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EU fines Asus, Denon-Marantz, Philips and Pioneer $130M for online price fixing
- baybal2 8y agoI am greatly, greatly surprised to see that Asus and other Taiwanese electronics brands still try to play these games given they haven't been present in high end markets for ages. Really, we are talking about difference in between them selling 250 euro laptops vs 270 euro laptops. Taiwanese consumer electronics industry got, kinda, ossified. Their mainstream products are almost as boring as "white goods" these days.
- skrebbel 8y agoThat would probably double their margins, don't you think?
- baybal2 8y agoA budget laptop is "Wintel tax" + $30 to $40 display panel + other components for $20 to $30. The rest is being eaten by tax and getting them to store shelves. There is a gigantic "commodity laptop" market and the less than 10% enthusiast/gaming niche in it. And YES, Intel is chopping down the tree it sits on. A lion share of their desktop CPU/Chipset/Wifi sales are in the commodity sector. If they strangle Taiwanese guys to the point they drop them in favour of ARM SoCs, it will trigger a magnitude 9 earthquake in the market.
- cwyers 8y agoThey don't make money off the resale price, they make money off the wholesale price. Any money over the wholesale price goes to the retailer (or the distribution chain), not the manufacturer.
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- mtgx 8y agoNot sure what has happened to Asus in the past few years, but the same laptop class at a given price range now has a significantly lower build quality than <2014. I don't know if it's them making retailers take these deals and getting lazy, Intel forcing higher and higher prices on them and them not being able to push the prices to consumers, RAM/SSD prices becoming higher, or what. Either way it's been disappointing to see them go down this path because they're going to lose whatever brand loyalty they had.
- bhouston 8y agoASUS doesn't have a response to the Dell XPS line. ASUS just has cheap feeling "gaming laptops" last time I checked.
- JazCE 8y agoI would say the Asus Zenbooks were generally the response to the XPS line. I must admit I haven't looked at them for a while, but the original Zenbook UX510 (I think) was pretty damn good, but rather pricey. I always felt that Asus were a step up from ACER.
- tormeh 8y agoHave both Acer and Asus. Can confirm. Acer is trash. Asus is as good as any I've used. This thread has people hailing Dell and HP as quality laptops. In other threads, there is no end to the troubles people have with Dell XPS. HP has a poor reputation as far as I remember, without remembering any specifics, except that they had overheating issues at one time. I guess the difference is probably between business and consumer laptops, where the former tends to be Dell or HP? Except Acer, as noted, because Acer is trash. Don't buy Acer.
- flamelover 8y agoDell is also trash, I've purchased two Dell laptop, lots of problems come with them. It's because it's expensive paid repair service so I bought it, but I don't think I really like to repair my laptop so many times. (And not to mention classic power adaptor problem with has built-in it for pretty long time) For Asus and Acer, we always joked them with a "built-in timer", they will break when time is up. Just like all those eco-friendly things. Very environment-friendly company.
- Rotdhizon 8y agoNow to get someone to investigate the RAM market for its blatant price fixing
- MaxBarraclough 8y agoI can almost taste the inevitable wordplay. Cash eviction: EU writes-back to most recently-used RAM manufacturers
- distantsounds 8y agocareful, The Register may steal that one.
- MaxBarraclough 8y agoThink it would end up spilling from The Register file?
- agumonkey 8y ago'no more static access to value, we need a more dynamic system' -- E.U
- close04 8y agoChina is but perhaps the reasons behind it are questionable. It happens right when China decided to come barging into the RAM market so the timing is suspicious.
