Why Is Festool Allowed To Fix Its Prices?

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I thought that we were protected and that the market was protected from price fixing.
Don't parts of the Sherman and Fair Trade Acts address this?
Regards,
Tom
Thos.J.Watson - Cabinetmaker tjwatson1ATcomcastDOTnet www.home.comcast.net/~tjwatson1
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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
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Jack Novak
Buffalo, NY - USA
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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
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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
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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.
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J. Clarke wrote:

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Ralph wrote:

Standard Oil was one of the first targets of the Sherman Antitrust Act you know.
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J. Clarke wrote:

We,re now paying &1.41 a liter.
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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 . . .
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J. Clarke wrote:

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Ralph wrote:

Do what, apply the Sherman Antitrust Act to your benighted region?
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J. Clarke wrote:

adequate job.
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Ralph wrote:

Oh, I see, you can't follow a conversation and have no sense of humor.
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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 /
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Jack Novak
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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.
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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
wrote:

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
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: 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
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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
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Fortunately Toyota gives quite a bit in the Houston area.
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almost 10 %
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