Price Fixing - Right or Wrong?

[Daryl J.]

Ok....I'm kind of reading between the lines here but would this be somewhat correct? There are certain pockets within the model kit industry that have markups that far exceed the usual cost/markup/profit margins generally identified as acceptable. And, by operating therein and reducing that markup, the discounter hopes to conduct business? As to how true it is anymore I have no idea but our Econ professor made it very plain that the product industry had this odd rule: 20% markup or die. Those that chose to profit above that...say 25%-30% went broke due to sales reductions and those that chose to discount below that...say marking up 15%-18% went broke due to market fluctuations and unforseen expenses. However, given the likely 40-ish% spread above with the certain jet kit, committing to MSRP-only sales is loathesome? I'd say yes given even the volumes of sales at these depressed rates.

The Trumpeter MiG-21MFs I have were purchased when full MSRP was $35 and they were picked up when on an aggressive sale at Squadron. Look at MSRP now.

Hmmm..... It would be interesting to hear the Middleton's (as in Kate's mom and dad, soon to be Prince William's in-laws) take on this as they've done very well in the toy industry. Weren't they discounters, Gordon, much like you just with a more broad-based product base?

Point being, Gordon, you have a point and I see it. I'd just like to see your margins increase a bit because the industry needs your type of quality service around for as long as possible.

Cheers to each,

Daryl J.

[Jay Chladek]

I see a major flaw with the arguement, that is even if all agree to price fix, somebody will bend the rules to benefit them and those who want it for less will find a way to do so. The web these days makes it practically impossible to set such prices. Take the stuff that comes from overseas (I live in the USA, so I'll use that as an example). We (and by "we" I mean the hypothetical hobby modeler that surfs the web and posts at places like ARC) purchase Trumpeter, Kinetic, Bronco and HobbyBoss kits from Lucky Model since they are so much cheaper compared to markups once they hit distributors here. We get Academy kits from a couple ebay vendors (such as Langley shop) because they are so much cheaper as well. Hasegawa and Tamiya we tend to get from a Japanese online retailer like HLJ (and there is a fair amount of stuff ONLY available there) so that is another avenue. There are some Revell of Germany kits that won't be imported into the US (such as the Star Trek stuff this September), so that means a vendor like Hannants for those. So what does that leave? Well, maybe a few Revell Monogram kits that are already priced at very low sticker prices anyway.

I have worked at hobby retail for about 9 years of the past 16 (5 years for one LHS, 6 off elsewhere and 4 at the same LHS). My experience with it and other shops (one of which my folks own in Texas) is that for a shop to survive today, it needs to be diversified into many different hobbies. The more the better. That way, a bad month in your primary hobby won't sink you as you have a fallback source of income. A dedicated model shop just won't cut it anymore. A dedicated train store might, but there are many different aspects to trains. However, most of their business is going to be generated during the fall winter months when train sales are at their highest for christmas and even manufacturers gear up for that. As such, sales in the summer at a train shop are going to be a bit lean. A dedicated RC car shop can be sunk easily and so can a dedicated RC airplane shop. Sure an RC plane shop can have many customers that spend a lot, but if the weather outside is bad, forget flying. At the LHS I work for, we are diversified into about 5 major hobbies (RC cars, planes, trains, plastic models, rockets) and by diversified it means we have good stock in ALL said hobbies. We have experts in all of them (I am a plastic guy obviously, but have knowledge in most of the others). THAT is how we survive and even then it is tight sometimes due to other factors (weather, economy etc...). Typically our shop never charges full retail for something unless it is under $20.00 US. We have to turn over more product to make the same profit. But if a customer buys more due to lower prices, it certainly helps keeping the product from getting stale on the shelf.

Price fixing to my eye only ends up in one thing, lost business as the customer will go elsewhere; be it to another brick and mortar place or online. Heck, even a few brick and mortar shops are going to online sales to help with the bottom line. If they charge less for a product than a dedicated vendor, people will go to them.