- IloveHN84 8y agoAlso the smartphone one..EU should investigate on the higher prices, sometimes unjustified, of producers..see Apple, Samsung or LG. This race to and over the €1000 barrier is really nonsense, considering that the companies are profiting
- briandear 8y agoDefine “unjustified.” What does it cost to write iOS? Because in the case of Apple, you have the cost of the parts and assembly, but you also have the engineering costs to even create the product. A product price isn’t just the sum of parts + assembly + profit. Regarding €1000 — if a country like France wouldn’t have a 20% VAT, prices would be lower obviously. So perhaps we should “investigate” the 20% VAT? Maybe we should “investigate” the French labor laws that contribute to the cost of goods sold? There are a lot of things we “could” investigate — or we can just accept that companies will price their good appropriately based on the market demand. This isn’t like it’s an essential item required for basic life. Maybe we could investigate why France has strict milk quotas that necessarily increase the price of milk? Investigating milk prices has a lot more relevance to people than the pricing of a luxury item like a high end smartphone. To be clear, I am not suggesting we investigate anything, only pointing out the absurdity of complaining about smartphone pricing when the EU has plenty of other products that are subject to price manipulation based on political interests. The EU has had tariffs for decades on imports, making everything more expensive. But sure, let’s complain about Apple and Samsung while ignoring textiles, food, cars and machine parts all of which are subject to tariffs that raise prices.
- close04 8y agoAre these fines in any way based on the projection of the revenue coming from applying the illegal practices? So what I'm asking is did anyone try to calculate how much money they might have made from this and apply a fine that nullifies all those profits, to which they add a penalty for doing it in the first place?
- teamhappy 8y agoHere's the algorithm used to set the fines: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52006XC0901(01)&from=EN https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CEL...
- tgtweak 8y agoSo where do the proceeds of this fine go? Do they do back to the purchasers of said products like in a class action? Similar question for the anti-trust fines...
- DomreiRoam 8y agofrom another case but should be the same principle http://europa.eu/rapid/press-release_MEMO-09-235_en.htm?locale=en#content http://europa.eu/rapid/press-release_MEMO-09-235_en.htm?loca... Where does the money go? Once final judgment has been delivered in any appeals before the Court of First Instance (CFI) and the Court of Justice, the money goes into the EU’s central budget, thus reducing the contributions that Member States pay to the EU.
- TheArcane 8y agoSo it basically goes to every EU member country.
- Cthulhu_ 8y agoIn theory, yes, or more directly, it's a discount for contributions. But in practice, it's more complicated. I don't even know where all the EU money goes to. Bailing out Greece and co? Subsidies?
- 317070 8y agoMainly subsidies of projects, they have an awesome website to explain this stuff: http://www.europarl.europa.eu/external/html/budgetataglance/default_en.html http://www.europarl.europa.eu/external/html/budgetataglance/... https://europa.eu/european-union/about-eu/money/expenditure_en https://europa.eu/european-union/about-eu/money/expenditure_... About 6% is administration.
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- patrickaljord 8y agoWhen companies charge too much, EU fines them for monopoly abuse, when they charge too low, EU fines them for dumping prices, when they charge the same, EU fines them for price fixing. It's almost as if laws were designed to fill EU's pockets.
- owenversteeg 8y agoThese fines are rare and the amounts are comparatively small. €120MM is peanuts to the EU. The intention of the fines is not to make money but to discourage illegal behavior. Specifically, EU fines represent about 3% of EU revenue. The funds from the fines may not be used until the fine has passed all chances of being overturned by courts, which can take up to 8 years. Finally: the fines reduce EU funding from member countries by the same amount. Even if the member nations decided to subsequently give more money back to the EU, there is a cap on how much money the EU can take.
- dontnotice 8y ago> The intention of the fines is not to make money but to discourage illegal behavior. Of course fines are a revenue source, the EU operates on multiyear fixed budged which they supplement with fines and tariffs. The bulk of that wealth transfer is reliant on the coffers of US companies.
- gonvaled 8y ago> The bulk of that wealth transfer is reliant on the coffers of US companies. Please share your sources. And, just assuming you are right, those coffers are full of untaxed revenue from EU markets.
- sqdbps 8y agoThe record fines were levied on US firms. Are you suggesting that it's legitimate to fine US companies on antitrust grounds to supplement tax revenue?
- JazCE 8y agoThis doesn't surprise me. Having been in the market for a AV Receiver recently, I was amazed at how little fluctuation in price there was between all the online stores for the likes of Denon and Marantz equipment.
