Supreme Court OKs Retail Price Floor

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Rich Tate

Supreme [H]ardness
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Jun 9, 2005
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Manufacturers will now be permitted to set a price floor on their products that retailers will not be allowed to go below.

Striking down an antitrust rule nearly a century old, the Supreme Court ruled today that it is no longer automatically unlawful for manufacturers and distributors to agree on setting minimum retail prices.
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Not good.

And don't put links up to sites that require me to register. Not gonna happen..
 
OK, that'll do it. :)

Try it now guys. Sorry about that. I can still read the original without registration polling. Odd.
 
Technically, this isn't inflation, but our bank accounts will beg to differ. Thanks SCOTUS. Thanks for nothing.

Seriously, is any further proof required? Corporations own the US government. Assume the position.
 
The most anti-consumer ruling I can recall.

Prices will almost certainly rise. In theory, I suspect, Denon could now sue an online retailer for selling a reciever marked up by 20-30% instead of the customary 65-70%.

"Speakers must be sold at 100% markup or you will be sued," says Polk Audio (and every other speaker manufacturer).

As a consumer, I don't see how anything good can come from this decision.
 
It seems odd to me that there actually was an old ruling that prohibited price floors. It seems that there already are price floors on many products, and have been for a long time. Take, for example, iPod prices. I have never seen any retailer offer them for anything other than the "official" price. Or, for example, Linksys wireless routers, which I've been watching. Every single retailer (OD, OM, Fry's, CUSA, BB, CC) all sell them at the same prices ($50 for WRT54G, $70 for the upscale version).

Did I miss something?
 
Ah, that's not so bad, it's vertical agreements, for a second there I thought that they were talking about legalizing cartels.

That would have been really bad.

I honestly don't see the harm in this, as long as there is still competition the manufacturers will be just as motivated as the retails to price aggressively, if one manufactures price floor is too high, the retailers will just buy off someone else, like consumers do.

However I also don't really see the point in this change, for just that reason.
 
With this change are people who don't like the price going to be forced to buy items now instead of being able to walk away because the price isn't what they wanted?
 
Sorry for the double post. One more thought:

I think this is actually worse for retailers than for consumers. From the consumer's point of view, there's still competition in the market place. Manufacturer A can dictate a minimum sales price, but it still has to compete with Manufacturer B. And they can't collude to raise minimum prices, either. That falls under another area of anti-trust law, which is still very alive and well, and such collusion is still very much illegal.

This stinks for retailers, though. Let's say you have an agreement with Mfr A to sell Widget X at $50 apiece. That's all well and good, until Mfr A comes out with Widget X v.2, and all your original Widget X's won't sell any more. You can't lower the price on the v.1's because of your agreement. No "clearance sale". You basically eat the cost of the v.1 widgets. Mfr A gets all the revenue for all the v.1 and v.2 widgets they shipped, but they don't have to worry about whether the retailers will actually sell all of them.

Of course, this can come back to bite the manufacturer, because retailers will be less willing to order large numbers of widgets for fear of getting stuck with unsaleable units. And this, of course, can shaft consumers in the end when there aren't enough widgets to go around, but that problem will eventually sort itself out, as retailers order more stock.
 
It figures. Only the Anti-Consumer Bush would argue for this.

We are really farked now people.

They have just legalized price-fixing in the US.

Guess what else is going to happen. The Grey-Market is going to go through the roof.
 
That's not the point. Not the point at all.

Paul_Johnson said:
With this change are people who don't like the price going to be forced to buy items now instead of being able to walk away because the price isn't what they wanted?
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Mohonri said:
It seems odd to me that there actually was an old ruling that prohibited price floors. It seems that there already are price floors on many products, and have been for a long time. Take, for example, iPod prices. I have never seen any retailer offer them for anything other than the "official" price. Or, for example, Linksys wireless routers, which I've been watching. Every single retailer (OD, OM, Fry's, CUSA, BB, CC) all sell them at the same prices ($50 for WRT54G, $70 for the upscale version).

Did I miss something?
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That's called MAP, Mininum Advertised Pricing. That was enacted because big box stores were killing the smaller shops. It's particularly evident in the musical instrument industry (which I used to work in) where big guys like Sam Ash and Guitar Center used to advertise for 10-20% less than the mom and pops and the mom and pops went out of business. It was a bit too little too late because most of the mom and pops had already gone out of business and now the big box stores are guaranteed a bigger profit.

However, I don't think MAP has anything to do with the law. It was a policy put forth to protect the smaller stores.
 