Edited February 14, 2011 by Jay Chladek

[Raptor01]

Just can't see Hasegawa, Tamiya, RoG, etc. standing on a MSRP or you will not get any more of our kits to sale. That would be business sucide. I think most who frequent these boards are more than casual modelers, do a poll to see who pays MSRP or buys more online or at the brick and mortar shop.

How many 25 yr olds will buy a $220 F-14 or any other $200+ models, same for a retiree on fixed income. I for one have been fortinuate and have accumulated a substantial stash and rarely pay MSRP. I buy on-line and rarely even frequent a brick and mortar shop, used to love the Hobby Shop up until I could find exactly what I wanted on-line and delivered to my door.

IMHO: Fix the MSRP and it will lower sales. PCM has sour grapes, Tamiya scuttled his Spitfire sales and Zoukei Mura scuttled his Ta-152H sales.

On-line shops SB, SQ, GM, Lucky, etc. are the now, if I were a manufacturer, my concern would be who is moving my product so I can make my profit, the retail area can figure out how to make their profit.

IMHO: Eduard has the right idea, Profi-packs loaded for modelers like me and weekend editions for those on a budget, wouldn't it be nice if Hasegawa and others did the same.

As an aside SB gets way too much of my money, Gordon Kwan runs the best Hobby Business I have ever frequented.

America has always had bargins, I can't see it any other way, fear not.

John

[crazydon]

Just can't see Hasegawa, Tamiya, RoG, etc. standing on a MSRP or you will not get any more of our kits to sale. That would be business sucide. I think most who frequent these boards are more than casual modelers, do a poll to see who pays MSRP or buys more online or at the brick and mortar shop.

How many 25 yr olds will buy a $220 F-14 or any other $200+ models, same for a retiree on fixed income. I for one have been fortinuate and have accumulated a substantial stash and rarely pay MSRP. I buy on-line and rarely even frequent a brick and mortar shop, used to love the Hobby Shop up until I could find exactly what I wanted on-line and delivered to my door.

IMHO: Fix the MSRP and it will lower sales. PCM has sour grapes, Tamiya scuttled his Spitfire sales and Zoukei Mura scuttled his Ta-152H sales.

On-line shops SB, SQ, GM, Lucky, etc. are the now, if I were a manufacturer, my concern would be who is moving my product so I can make my profit, the retail area can figure out how to make their profit.

IMHO: Eduard has the right idea, Profi-packs loaded for modelers like me and weekend editions for those on a budget, wouldn't it be nice if Hasegawa and others did the same.

As an aside SB gets way too much of my money, Gordon Kwan runs the best Hobby Business I have ever frequented.

America has always had bargins, I can't see it any other way, fear not.

John

DING DING DING....we have a winner here people

Very few people would spend $220.00 dollars for a F-14 kit....sure in the heck a 25 year old won't...not anyone with 1/2 a brain.

I'd say you hit the nail on the head with the comment that PCM has had the rug pulled out from under him on 2 product lines recently....mainstream versions of those 2 kits came out offering modelers better value for their dollar and the customer is voting with their wallets.

[bigjugs]

Let's get real and see whether price fixing really deters purchasing the product.

Modelers have been slobbering all over PCM's 1/32 offerings. The kits are made by Sword in the Czech republic.

Now, how many of you actually purchased the PCM Hurricane or Focke Wulf knowing you could not get it cheaper than what Ken Lawrence said you had to pay for it? Come on admit it, confession is good for the soul and bad for all the rantings about price fixing when the kit is the only game in town.

What ticks me off is Mr. Lawrence's greed and need to control. He wants to directly sell his kits at a fixed price and make everyone else sell it at that price too. Either be a company that's puts its kits in distribution taking your distributor cut and being happy, or be the exclusive seller, like WNW. Let the LHS stand or fall on its own business acumen.

