Price fixing

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Len said:
Not going into the good and bad, right or wrongs of price control/fixing.

In SA any form of retail (and even wholesale) price control is illegal, and everyone in the value chain is subject to huge fines and now even class action lawsuits. Their is also noise of it being criminally prosecuted.

The bread saga was very public, but probable more relevant to this hobby is the bicycle retail price fixing one.

On a personal level I support LFS, if they have the product or are willing to get it for me. I accept reasonable profits (personal view on what is). Stuff I can not get here I import myself.
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MAP is not pricing fixing in its truest form, but its confused as its new to SA...
in the states for eg, Dell sells there own products at a SRP to make sure that other shops dont over-charge, but some do and add an extra service to justify it..

i look at the company i work at, we are way more expensive then competition, but our service etc justifies this, so while u may get things cheaper else where, what is your service like.
 
dallasg said:
now i would say that is more price fixing, according to SA law and definition of MAP, its only a price that must be advertised, eg Skimmers starting from R1500, but if you come to my store i can sell it for R1200 and make less profit
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Thats not to say.. She can give you a discount, no prob, so loyal customers get discounts, but the suppliers set a price so that "Place A" does not screw over "Place B". The MAP idea is to get everyone to sell at the same price, so that 1 oke does not make enough to drive a ferrari , and the next guy a tata..

If they sell for way less than the rest, and other places complain, they are doing damages to other companies - that is where the supplier steps in and asks nicely to keep it the same.. Its not price fixing , its more like Pick and Pay - if it costs R10 in JHB, It costs R10 in Witbank ..

There was a post a while back about something simular - importing fish or something. I also made this comment there..

The only way to get to a standard of what everything should cost, what hardware, livestock etc. should be sold at is a official Marine Import Commitee.

A legal institution that keeps all of this under control.
 
a question worth asking for online organisation s such as marco's is it not acepptable to have a slight reduction in price on the item to take transport into account?

i know that this would be tricky as freight to different areas vary.. but surely the seller is taking the knock and the buyer is still getting the item he wants from whom he chooses to purchase from at the same price as if he were to purchase fro his lfs?

i know its a tangit to this topic but thought id take the gap to ask...
 
The retailer should be allowed to sell at whatever price he wants to. If he makes 20% profit or 100% profit is up to him and the way he manages his business. E-commerce is the way of the future. The consumer then has the choice of buying on-line versus a store.

Also, the Pick 'n Pay argument does not wash with me. I could buy the same product cheaper at a competitor. That's what makes it a free market. I can buy Coca Cola at the recommended price or I can buy it at Pick 'n Pay at a discount and they are allowed to advertise this discounted price.

What is it with the SA aquarium wholesalers? Competition is good. Cheaper prices means larger volumes. This appears to be a concept that escapes us in SA. One would have thought that with the strong rand, we could get products a little bit cheaper. Doesn't make sense to me.
 
Zayd i agree with you 99.5% here, all except for the e commerce, i think people will still like to go shopping and see whats available.
 
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dallasg said:
MAP is not pricing fixing in its truest form, but its confused as its new to SA...
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You can spend a lot of money on lawyers today to get an opinion on where the line is, and there is a lot of issues in and with the competition commission and their abilities and processes, but this seam to be one of the better drafted laws/regulations with a institution willing and keen to implement. I also think that the fact that class actions lawsuits is now possible, you are going to see lawyers incentivised to take on "smaller" cases. Note, I am not a lawyer, so this is a personal and layman opinion.

Luckily or unluckily, they (commission and lawyers) are still after the big fish (excuse the pun) at the moment, so our hobby/industry will probable not draw their attention in the short term.

That said, the general test for price fixing is if a organisation is "agreeing to fix or influencing, trying to fix or influence whole sale and/or retail prices" and the result is measured whether " the conduct was likely to harm consumers and/or competitors"

Recommended retail price (RRP) is legal in SA under some criteria, but MAP (Minimum advertised price) most probable will always be illegal (again you could find a lawyer that will argue the point) in SA as it tries to maintain prices above and/or below a specific level.

