Klarinet Archive - Posting 001614.txt from 1998/04

From: "Sherry Katz" <slkatz@-----.com>
Subj: Re: Retail v. Warehouse
Date: Tue, 28 Apr 1998 11:35:50 -0400

-----Original Message-----
From: Kevin Fay <kevinfay@-----.com>
Date: Monday, April 27, 1998 11:56 AM
Subject: Retail v. Warehouse

>I do not believe that your friend is lying--I do know, however, that he
>is somewhat misinformed.
>
>While many manufacturers do offer special models for large retailers,
>thus being able to offer a lower price on them, branded items MUST have
>the same price to all competitors at the same level of distribution.
>
---
That would be the Robinson-Patman Act you are writing about. Alas, no one,
or virtually no one enforces that law because it has more holes than Swiss
cheese. It makes poor economic sense. It's policy runs counter to most of
the other antitrust laws, and it isn't popular with prosecutors. On the
other hand, prosecutors love to pay lip service to Robinson Patman while
having not the least interest in enforcing it.

Anyway, there are a number of ways to give price breaks to big
distributors - for example - MDF (marketing development funds - essentially
payment for placement or payment for ads in circulars), rebates, bundles
(selling them a group of products in one umbrella price), closeouts, etc.
I'd be shocked if the large warehouses weren't getting all kinds of price
breaks.

I'm a former attorney (well, still an attorney) and I don't practice law and
I work in product management for a company that manufactures and distributes
retail products (not music or instruments). I don't work directly in sales,
but I'm pretty familiar with the holes in Robinson-Patman and actual
merchandizing practices. I doubt the music business is much different than
any other retail business.

Sherry Katz