Edited February 14, 2011 by bigjugs

[Hawkeye's Hobbies]

Point being, Gordon, you have a point and I see it. I'd just like to see your margins increase a bit because the industry needs your type of quality service around for as long as possible.

Why would he change what works and has been able to allow him to continued growth. His business model and customer reputation is what attracts more and more mfrs to his doorstep. His business model is basic, functional and facilitated to do what customers expect...good prices, selection and OUTSTANDING SERVICE while at the same time providing secure employment for his staff and a living for he and his family...not to mention continued expansion of the business.

It is the others in this industry who are operating using antiquated methods, outdated processes and technology that are in danger of failure. They needed to make better business decisions and invest in the tools to make their jobs easier, more efficient and profitable. But unfortunately don't or didn't and many are upside down financially and hanging onto a greasy trapeze bar with either no safety net or one that isn't reliable. Definitely a dead act in a failing circus...but the show will continue on for those that understand what the customers want and how to provide it...using a solid business plan.

[Big Texan]

Price fixing is just wrong. One only has to look at gas and oil prices to see the effects of price fixing! I believe in freedom and independence to do what you want.

First of all, hobby shops buy from distributors for the most part. They get stuff at wholesale prices. Then they mark this stuff up for retail. Let the individuals decide how much they want to sell something! Hobby shops are not equal! They never can be! A hobby shop in Seattle is going to sell stuff at a lower rate than a shop in Amarillo, Tx. Why? Well, for one thing, they're a port city where things come in. Doesn't have to be trucked or trained to places like Amarillo. The hobby shop in Amarillo would have to sell at a higher price due to freight alone, let alone overhead for the shop itself. Sure, I'd like to see shops survive, but as already stated, the shops now a days have to be very diversified. Our shop in Amarillo fits that bill. That being said, its' expensive to buy kits there. Trumpeter kits are "full" priced plus. I don't buy kits there. I buy my supplies there. As for kits, I hit Hobby Lobby due to the 40% weekly coupon, and I hit Sprue Bros and Great Models. Also, Ebay.

No, price fixing is wrong, plain and simple. I will always buy where I can get a good deal. I will show them loyalty. If the other shops are complaining, then be more competitive, that's the name of the game!

[TaiidanTomcat]

call me crazy but I thought the trick to get folks to buy your product was to offer it better, faster, cheaper. If he starts a take it or leave mindset, deliberately keeping the prices higher in a bizarre scheme to somehow make more money I wish him the best of luck, and look forward to seeing his business alongside dinosaurs and the dodo bird.

I pay a little more to get sprue bros. because:

1.) The SPEED (!!!)

2.) the consistency in his inventory ( I always know what is and what is not in stock)

3.) reputation. Excellent track record and I can get a hold of people on ARC along with the website.

His plan will be the opposite of these things-- slow to adapt and inflexible to the market.

And as has been mentioned age demographics are not on his side.

Edited February 14, 2011 by TaiidanTomcat

[Jennings]

Price fixing is just wrong. One only has to look at gas and oil prices to see the effects of price fixing! I believe in freedom and independence to do what you want.

While I may not disagree in principle, there's nobody on the planet who "needs" plastic model kits. You don't fuel your car with them, and ambulances don't need them to get you to the hospital when you have an MI. BIG difference there.

J

[jmathews]

While I may not disagree in principle, there's nobody on the planet who "needs" plastic model kits. You don't fuel your car with them, and ambulances don't need them to get you to the hospital when you have an MI. BIG difference there.

J

Maybe I just don't spot it, but I don't think Big Texan was suggesting anyone "needs" plastic models. I think he was just mentioning an unrelated area in which price fixing has been very detrimental.

On the other hand, I DO 'need' plastic models.

[crazydon]

On the other hand, I DO 'need' plastic models.

I can quit buying anytime.....really I can ...and if Ken had his way we'd all be going cold turkey

[loftycomfort]

On the other hand, I DO 'need' plastic models.