Now that the corporate takeover of America is complete, I wonder if the Supreme Court will tackle free speech next.
 
I don't know how this would be a good thing for the American consumer either.
 
This is basic economics, people.

Setting price floors is typically a bad thing, as it can cause surpluses where there not need be any. But the government has done the right thing here because it removes a restriction place by the federal government where there should never have been one in the first place.

Regardless, this is not going to have too much of an effect on the consumer except, potentially, in markets where a manufacturer has a temporary monopoly on a product through patent laws. Once there is more than one competitor for something, price floors become a thing of the past.

Also, in order for a price floor to exist, the distributer(s) have to agree to them. If not enough distributers agree to the price floor, the manufacturer is going to not have the distribution that they want, and thus not do very well. Once that happens, their price floor goes out the window.

Oh, and do you think that places like Walmart are going to agree to any sort of price floor? All of a sudden Walmart is a good thing! :)
 
In other news Chevron set pricing minimums at $4.00 across the board.

The milk board set prices at $4.00 per gallon.

Yeah this is a red letter day. I am seriously starting to consider telecommuting from Havanah. At least it would be less dirty.
 
Where did you go to school that they still teach economics? ;)

Multics said:
This is basic economics, people.

Setting price floors is typically a bad thing, as it can cause surpluses where there not need be any. But the government has done the right thing here because it removes a restriction place by the federal government where there should never have been one in the first place.

Regardless, this is not going to have too much of an effect on the consumer except, potentially, in markets where a manufacturer has a temporary monopoly on a product through patent laws. Once there is more than one competitor for something, price floors become a thing of the past.

Also, in order for a price floor to exist, the distributer(s) have to agree to them. If not enough distributers agree to the price floor, the manufacturer is going to not have the distribution that they want, and thus not do very well. Once that happens, their price floor goes out the window.

Oh, and do you think that places like Walmart are going to agree to any sort of price floor? All of a sudden Walmart is a good thing! :)
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Mohonri said:
Sorry for the double post. One more thought:

I think this is actually worse for retailers than for consumers.
[...]

This stinks for retailers, though. Let's say you have an agreement with Mfr A to sell Widget X at $50 apiece. That's all well and good, until Mfr A comes out with Widget X v.2, and all your original Widget X's won't sell any more. You can't lower the price on the v.1's because of your agreement. No "clearance sale". You basically eat the cost of the v.1 widgets. Mfr A gets all the revenue for all the v.1 and v.2 widgets they shipped, but they don't have to worry about whether the retailers will actually sell all of them.
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Right there is the reason why this is bad for consumers. If I want to be a smart consumer and buy Widget X v1 after v2 is out, I cannot hope for lower prices anymore, since the vendor has set a price floor. Sure this is bad for the retailer, since they'll get stuck with old stock, but as a `behind the wave' consumer that likes to get cheap stuff after the initial surge...

Also, does this type of ruling affect private (eBay/ FS-forum) sales? What if a place wants to clear out overstock stuff on the cheap on eBay!?
 
First, retailer A has to agree to buy Widget X from Comapny Z with the clause. Retailer A gets stuck with old merchandise that Retailer A can not move once WidgetX2.0 comes out so they buy less WidgetX2.0 from Company Z. Company Z's profit goes down. Company Z then either has to remove minimum price or drop minimum price. Prices go down or Company Z continues to make less money.

Now if there is say Retailer B across town who did not agree to minimum price selling Widget X and later Widget X2.0.

Customer A can then either buy from Retailer A who agreed to minimum price or they can buy from Retailer B who did not. Since Retailer B did not agree to minimum price for WidgetX from Company Z they sell for less than Retailer A on discount. Retailer B now moves more Widget X then Retailer A so when WidgetX2.0 comes out Retailer B buys more than Retailer A from Company Z pushing the effective market price down. Company Z's profit goes up since Retailer B is now moving more product.

That is all if there is only one widget company. If there are two widget companies you still have price competition and you have retailer competition about minimum price or lack there of. Obviously I can insert a million otehr variables but short of across the board price fixing which this does not adress none change the market dynamic.
 
In related news, Canadian online retailers seen rubbing their hands together and cackling like senile hermits.

Some good might actually come from all this free trade hoopla after all.
 
drizzt81 said:
That is if the widget maker agrees to sell to one retailer without a price floor.
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If they don't then:

First, retailer A, B, and C have to agree to buy Widget X from Comapny Z with the clause. Retailer A , B, and C get stuck with old merchandise that Retailer A, B, and C can not move once WidgetX2.0 comes out so they buy less WidgetX2.0 from Company Z. Company Z's profit goes down. Company Z then either has to remove minimum price or drop minimum price. Prices go down or Company Z continues to make less money (share holders are not fond of this option).