- NeedMoreTea 8y agoThe hifi and AV markets have seemed suspicious in pricing for years. Only way to get a discount is if you bump into an old model somewhere.
- muro 8y agoMarantz is regularly 50% off in Switzerland in major online stores.
- vinay427 8y agoSort of a tangent, but more for personal curiosity what are the major online stores for electronics in Switzerland?
- lukeqsee 8y agobrack.ch fust.ch mediamarkt.ch …and more. Switzerland has a vibrant market from what I've seen living here the past few months with pretty competitive in-country shipping (I once got a package via normal post the next day after ordering at 16:00 local time).
- bitL 8y agoSo should ASUS start selling their stuff in their own "ASUS Stores" only to bypass this? They obviously want to avoid imminent race to the bottom and commodification of their high-margin models (if there are any). How does this differ from US-wide enforcements of MAP (Minimum Advertised Price) where even e.g. Amazon is fully complicit?
- sfifs 8y agoManufacturers generally don't want to be big in retail because that would require them to hold a lot of working capital as inventory. Apple is fairly unique in this regard because of the hefty price premium they command. eCom still works out because you can aggregate orders to the factory supply chain and that smoothes out some of the demand variability.
- johnchristopher 8y agoYou can also buy from HP, Lenovo and Dell. Apple is not fairly unique.
- tonyedgecombe 8y agoOnline though, they don’t have their own stores.
- toyg 8y agoI think parent meant retail as brick&mortar. The ones you mention do direct sales, which is a bit of a different game.
- johnchristopher 8y agoOh, you are right. HP products can be bought in stores though but indeed I can't think of any brick and mortars computer shops like Apple.
- komali2 8y ago
- thefounder 8y agoNow they should go over Dolby and HDCP 2.2 requirements that render good equipment obsolete and forces you to "upgrade" so that you can watch content you already paid for.
- JazCE 8y agothat's nothing to do with price fixing.
- cptskippy 8y agoIt's planned obsolescence which is arguably worse. Price fixing doesn't create a steady demand. With planned obsolescence you can reliably predict demand. Combine that with price fixing and you've got yourself a pretty reliable revenue stream.
- paidleaf 8y agoNo jail? As an example, if a group of multinationals illegally fix prices and gain $1 billion in extra profits and they get a tax deductible $130 million fine, where is the deterrence?
- bytematic 8y agoI suppose they were suppose to do it legally and perhaps make more money hoping that the fine will even out the profit, benefits include no bad pr? I don't agree with it either.
- ceres 8y agoWell there isn't. Unfortunately, that would not be "business friendly". Modern society has been heavily trained to walk on eggshells around big corporations and that isn't changing any time soon.
- vertex-four 8y agoOf course, if they were given a fine anywhere near the effect on the economy they had, this very forum would be decrying the EU for being overbearing and anti-business.
- icelancer 8y agoNot likely. This forum is very anti-price-fixing and anti-competitiveness, especially with regards to headhunting and wages like Apple/Google had.
- contravariant 8y agoResponses were somewhat mixed to the recent Google fine though.
- nutjob2 8y agoI think people here are liable to see Android as a public good, compared to its competition.
