Why Is Festool Allowed To Fix Its Prices?

Tom Watson wrote:


In an article by Mike Cox, the Michigan Attorney General, he sates the
following:

"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. "

http://www.michigan.gov/ag/0,1607,7-164-34739_17343_18163-44650--,00.html

--
Jack Novak
Buffalo, NY - USA
novasys@verizon.net

Jack:

When I read the linked article I find the following:


"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."


I don't see how this is not in conflict with what you've quoted,
particularly regarding coercion.

Isn't the threat of terminationg the retailer's ability to sell the
product coercive?



Regards,

Tom

Thos.J.Watson - Cabinetmaker
tjwatson1ATcomcastDOTnet
www.home.comcast.net/~tjwatson1

Tom Watson wrote:


Logically, you might think so.  However, I suspect it's not "legally"
coercive, in that there is nothing forcing the retailer to sell at a
given price other than wanting to do business with the supplier.

A supplier can refuse to do business with a retailer for any number of
reasons.  The retailer not abiding by MSRP is just one of them.

In a sense, it's no different than offering software under a specific
license.  You have the option of either obtaining it under that license,
or not obtaining it at all.

Chris

Chris Friesen wrote:

If Porter Cable, DeWalt, Makita, Ryobi, Ridgid, Craftsman, Bosch,
Milwaukee, Panasonic, Festool, and all the other manufacturers of,
say, circular saws, got together and agreed that they would all sell
their saws for the same price, that would be "price fixing".  But each
manufacturer has every right to set a price for the tools that they
manufacture and to do whatever they have to to maintain that price as
long as they don't collude with the other manufacturers.

--
--
--John
to email, dial "usenet" and validate
(was jclarke at eye bee em dot net)

J. Clarke wrote:

Something like the sale of gas?

Ralph wrote:

Standard Oil was one of the first targets of the Sherman Antitrust Act
you know.

--
--
--John
to email, dial "usenet" and validate
(was jclarke at eye bee em dot net)

J. Clarke wrote:

Gas just went up ten cents a liter or about 41 cents an imperial gallon.
We,re now paying &1.41 a liter.

Ralph wrote:

Not in the US you aren't.  We don't use "imperial gallons" nor do we
charge by the "liter".  And the Sherman Antitrust Act has absolutely
no force whatsoever outside the US.  Of course if you really want it
to you could try orchstrating a terrrorist attack against us . . .

--
--
--John
to email, dial "usenet" and validate
(was jclarke at eye bee em dot net)

J. Clarke wrote:

Why would we do that.  We'll just let you do it to yourselves.

Ralph wrote:

Do what, apply the Sherman Antitrust Act to your benighted region?

--
--
--John
to email, dial "usenet" and validate
(was jclarke at eye bee em dot net)

J. Clarke wrote:

No, follow the terrorist route against yourself.  You seem to do an
adequate job.

Ralph wrote:

Oh, I see, you can't follow a conversation and have no sense of humor.

--
--
--John
to email, dial "usenet" and validate
(was jclarke at eye bee em dot net)

Tom Watson wrote:


The manufacture has terminated the retailer's ability to purchase the
produce at a wholesale/dealer price.

The practice is often used to protect the small retailer and apparently
it is not illegal:

"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."

http://www.artrm.com/retail/msrp /

--
Jack Novak
Buffalo, NY - USA
novasys@verizon.net

You have to look at all angles.  It is illegal to fix the price but is legal
to suggest a price.  Festool suggests that no one drop the price below their
suggested price.  If a retailer drops his price below that price, the
manufacturer could raise the retailers cost of the product, eliminate
discounts on stock orders, or any number of different things  Unless you
read the actual contract you really don't know what the circumstances are.
Sales people rarely really know what the agreement is.  I'd suggest that no
retailer wants to drop his price because that would lower his gross profit.
The retailer could also charge more than suggested and include some other
benefits and that would not be a problem.   If the retailer can sell above
the suggested price then the price is not fixed.
GM has been doing this for years with the Saturn.

Personally I like to shop for a bargain but I also feel good about knowing
that I could not have done better after buying from my favorite dealer.

When I worked in retail, we had companies that stated the MSRP and told us
under no uncertain terms that THAT was what the items would sell for or we
would lose our distributorship.
There are a LOT of companies that do that, more than most people realize.

Kate




Jack:

When I read the linked article I find the following:


"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."


I don't see how this is not in conflict with what you've quoted,
particularly regarding coercion.

Isn't the threat of terminationg the retailer's ability to sell the
product coercive?



Regards,

Tom

Thos.J.Watson - Cabinetmaker
tjwatson1ATcomcastDOTnet
www.home.comcast.net/~tjwatson1

: I thought that we were protected and that the market was protected
: from price fixing.

I think price fixing nly occurs when different suppliers of a
product collude to make sure no one undersells, i.e. all the
manufacturers of X decide to not compete with one another.

Any one manufacturer is allowed to set their price at whatever they
want, and I think in this case (see also Lie-Nielsen planes) they
require their distributors to match the MSRP.  So, if you are a Festool
distributor and decide to sell for 10% less than Woodcraft,
Festool can drop you as a distributor.


This is all stuff I've gathered -- I'm neither a lwayer nor a
business person, so I may be wrong.


    -- Andy Barss

Tom Watson wrote:

It's only price fixing if there is an agreement between the manufacturer
and retailer, or between multiple retailers, or between multiple
manufacturers.

Apparently the fact that Festool can terminate doing business with the
retailer if they don't abide by minimum prices doesn't count as an
"agreement" to sell at the minimum price...not sure how that works.

For what it's worth, Toyota is basically the same around here.  No give
on pricing at all.

Chris

Fortunately Toyota gives quite a bit in the Houston area.

 SHMBO just bought a Toyota on Monday, First price, 22K.  Check was 20.1K,
almost 10 %