So do I. In fact, I need plastic models to survive. I wish every air molecule would turn into a 1/32 Tamiya jet kit. I'd *breeeeath* it all in.

Terry

[Big Texan]

Maybe I just don't spot it, but I don't think Big Texan was suggesting anyone "needs" plastic models. I think he was just mentioning an unrelated area in which price fixing has been very detrimental.

On the other hand, I DO 'need' plastic models. :lol:

Bingo!

[KenLawrence]

<<On the other fourm, Ken Lawrence of Pacific Coast Models is advocating price fixing the price of items (such as kits) as a way to help keep the LHSs in business.>>

As I had explained to Gordon on several occasions, in 2007, the U.S. Supreme Court in the case of Katy's Kloset vs. Brighton, ruled that the 1911 "Price Fixing" laws were now overturned and that the manufacturers have the right to set the retail prices of their products. In October of 2010, in another case, the Court ruled 4-4 in Costco vs. Swatch (Omega), that Swatch had the right to set the retail prices of their products. As the decision was divided, the ruling of the 9th Circuit Court of Appeals was upheld. So as the law stands now, there is no such thing as "price fixing".

For years, Gordon did business with us after agreeing to our conditions. On one occasion, he complained to us about another internet company who was discounting our items.

Last year, he attempted to unilateraly attempted to change our agreement so that he could have a price advantage over our other customers. We refused his demand and our business together ceased.

As we have explained, our primary market are the LHS's. Right or wrong, this is where we believe the future of the hobby is. We sell to a small handful of internet shops which accept our conditions.

<<We are vehemently against this is as we consider forcing customers to pay a higher price (this will be the likely result of an item that is price fixed) for something as unethical and immoral.>>

Bunkum! No one is forcing anyone to buy anything.

<<Illegal? I don't know as I am not a lawyer and am not going to say whether it is or it not.>>

As I suggested before multiple times, why don't you read the court case???

<<In case anyone was wondering, this is why we no longer carry any of the lines from Ken as we will not be complicit to price fixing.>>

The fact is that you tried to change the conditions of our agreement and we wouldn't stand for it. So stop trying to act like the victim.

Cheers,

Ken

PCM, Inc.

[crazydon]

<<On the other fourm, Ken Lawrence of Pacific Coast Models is advocating price fixing the price of items (such as kits) as a way to help keep the LHSs in business.>>

As I had explained to Gordon on several occasions, in 2007, the U.S. Supreme Court in the case of Katy's Kloset vs. Brighton, ruled that the 1911 "Price Fixing" laws were now overturned and that the manufacturers have the right to set the retail prices of their products. In October of 2010, in another case, the Court ruled 4-4 in Costco vs. Swatch (Omega), that Swatch had the right to set the retail prices of their products. As the decision was divided, the ruling of the 9th Circuit Court of Appeals was upheld. So as the law stands now, there is no such thing as "price fixing".

For years, Gordon did business with us after agreeing to our conditions. On one occasion, he complained to us about another internet company who was discounting our items.

Last year, he attempted to unilateraly attempted to change our agreement so that he could have a price advantage over our other customers. We refused his demand and our business together ceased.

As we have explained, our primary market are the LHS's. Right or wrong, this is where we believe the future of the hobby is. We sell to a small handful of internet shops which accept our conditions.

<<We are vehemently against this is as we consider forcing customers to pay a higher price (this will be the likely result of an item that is price fixed) for something as unethical and immoral.>>

Bunkum! No one is forcing anyone to buy anything.

<<Illegal? I don't know as I am not a lawyer and am not going to say whether it is or it not.>>

As I suggested before multiple times, why don't you read the court case???

<<In case anyone was wondering, this is why we no longer carry any of the lines from Ken as we will not be complicit to price fixing.>>

The fact is that you tried to change the conditions of our agreement and we wouldn't stand for it. So stop trying to act like the victim.

