would repeal provisions of the ruling is now being considered in the House. In October, 41 state attorneys general wrote a letter to members of the House Judiciary Committee, arguing that the court’s decision had resulted in higher prices for shoppers...

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Crime/Corruption; Culture/Society; Extended News
KEYWORDS: amazon; amazondotcom; competition; consumerrights; ebay; ecommerce; internet; pricefixing

1 posted on 02/08/2010 12:38:49 PM PST by a fool in paradise
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To: a fool in paradise

There should be no minimum price.

I have never seen a site where the price is unlisted until you go to “checkout”.


2 posted on 02/08/2010 12:41:20 PM PST by GeronL (Dignity is earned from yourself. Respect is earned from others.)
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To: a fool in paradise
That is not price fixing.

Price fixing is when competitors meet to agree to fix the price across the board to control the market.

Manufacturers setting their price and demanding their retailers honor that contract is not price fixing since the retailer has the option to simply not carry that manufacturers product and instead carry a competitive brand,

3 posted on 02/08/2010 12:41:31 PM PST by MNJohnnie ("The trouble with socialism is that eventually you run out of other peoples' money" Lady Thatcher)
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To: a fool in paradise

The other thing manufacturers do is give different retailers different model numbers. That way they really can guarantee you the lowest price on big ticket items. Because other retailers don’t sell the same item.


4 posted on 02/08/2010 12:42:29 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: MNJohnnie

The music industry engaged in price fixing with industry wide price points on CDs. A class action lawsuit was brought by dozens of states against several of the companies and settled out of court.

The quotes in the article (one of which I included in my excerpt) show that they want to protect their interests from merchandise being priced too cheaply (as it approches “zero”). This is beyond “advertised price”. This is setting minimum pricings.

Big Media certainly abused that power in the past.

Amazon sells more than just books and CDs and DVDs these days but it is still the bread and butter.


5 posted on 02/08/2010 12:46:32 PM PST by a fool in paradise ("like it or not, we have to have a financial system that is healthy and functioning" Obama 2/4/2010)
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To: driftdiver

Yes, I noticed that when I went shopping for a mattress 10 years ago. Every chain sold a different “custom” model of the Sertas, etc.


6 posted on 02/08/2010 12:47:19 PM PST by a fool in paradise ("like it or not, we have to have a financial system that is healthy and functioning" Obama 2/4/2010)
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To: GeronL
I have never seen a site where the price is unlisted until you go to “checkout”.

There are many where you have to put the item in your cart before seeing the price. I recently was shopping for a digital camera and had a dozen different cameras in my Amazon cart to be able to see all their prices.

And don't get me started about the places which won't tell you what the shipping is until you get to checkout. I usually can fool it by setting up a fake account with an @mailinator.com account and it will tell me what the shipping is before asking for my credit card. A couple have required a credit card number before even telling me what shipping would be, so I just left them and shopped at another website.

7 posted on 02/08/2010 12:48:45 PM PST by KarlInOhio (Special SOTU tagline: YOU LIE!)
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To: KarlInOhio

okay.

But the idea of a minimum price is ret-— that r word.


8 posted on 02/08/2010 12:50:15 PM PST by GeronL (Dignity is earned from yourself. Respect is earned from others.)
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To: GeronL

Almost all of the major electronics and big box retailers use “add to cart” end arounds for special deals.

Electronices use it most.


9 posted on 02/08/2010 12:52:08 PM PST by sbMKE
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To: GeronL
But the idea of a minimum price is ret-— that r word.

Not necessarily. Minimum prices discourage free riding on the part of discounters that don't provide service in connection with the sale of the product. It is a legitimate and useful tool for a manufacturer to protect its brand.

10 posted on 02/08/2010 12:55:52 PM PST by Publius Valerius
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To: Publius Valerius

Retailers should be allowed to discount if they can. Think Wal-Mart. Once the retailer “buys” the product then its theirs to resell, unless the manufacturer can guarantee a profit or something.

The last thing we need is government setting those prices.


11 posted on 02/08/2010 1:02:02 PM PST by GeronL (Dignity is earned from yourself. Respect is earned from others.)
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To: sbMKE

Thats interesting. I never click on anything if I don’t see the price listed.


12 posted on 02/08/2010 1:02:44 PM PST by GeronL (Dignity is earned from yourself. Respect is earned from others.)
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To: Publius Valerius

“It is a legitimate and useful tool for a manufacturer to protect its brand. “

Really? Its certainly useful for setting prices but not so sure about protecting their brand.

It gives me the impression they are playing a shell game when companies do this kind of stuff. That reflects negatively in my book.


13 posted on 02/08/2010 1:06:07 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: a fool in paradise

I’ve seen the same thing in appliances, TVs and other expensive electronics.


14 posted on 02/08/2010 1:07:18 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: GeronL

Walmart doesn’t buy merchandise until they sell it. The manufacturer pays for the time it sits on a shelf.


15 posted on 02/08/2010 1:08:31 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: GeronL

>>I have never seen a site where the price is unlisted until you go to “checkout”.<<

Same here, though it can often be a challenge to get shipping prices


16 posted on 02/08/2010 1:13:45 PM PST by RobRoy (The US today: Revelation 18:4)
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To: GeronL

I see it all the time, it’s a manufacturer’s call. But once I see they won’t list the price without me going through half the checkout I decide I won’t buy that product, in the end it’s bad for the manufacturers more than anybody else.


17 posted on 02/08/2010 1:17:49 PM PST by discostu (wanted: brick, must be thick and well kept)
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To: GeronL

I have and I left the site and never went back.


18 posted on 02/08/2010 1:19:41 PM PST by packrat35 (Democrat Healthcare is a 9-11 Attack on the Constitution)
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To: driftdiver
Really? Its certainly useful for setting prices but not so sure about protecting their brand.

Let's say you have a product that is a high-tech product that the customer expects a certain level of service to accompany the purchase, like, say, a HDTV. Without minimum prices, a customer might go into Best Buy, talk to the salesman for an hour about what TV to buy, and then walk across the street to Costco and buy the TV for a few hundred dollars less--because Costco doesn't provide that type of service with the purchase.

What eventually happens is that Best Buy drops the level of service so they can drop the price of the TV, and that hurts the TV manufacturers, because the customers won't spend that type of money without being educated about their purchase. So to prevent this type of situation, a manufacturer might impose minimum prices in order to protect the retail that is providing this type of service--one that is important to the customer.

19 posted on 02/08/2010 1:25:43 PM PST by Publius Valerius
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To: Publius Valerius

People do that anyway. Its up to best buy to provide a value for their price. Shouldn’t be hard since Costco provides zero service.


20 posted on 02/08/2010 1:35:30 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: GeronL
I have never seen a site where the price is unlisted until you go to “checkout”.

You must not shop on line much.
A favorite trick is, "we can't tell you the price, but if you place the item in your 'shopping cart' you can remove it after you check the real price."

21 posted on 02/08/2010 3:09:50 PM PST by Publius6961 (He is not America; he is an employee seemingly unable to rise to minimal expectations.)
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