In reality there are companies that wag the retailer...WalMart, Dell, etc.... You don't really think WalMart is going to stop discounting do you?
 
What is to stop all the big oil companies from not setting a price floor on oil. America is never going to stop using gas. Big oil companies where being looked at for doing this but now that it appears to be legal what is going to stop them from over pricing oil even more. Farmers can now get together and decide that they won't sell their corn for anything less than $100 a kernel. We need food so we have to pay it. We have just witnessed the end of the American economy. :(
 
ChiefMigizi said:
What is to stop all the big oil companies from not setting a price floor on oil. America is never going to stop using gas.
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Price fixing was not addressed in the ruling ergo it is still illegal.

Farmers can now get together and decide that they won't sell their corn for anything less than $100 a kernel. We need food so we have to pay it.
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Buy wheat watch the profits of wheat farmers go up while the corn farmers go broke.

We have just witnessed the end of the American economy.
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When that doesn't happen are you going to come back and post about it...because it didn't last time:

During the period from 1937 to 1975 when Congress allowed the states to adopt laws that permitted retail price fixing, economists estimated that such agreements covered about 10 percent of consumer good purchases.
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I won't buy an iPod for this very reason. Next up, Walmart buys the US. Uh, sorry too late.
 
Adisharr said:
I won't buy an iPod for this very reason. Next up, Walmart buys the US. Uh, sorry too late.
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Nevermind that you can find iPods online for less than retail...not much less, but for less. Audio prices have been fixed with a wink and a nod for decades. The courts have now legitimized this practice.

The idea that there's another widget to take it's place only works if the product is a commodity.

Oh sure those Infinity speakers are set at 70% wholesale and the retailer is legally bound to that price, but you can get some spark-o-matics for 10 bucks :rolleyes:
 
Ok let me clarify things I wasn't around the first time this happened so I didn't post about it then and I don't plan to post about it if it doesn't happen.

It only takes on company large enough to set the prices high to hurt everyone. Lets say a large farming corporation set floor limits on everything they have setting the limits much higher than they should be. Eventually we will have to buy from them if they are large enough because there won't be enough other farmers to meet demand. Demand increases which will allow the other farmers to increase their prices without worrying about losing business.

Price fixing doesn't have to be part of it. Since 1975 the size of corporations has grown. We longer has as many smaller companies offering the same product as we now have a few larger companies offering the same product.

If you hare naive enough to believe this is going to do nothing but help our economy than so be it. But don't give me a bunch of flak when you don't know what you saying. I wasn't alive at that time, I wasn't talking about price fixing and I sure as heck do not nor have I given you the premise to believe that I will post something about this if it doesn't happen. So get off your high horse quit believing you are all knowing and pull that stick out of your ass.
 
To me this is just legalized price fixing. The manufacturers can now set really high price floors to screw over consumers and I bet other competitors do the same thing to bring on all the rapage they can.

It is beyond wrong to not allow the retailer to set the desired markup and put 100% of that power into the hands of the maker.
 
welcome to $3000+ 8900 Ultras

well, u get the idea :p

ati's cards suck. i see this definitely happening
 
BoogerBomb said:
To me this is just legalized price fixing. The manufacturers can now set really high price floors to screw over consumers and I bet other competitors do the same thing to bring on all the rapage they can.
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Unless items don't sell at those higher prices and so competitors offer low cost alternatives ot feed a different market segment.

There is already product segmentation in the market place just like this ;)

As a businees practice price floors don't work very well for the retailer or the manufacturer so make them relearn that the hard way. Don't buy from people who use them.

It is beyond wrong to not allow the retailer to set the desired markup and put 100% of that power into the hands of the maker.
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It seems from the ruling the retailer can set markup...they just can't go below a certain limit.
 
Paul_Johnson said:
With this change are people who don't like the price going to be forced to buy items now instead of being able to walk away because the price isn't what they wanted?
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Yeah, this is going to be an inconvenience rather than a customer screwing though, say "Sony DVD player X" has a certain price floor, and the consumer wants that model, well maybe "nearly identical Phillips DVD player Y" has a lower price floor.

The customer has three choices, buy neither, buy the sony, buy the phillips, here's the beauty of it, if they buy the sony then it means that they were willing to pay that amount of money anyway, no harm no foul. If they buy the phillips, sony gets the message that their price floor is too high and they lower it to be competitive.

Pretty much how it worked before anyway.
 
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