Scary is that the crime is not only committed by the whole-seller, but also by the retailer. So if a retailer agree to adhere to a wholesaler's pricing policy, it is also participating in the illegal action and liability to a fine (max 10% of turnover). More scary is that in the absence of an agreement, conduct can also be taken into account.

I know that a lot of business in SA are still conducted in a MAP fashion, and it must be tuff for a retailer to go agains established practice, but I suspect as more and more fines are levied, industries will start getting more inline around this.

Personally, I have yet to see price-fixing benefit an industry or consumers in it. There is upheavals when it gets done away with (and this is normally the reason/incentive for incumbents to fixing prices), but price competition in the long-run is always good for an industry and forces players to focus on service/availability/demand/etc.
 
Alan said:
Zayd i agree with you 99.5% here, all except for the e commerce, i think people will still like to go shopping and see whats available.
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I agree, stores are necessary but the internet is used to research opinion, etc. When buying big ticket items (and hardware for reef tanks are expensive) I search for the best deal and pricing can be very different - up to 25%. What justifies this? Not service because the warranty is supplied by the manufacturer/wholesaler.

Look at the motor vehicle trade. We have MAP. But discounts are not huge, single digit and the discounts are very similar from dealership to dealership.
 
zayd.............its a balls up the world over...........

hows this one.......
i go to mauritius every year..........2litres of coca cola bottled in south africa
retails in a mauritius store "super u" for 34 rupees.....divide that by 4.....R 8.50


now you tell me, how that gets made here, is shipped by sea freight 4000km, transported to store, taxed, marked up etc etc and still is R5.50 cheaper then our stores.....
 
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butcherman said:
All im saying on this subject is build up a relationship with the LFS you know and trust. They will look afer you if they are any good.
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100% agree


however.....like i said, price turns even the most loyal people away....especially these days..........

oh, and try doing bussiness on account and consignment these days.........lol
thats a joke............if you making let say 30% profit.........
let me tell you now........you will wait up to 60 to 90 days even with your best clients......and you will loose the money and stock from some clients that will just close and not pay or just not pay cause they dont have the money.
so literally.......the market is stuffed............
stick with your supplier, build up a relationship.....you will get better prices and help your suppllier grow aswell as the market...........

its funny but this trade seems to be where the can of worms really comes out.........
sure other trades have it too.....but this trade is just ridiculous.

and you see it worse when people are battling, lost other sources of income etc etc they go into survival mode and all ethics, bussiness relationships, frienships etc etc just go out the window. they do anything to get the money in there pocket before anyone else can:blush:
 
zayd said:
When buying big ticket items (and hardware for reef tanks are expensive) I search for the best deal and pricing can be very different - up to 25%. What justifies this? Not service because the warranty is supplied by the manufacturer/wholesaler.
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I don't think we should complain about this, this is great, it means that there is price competition!

The shop that sells for 25% more than the cheapest shop will either go out of business because no one is buying from them, or they provide something of value (advise, service, stock/spare availability) that you are willing to pay the 25% more, or they specialise in and sell to stupid/uninformed customers.
 
Len said:
but probable more relevant to this hobby is the bicycle retail price fixing one.
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It alleged that the recommended retail price included a mark-up of 35 percent for bicycles and 50 percent for accessories.
The ceiling on mark-ups was also said to determine the profit that retailers could make on cycles and accessories.
“Bicycle retailers colluded to exclude competitors like internet retailers from the market,” the Commission alleged.
It claimed the strategy used was to ask the wholesaler to sell to independent retailers at a higher price and it said this conduct was likely to harm competitors and consumers.
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Here the retailers worked together with the distributors to exclude certain shops. That is illegal.
 
