BREAKING NEWS - Fender Europe fined £4.5Million for breaking competition law

richardhomer

TimmyO said:

Don’t a fair few companies effectively do this? 

Talk to any Martin dealer and they are cagey about the “price” on the website.

One well known one looked me in th eyee and said that ‘ Martin don’t like us doing it, and a few of us larger dealers have agreed together that we won’t reduce prices below a certain point... ‘ that’s a bloody cartel! 

Car dealers generally won’t move beyond the best price on Carwow, good luck with getting much off an Apple device or hi fi products made by Linn or Naim. I reckon it’s the ‘norm’ in many sectors.

hollywoodrox

TimmyO said:

Don’t a fair few companies effectively do this? 

Talk to any Martin dealer and they are cagey about the “price” on the website.

One well known one looked me in th eyee and said that ‘ Martin don’t like us doing it, and a few of us larger dealers have agreed together that we won’t reduce prices below a certain point... ‘ that’s a bloody cartel! 

I was once in a shop and in a position to buy a Taylor guitar for £750 (it was the 90s) I would be paying cash  and they would not knock £50 off  which was fair enough  they were selling it  so I ended up buying a Takamine fd360sc  off a shop advertised in guitarist magazine  for £699,  

the manufacturers retail price guide was over  a grand at the time so I was well chuffed as I had seen glen Frey playing one along with a Santa Fe model  and it felt much better than the Taylor and was hell of a guitar

Jalapeno

Whitecat said:

Suspect this is way off based on @Strat54's post below yours, but despite that, it's not Fender pocketing the extra money, it's the dealers.

I very much doubt that, Fender get their wholesale price regardless, price maintenance means their wholesale price is artificially higher.  Any waggle room/discounting comes out of the retailer's pocket

Whitecat

Jalapeno said:

Whitecat said:

Suspect this is way off based on @Strat54's post below yours, but despite that, it's not Fender pocketing the extra money, it's the dealers.

I very much doubt that, Fender get their wholesale price regardless, price maintenance means their wholesale price is artificially higher.  Any waggle room/discounting comes out of the retailer's pocket

That’s exactly what I mean - RPM does not mean an artificially higher wholesale price though. RPM basically only benefits the dealer, as it were. 

Fretwired

crunchman said:

Mixed feelings on this.  Like a lot of EU rules, this one seems to benefit big business.  The big internet box shifters will be able to undercut small shops and drive the last remaining ones out of business.

If you go back in time, books were sold at a price determined by the publisher.  Pretty much every town had a decent independent bookshop.  When that system was abolished, the likes of Waterstones took over with their economies of scale and killed off the independents.  Now we have Amazon killing off physical bookshops of every kind.

Our towns and cities are the poorer for not having bookshops where we can go and browse, but we do have cheaper books - for the moment.  What happens when Amazon have killed off all the competition?  Amazon got market share by undercutting everyone, but if you shop around now, they are often not the cheapest.

There is a danger of the UK's big musical instrument retailers becoming a cartel and keeping prices artficially high.  Some of the big ones have already formed some kind of buying consortium.

When fixing is allowed to go unchecked, prices get too high, but without some kind of maintenance of prices, you wind up with a handful of big boys swallowing all the competition and eventually jacking up prices.  In theory, a new player could enter the game at the point, but the start up costs would be too high.

There is no simple solution to this that keeps prices sensible while ensuring competition long term.. 

Whilst I agree to a point it's progress. Your small independent bookshop would have a small range of books or might even be a specialist. Amazon basically has everything in print, including books from abroad at an affordable price (they need to pay more tax but that's another issue). They also do include local bookshops on their site and in searches many of which make money selling out of print books. There were three book stores in my local high street - poor service in all three with rude owners. They aren't missed.

The same goes for music stores - as Andertons have proven there's nothing to stop shops having an online presence. It means Andertons can compete. Andertons have a physical store, an online shop and a great marketing strategy and online presence via their videos on YouTube. Other stores could have done this, but didn't.

crunchman

Whitecat said:

Jalapeno said:

Whitecat said:

Suspect this is way off based on @Strat54's post below yours, but despite that, it's not Fender pocketing the extra money, it's the dealers.

I very much doubt that, Fender get their wholesale price regardless, price maintenance means their wholesale price is artificially higher.  Any waggle room/discounting comes out of the retailer's pocket

That’s exactly what I mean - RPM does not mean an artificially higher wholesale price though. RPM basically only benefits the dealer, as it were. 

Potentially it benefits Fender as well.

From what I've heard, the smaller dealers probably pay a bit more to buy a small quantity of guitars than someone like Andertons who might buy in hundreds at a time.  That's a bigger margin for Fender.

The end point is when all the small dealers are gone, and you end up with a giant Thomann type dealer.  A dealer like that has a lot of muscle and can deal on their own terms, rather than have to accept Fender's deal.

Fender also probably want to avoid a situation like they have with Guitar Center in the US.  There have been rumours about Guitar Center's problems for years.  If GC did go under, it would cause all kinds of problems for Fender.  Allowing smaller dealers to be able to make a living so there is a more diverse dealership would remove risk for Fender.

Keeping smaller dealers afloat might also help overall sales.  I might be old school, but I still want to try a guitar before buying.  If there are no local shops, I'm less likely to buy.

symphonytech

Jelapeno: This isn't really the case; the wholesale price isn't supported by this RPM at all; the price maintenance in this case isn't lateral (ie. collaboration between competing brands and companies to maintain wholesale pricing), but instead vertical. This means that the price is maintained by the dealers on the behest of the distributor.

The distributor's price isn't therefore directly affected either positively or negatively.

What it does do is attempt to artificially preserve the profitability of their products for the dealer base, and make their brand more appealing to profile in the stores

Jalapeno said:

Whitecat said:

Suspect this is way off based on @Strat54's post below yours, but despite that, it's not Fender pocketing the extra money, it's the dealers.

I very much doubt that, Fender get their wholesale price regardless, price maintenance means their wholesale price is artificially higher.  Any waggle room/discounting comes out of the retailer's pocket