Cheers,

Ken

PCM, Inc.

If you feel your best bet is the LHS or a select few on-line mail order house's that's your privilage. Speaking as someone who knows a thing or 2 about LHS I've never seen your product line carried at any...and doubt the average shop would.

I also understand mail order shop's like Sprue Bro's want to clear stock out when needed...Squadron Mail Order would do this for years before Gordon started running sales and no one complained. Stock sitting on the shelf for prolong periods of time doesn't turn any profit and the retailer has to pay taxes each year on said stock....

[Miccara]

<<On the other fourm, Ken Lawrence of Pacific Coast Models is advocating price fixing the price of items (such as kits) as a way to help keep the LHSs in business.>>

As I had explained to Gordon on several occasions, in 2007, the U.S. Supreme Court in the case of Katy's Kloset vs. Brighton, ruled that the 1911 "Price Fixing" laws were now overturned and that the manufacturers have the right to set the retail prices of their products. In October of 2010, in another case, the Court ruled 4-4 in Costco vs. Swatch (Omega), that Swatch had the right to set the retail prices of their products. As the decision was divided, the ruling of the 9th Circuit Court of Appeals was upheld. So as the law stands now, there is no such thing as "price fixing".

For years, Gordon did business with us after agreeing to our conditions. On one occasion, he complained to us about another internet company who was discounting our items.

Last year, he attempted to unilateraly attempted to change our agreement so that he could have a price advantage over our other customers. We refused his demand and our business together ceased.

As we have explained, our primary market are the LHS's. Right or wrong, this is where we believe the future of the hobby is. We sell to a small handful of internet shops which accept our conditions.

<<We are vehemently against this is as we consider forcing customers to pay a higher price (this will be the likely result of an item that is price fixed) for something as unethical and immoral.>>

Bunkum! No one is forcing anyone to buy anything.

<<Illegal? I don't know as I am not a lawyer and am not going to say whether it is or it not.>>

As I suggested before multiple times, why don't you read the court case???

<<In case anyone was wondering, this is why we no longer carry any of the lines from Ken as we will not be complicit to price fixing.>>

The fact is that you tried to change the conditions of our agreement and we wouldn't stand for it. So stop trying to act like the victim.

Cheers,

Ken

PCM, Inc.

I sympathize with the difficult quest of trying to explain your position. Sadly, I don't believe you will get a fair trial in this venue.

[ElectroSoldier]

Ken welcome to the good ship BandWagon.

If you try and jump onboard while the driver is trying to run you over you are likely to give him an even larger target to aim for.

Good luck in this, I must say Im with you on it, "price fixing" isnt about this kind of thing.

[MattC]

Just my 0.02 on this.

I don't think there is any stipulation on the markup that a vendor adds to a product, surely it is up to the vendor to determine what profit margin they seek on each sale? Thats why supermarkets have "loss leaders" where they sell below cost price to drive footfall.

So as long as the vendor is paying their supplier the agreed price for the products which they sell, the price they sell that on at is irrelevant yes?

But on price fixing, if you ever bought a car from a dealership, the price is fixed. No, it isn't the price you see on the windscreen, but the manufacturer gives the franchisee a price banding, so the minimum price might be set by the manufacturer at £15K, you go to the showroom and it says £25K on the windscreen. You go in, haggle, and come away with a £20K deal, feeling smug that you got a £5K discount. You didn't, you paid £5K more than the minimum price the manufacturer stipulated as part of the franchise deal.

Same goes for private non-franchised dealers. If they don't like the T&C's, the manufacturer doesn't sell them the cars to sell on.

That only runs into trouble when people won't pay the £15K the manufacturer demands, so they end up with surplus stock which they have to sell off at a knockdown price.

