Klarinet Archive - Posting 000037.txt from 2006/08
From: "Kevin Fay" <kevin.fay.home@-----.net>
Subj: RE: [kl] Buffet Pricefixing??
Date: Tue, 01 Aug 2006 23:06:25 -0400
On Mon, 31 Jul 2006 20:35:06 EDT, Lisaargiris@-----.com wrote:
<<<It is not considered price fixing because the dealer has the choice to
sell at any price they wish as long as it is at least Buffet's MSP price.
You are making an assumption that everyone will choose to sell at the MSP
price. While I will, and I am sure others will, not everyone will. Buffet
simply has elected to require this from their dealers without any further
discussion.>>>
. . . to which Tim Roberts replied:
<<<Saying that it is not price fixing does not make it so. The United
States, at least, has a rather extensive and complicated set of trade
regulations covering these kinds of situations. The simple act of
having two competitors gather in a room and discuss pricing is a
potential violation of those trade regulations.>>>
Tim has unknowingly hit on the difference between price fixing (illegal
under Section 1 of the Sherman Act) and "resale price maintenance" - which
is quite legal as long as the manufacturer acts unilaterally, as Buffet
appears to have done here.
Resale price maintenance is legal in lots of places. See the OECD's
discussion here: http://www.oecd.org/dataoecd/35/7/1920261.pdf.
Tim' post went on:
<<<<Buffet does have the right to decide to whom it will sell its
instruments. I'm not convinced that it has the right (in America, at
least) to dictate minimum pricing to independent dealers.>>>
They do. Yamaha does this with their "Allegro" line. Buffet tried to have
it both ways by setting a minimum retail price for the Festival, but
apparently that did not work.
Lisa posted:
<<<If Buffet did not have more then 80% market share it would not be
possible for them to do this.>>>
. . . which is *not* true. If they had an 80% market share, resale price
maintenance would in fact be a problem. Buffet doesn't have anywhere near
an 80% share of any market, unless you want to narrow it to "artist-level
clarinets" or some such. The reality is that the vast majority of these
instruments are sold to kids in junior high and high schools, who can buy
all kinds of clarinets. If you look at wind instruments as a whole, they're
dwarfed by Conn-Selmer and Yamaha.
Tim riposted:
<<<And that, in trade terms, is called "exploiting monopoly powers".
Microsoft has already learned the dangers of that.>>>
Actually incorrect on a few levels, at least as far as resale price
maintenance goes. The legal beef against Microsoft was "technological
tying" - that you had to take their browser/media player if you want the
Windows operating system. Whatever the merits of that complaint, still
going on in the EU, it has nothing to do with resale price maintenance.
Part of the settlement with the U.S. Feds basically *requires* Microsoft to
sell Windows at the same price to the top 20 OEMs. See Section III.B of the
settlement stipulation here: http://www.usdoj.gov/atr/cases/f9400/9495.htm.
This would lead to greater uniformity of pricing.
To my (limited) knowledge, Microsoft doesn't engage in retail price
maintenance on Windows or any other product. (They have enough to worry
about in other areas).
kjf
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