not to be funny here....but lets put this scenario out there...........
maybe the aquarists are also to blame a bit here.....as are the wholesalers, as are the retailers
i know for a fact someone went on my website and saw the price of a skimmer
that we had on a special.......instead of that someone buying the skimmer, he decided to go to his lfs in cape-town and be a real hussler and try get the lfs to sell him the skimmer at the same price buy threatning that if he did not match or beat the price he would buy it on my website........the lfs then calls the importer supplier and moans that my prices are too cheap (not knowing that i had negotiated pricing on a certain volume of product for a certain amount of time due to our online stores launch)....this then puts the importer in a jam....and what happens......we have to re-structure all our pricing and the customer looses out at the end of the day.
and guess what..........our prices where advertised cheaper...........i can guarantee you our service is 200% better aswell as our back -up...............and at the end of it all we did not make the sale.....and were not even aware of the sale until the lfs finally placed the order with the importer after all the politics.

be loyal to your supplier.....weather its e-commerce or a lfs down the road......yes, shop around....if you feel you being screwed....find and stick with a supplier that wont screw you:1:

its all very childish in a way..........
we dont even advertise specials on this forum any more due to this......
aquarists try get the same deals from there closest lfs.....and the fun starts.
on this forum , you advertise a great deal for the hobbiest....you sell maybe 2 or 3 items....and then you get about 30 days worth of politics as every retail store in this country, some of them friends of ours, some of them not, aswell as other e-commerce stores etc etc will all just bombard complaints to all the suppliers the products came from.......

funny hay.............

i have chosen to just laugh and let other people do it.....and focus and what makes our bussiness work........there was an instance just the other day when a retail store was luring people into his store selling salt at cost........i just sat back and laughed as they were one of the people months ago moaning about our pricing..........

its all relative..........but reefers need to be loyal to there supply sources
if there is a special advertised....great...grab it....but dont try and take the mickey out of the lfs or supplier that has been servicing you for years......
buy the special and get on with it.........carry on supporting your lfs after.....making the noise is what starts the arguments, price wars and the snowball continues........at the end, people dont advertise specials and you loose out

so who looses out here
 
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zayd said:
Hi Guys

Having been an aquarist for 5/6 years now and having setup 3 tanks, I notice that price fixing is a huge problem. We have a large distributer in SA representing several brands that enforce "recommended" selling prices.

I have recently pointed out to some local retailers that another retailer is offering the product at a cheaper price than them only be to told that the cheaper retailer's price is wrong and the website is being teared down.

Is this practice not breacing our competition law? I would like to submit a complaint to the competition commission as the retailer should be able to sell at whatever he price he chooses to.

What do you guys think?

Regards

Zayd
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Hi Zayd

This is very true. As a new wholesaler in the business, we have found that some wholeaslers are raping the South African Market and forcing LFS to sell at very high Selling prices.

We have decided to bring the price level down to Europe and UK international prices and allow hobiest to have the same advanatages around the world.

As you could imagine Keith and myself are not the most popular people at the moment and there are many wholesaler trying to prevent this.

But we will succeed and bring prices back to reality for all hobiest.

Thanks for the tread South Africa needs this type of feed back.
 
The Waterboy - Marco said:
the lfs then calls the importer supplier and moans that my prices are too cheap (not knowing that i had negotiated pricing on a certain volume of product for a certain amount of time due to our online stores launch)....this then puts the importer in a jam....and what happens......we have to re-structure all our pricing and the customer looses out at the end of the day
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Right, thats why its called price fixing and your supplier is guilty of this if he forced you to up your price.
 
no....you got it wrong alan.....they forced me to up my ADVERTISED PRICE VIA E-COMMERCE.....
i can sell for and advertise whatever price i want from my physical outlet....hence its not a fixed price but a reccomended advertised price!
 
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Alan said:
Right, thats why its called price fixing and your supplier is guilty of this if he forced you to up your price.
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Nope

It is called good negotiations between Marco and distributor. They did not worked together to exclude other retailers, and the this conduct was not likely to harm competitors and consumers. Actually consumers were the end benefactors.
 
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