No, price fixing is wrong, plain and simple. I will always buy where I can get a good deal. I will show them loyalty. If the other shops are complaining, then be more competitive, that's the name of the game

I agree with that, but the thing is, where you think you are getting a good deal, the "deal" is usually only as good as the supplier allows it to be. You don't see all the wheeling and dealing that goes into it, but in a lot of cases, that "deal" has already been squared with the supplier, something like this;

Supplier - You pay us £10 for this kit, and sell it at £15

Vendor - Ok no worries

Vendor - I'm not selling many, I'll discount the price to £10. Damnit. I'm not making any profit, can you lower your price?

Supplier - No.

Time passes.

Supplier - You haven't sold many of that kit have you.

Vendor - No, the price is too high at £15, it needs to be £10

Supplier - Ok, you buy it from us at £9 and sell it for £12, and we'll also sell you this other more popular kit at £9 and you sell it at £15 instead of £12

Vendor - Will do

Vendors Shop - "Special Offer - £3 off - Only £12"

So, you get the kit cheaper yes, but the deal is paid for somewhere else.

[Hawkeye's Hobbies]

Ken, yes you are within your legal right to set an MSRP and expect your dealers not to deviate from said price. However in the market today even at the LHS, owners are less likely to stock anything that they can't mark at an attractive price point or reduce in cost to reduce inventory that isn't producing a turnover. To survive they must be able to price at what their local market will accept.

When a dealer takes your proposal, stocks your product(s) then later finds those item(s) sitting stagnant on their shelves some months later they'll mark the price down to make room for inventory that will turn and earn a return. So they lose the ability to reorder from you for violation of your pricing policy. Do you really think they care? Dead inventory cost money as it sits on the shelf collecting dust, why would they want to order more of it!

Are you going to offer these dealers a buy back program? It would be a great incentive to the LHS, a no risk purchase plan. No risk no incentive to sell. Most companies are not in a position to carry that kind of financial burden.

Given there is about 1200-1500 LHS currently in the US (not all stock plastic models)and for each new one that opens two close...do the math your preferred dealer base is diminishing rapidly not increasing. Also understand that customers look for the best deal, even those we as mfrs serve. No matter what the item, if it doesn't sell it isn't providing the retailer with a profit. So most accept that they must mark down the item to make room for those that will/do, yet your policy comes with a threat...sell it for less...You're Cut Off. So in essence you are limiting your potential customer base with a policy apparently many customers (retail and direct) believe as unacceptable. Everyone is entitled to their opinion.

If you think the LHS is the salvation of the hobby then you should be in front of them at every occasion possible...iHobby Expo is but one place where the minority of those LHS in this country attend to meet face to face with mfrs and distributors. These are the serious and innovative store operators, but their numbers are declining too. The hobby industry will have to seek a merger with (gasp) the craft industry to continue to be able to sustain such expos. That presents yet more challenges for the LHS owners that most are unwilling to acclimate towards. For some the necessity of bringing arts and crafts into their stores will be the final straw and further decrease the number of LHS to market and sell your products to. Though you'll have an opportunity to start pitching your pricing program to craft store owners looking to embrace the scale modeling category. You think the LHS owners are a tough sell...try the craft stores! They thrive on the ability to use discount pricing!

Maybe you should start encouraging LHS owners to embrace the Internet to open up more opportunities to reach a broader customer base. If they indeed want to survive they'd better, the Yellow Pages is just a couple years from being a thing of the past in a printed (paper) form. The White Pages have already started to be discontinued in some areas and will continue to be eliminated country wide. EVERYONE will find information either online or through their cellphones!

Manufacturers, distributors and retailers alike that want to survive are finding it necessary to diversify not only in how and to whom they market towards, but the products they produce and sell. Counting on one entity of this hobby, the LHS for continued sustainability is like being a one legged man standing on ice...its not if but when the fall occurs, its just a matter of time.

As they say you can't save someone from them self. Its your decision, your policy. Whether is widely accepted that remains to be seen...many of us don't see it a sustaining option and these differences is what makes the business world continue to reap rewards as well as disappointments. Like ducks, we'll have to watch and see if the LHS's line up to head towards your door or turn and walk away.

[gkwan]

Ken,

I think you need to re-read my original post which I will paste here do save you the trouble of locating it:

"On the other fourm, Ken Lawrence of Pacific Coast Models is advocating price fixing the price of items (such as kits) as a way to help keep the LHSs in business. He thinks that is what is needed to save the LHS.

We are vehemently against this is as we consider forcing customers to pay a higher price (this will be the likely result of an item that is price fixed) for something as unethical and immoral. Illegal? I don't know as I am not a lawyer and am not going to say whether it is or it not. Maybe some of the modellers here that are lawyers by day can chime in on this.

In case anyone was wondering, this is why we no longer carry any of the lines from Ken as we will not be complicit to price fixing.

Just curious what us ARCer's think about this." [from Post #1 of this thread]

and here is the poll question that was asked of ARCers:

"Do you think it is right that a manufacturer/importer/distributor price fix an item so to maintain a certain price that an item can be sold at?" [from Post #1 of this thread]

I haven't got the foggiest why you think I am acting as the victim here. It was written without any malice towards you. I asked the question because I wanted to know what others here on ARC thought of your idea (I know what I thought).

For the record, we dropped your lines once we realized price fixing is wrong (as have other retailers such as Mid Tenn Hobbies, for example). You will never convince me that intentionally making a customer pay more for an item in the free marketplace is right. This is not the case of you not being allowed to set the MSRP on a product you produce, but whether you should dictate what a retailer sells your product doe once you sold it to them.

Ultimately it does not matter what you and I think. It also doesn't ultimately matter whether it is legal or not. It will come down to what the model buying public thinks. If the model buying public disagrees with you, they will put you out of business before any regulatory agency ever will (if it is illegal).

IMHO, you dictating/controlling a price a product is sold for is not a wise business move, but then to declare it to the world that is what you are doing is, to me, you committing business suicide. It is what the perception of the modelling buying public that ulimately matters. The modelling buying public will be the ones to settle this - so let's settle this by allowing the model buying public who believes in what you propose is right to stop buying for us nasty internet discounters as you consider us and buy from Ken and his price fixing co-conspirators; and the model buying public who is against price fixing should do the opposite. This will be the ultimate determination of the answer to this discussion.

Gordon

[Wayne S]

<<On the other fourm, Ken Lawrence of Pacific Coast Models is advocating price fixing the price of items (such as kits) as a way to help keep the LHSs in business.>>

As I had explained to Gordon on several occasions, in 2007, the U.S. Supreme Court in the case of Katy's Kloset vs. Brighton, ruled that the 1911 "Price Fixing" laws were now overturned and that the manufacturers have the right to set the retail prices of their products. In October of 2010, in another case, the Court ruled 4-4 in Costco vs. Swatch (Omega), that Swatch had the right to set the retail prices of their products. As the decision was divided, the ruling of the 9th Circuit Court of Appeals was upheld. So as the law stands now, there is no such thing as "price fixing".

Cheers,

Ken

PCM, Inc.

Ken I am not sure what the deal is with this thread really, so not going into your or the original thread makers business.

As for the term "price fixing" I would stay away from that term even tho "fixed price" does kind of fit into price fixing. When one thinks of price fixing, one thinks of oil companies etc.

I do not think it was ever illegal for manufacturers to set a fixed price as in retail for their own products on a federal level, States on the other hand are a separate issue.

Manufacturers setting a fixed price is pretty much looked at as retail management.

"Price fixing" on the other hand is illegal depending on what the intent is and who is doing it.

Say vendors/stores who control of someones product in a certain area, for heck of it, lets say the entire east coast of the United States. Lets say them and the person who imported Tamiya kits into the east coast decided they were going to sell every Tamiya kit for 1000 Dollars each. That would be Illegal and that would be price fixing.

------------------

Costco vs. Swatch far as what I read had to do with copyright infringement, not the fact that Swatch has the right to set the retail price of their own products through tho's who they gave the rights/contract to sell their products.

Edited February 16, 2011 by Wayne S

[gkwan]

"Price fixing" on the other hand is illegal depending on what the intent is and who is doing it.

Say vendors/stores who control of someones product in a certain area, for heck of it, lets say the entire east coast of the United States. Lets say them and the person who imported Tamiya kits into the east coast decided they were going to sell every Tamiya kit for 1000 Dollars each. That would be Illegal and that would be price fixing.

To clarify, this (above) is what Ken is proposing. He is not discussing a manufacturer's right to set the MSRP.

Edited February 16, 2011 by gkwan

[jmathews]

As I had explained to Gordon on several occasions, in 2007, the U.S. Supreme Court in the case of Katy's Kloset vs. Brighton, ruled that the 1911 "Price Fixing" laws were now overturned and that the manufacturers have the right to set the retail prices of their products. In October of 2010, in another case, the Court ruled 4-4 in Costco vs. Swatch (Omega), that Swatch had the right to set the retail prices of their products. As the decision was divided, the ruling of the 9th Circuit Court of Appeals was upheld. So as the law stands now, there is no such thing as "price fixing".

Ken

PCM, Inc.

Ken, don't get too carried away with this position of yours that there is no such thing as "price fixing". According to DOJ, price fixing is still very much a part of the American Anti-Trust laws.

The two cases that you're so fond of quoting are not represented correctly, or in full, by your broad brush. The Brighton case is being appealed, the appeal holding that "lower courts have gone too far in applying the 2007 decision, reading it as giving manufacturers carte blanche to fix prices rather than analyzing each pricing agreement for its anticompetitive impact." Even if that were not the case, it was a 5-4 split among liberal/conservative Justices. What difference does that make? It means there are many people on both sides of the issue.

The other case you use for this discussion, Costco v Swatch, was not really about the price, but the fact that Costco had, in their opinion, acquired the inventory through channels that were not authorized by the Swatch/Omega dealer policies. As the journal articles stated concerning the finding, "the Court's action was not a ruling on the merits of the case.." and that the actual decision was regarding copyright infringement. The Court was split 4-4, close once more, along the same lines as the other case, which re-affirmed the lower court. Again, many people on both sides of the issue.

It's an easy argument that maybe sometimes what is legal, or possibly in these cases, seemingly or ARGUABLY legal, still may not be simply 'right'.

It's my fault that I didn't understand that I couldn't take pricing action on inventory from you after seeing that it failed to move at all after a more than generous inventory cycle, but once that was clear, from our face-to-face discussion in Phoenix, and subsequent emails, I had no reluctance disposing of the line.

I agree with Gordon. Forget the issue of whether it's legal. It's just not right.

Jack

[mhoupt]

Gordon,

I am with you. You should be able to purchase an item from a distributor and charge what you see fit. If people like me are willing to pay your price over some other joints price, then more power to you. But, considering your prices on things. I am buying from you. The only time I don't is when you don't have it.

Mark

[a4s4eva]

Maybe I’m stupid but what I can’t understand is why the hell the manufacturer cares what the retailer sells it for.

After all he (the manufacturer) sells to the distributer/retail at the price he (the manufacturer) is happy with. If one retailer wants to sell it for less than what he paid the manufacturer for it then what business is it of the manufacturers? H (the manufacturer) has got his cash. Likewise if one retailer wants to mark it up by 200% and one by 10% what business is it of the manufacturers….

In this case I think Ken has the romantic idea that the LHS is the further of the hobby and he thinks that making everyone pay more will ensure the future of the Hobby.

Personally I think the LHS are (or soon will be) a relic of history. The internet (boards /websites/ online stores/) are the future.