- cepth 8y agoQuestion for any lawyers/legal observers out there: What exactly did these companies do wrong? From the article, 'If those retailers did not follow the prices requested by manufacturers, they faced threats or sanctions such as blocking of supplies.' Does this imply that any retailer in the EU has a legal right to sell goods at any price? If I'm a retailer reselling Asus or Phillips products at cost in order to gain market share, how is that not anti-competitive behavior as well? I don't understand why suppliers cutting off supplies to retailers is anti-competitive in this case. As anyone who has done business with Amazon through Vendor Central can attest to, Amazon gives you no ability to control the sale price of your goods. Their pricing algorithms automatically adjust the price on most items "Sold and fulfilled by Amazon.com" to be the lowest on the internet. To me, there is a very troubling extension of the EU's logic here. Quite famously, the high end cookware manufacturer Wusthof tried to prevent Amazon from selling its products, since Amazon was undercutting the value of its brand by offering massive discounts over prices on Wusthof's own site, and its brick and mortar distribution channels. Does this mean that under this EU ruling, that Amazon could sue Wusthof for attempting to "block" its supply of Wusthof goods? To take it a step further, Amazon lost money on each early-model Kindle sold. If Amazon attempted to rapidly gain market share in say the chocolate market by reselling Lindt or Godiva chocolate slightly below cost, how does the anti-trust law work out here? Amazon would arguably be engaging in anti-competitive behavior, while the chocolate maker could be fined for telling Amazon it planned to withhold future supplies? I'm generally a big supporter of consumer rights legislation and enforcement, but this makes me wonder if the EU is going too far. Their ruling seems to have the potential to open up a huge can of worms, and may actually entrench the monopoly power of larger ecommerce sellers.
- kalleboo 8y ago> Does this imply that any retailer in the EU has a legal right to sell goods at any price? If I'm a retailer reselling Asus or Phillips products at cost in order to gain market share, how is that not anti-competitive behavior as well? There are other laws for price dumping https://en.wikipedia.org/wiki/Predatory_pricing#European_Union https://en.wikipedia.org/wiki/Predatory_pricing#European_Uni...
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- Const-me 8y agoI don’t understand why did Asus, Philips and others do that? Why do they care about retail prices? They’re not earning retail price, they offer their products to retailers for wholesale prices. They’re manufacturers, can’t they always adjust that wholesale price however they see fit?
- toong 8y agoMy guess: perceived brand value ?
- Aunche 8y agoIf retailers sell their devices as loss leaders, it may tarnish their brand image.
- iammaxus 8y agoThe margin that a reseller/distributor/retailer has on a product goes mostly to sales and marketing of those products in one form or another (ads, placement in a store, training of staff on the product, etc). If an OEM lets that margin get squeezed by low cost resellers (like a crappy ecommerce only company), their other resellers will also get their margins squeezed and therefore can't spend much to sell that product. One common response to this is to charge different wholesale prices to different channels, but this can also be difficult to control or subject to price-fixing regulations. Keeping the margins high for resellers = spending more on sales and marketing for your product. I don't think non-commodity products in competitive markets should be subject to price-fixing rules in terms of setting the market price, but that's how it is in many jurisdictions today.
- berberous 8y agoTo protect their customers (the distributors/retailers), who have different cost structures (e.g., BestBuy, with physical real estate and employees, has higher margin requirements than a no-name website dropshipper). A physical retailer will get annoyed with a manufacturer, and will not want to carry their products, if their products are easily available via other sales channel for much less. And many manufacturers will want to utilize multiple sales channels to maximize overall sales.
- ge0rg 8y agoIt's funny how almost one hundred years after the Phoebus cartel[0], Philips is still participating in anti-competitive behavior. Apparently the invisible hand of the market is not so well suited after all. [0] https://en.wikipedia.org/wiki/Phoebus_cartel https://en.wikipedia.org/wiki/Phoebus_cartel
- blattimwind 8y agoPhilips isn't exactly an unknown there. https://www.reuters.com/article/us-eu-cartel-crt/eu-imposes-record-1-9-billion-cartel-fine-on-philips-five-others-idUSBRE8B40EK20121205 https://www.reuters.com/article/us-eu-cartel-crt/eu-imposes-... https://de.reuters.com/article/uk-eu-court-semiconductors/philips-infineon-lose-appeal-against-eu-cartel-fines-idUKKBN1440V1 https://de.reuters.com/article/uk-eu-court-semiconductors/ph...
- tormeh 8y agoWat. Looks like the mean time-between-fines for Philips is three years...
- TheSpiceIsLife 8y agoJust another cost of carrying on a business.
- hammock 8y agoThis is not a cartel, it's resale price maintenance. And RPM is controversially anti-competitive; for example it is legal in the US by Supreme Court ruling.
- gowld 8y agoAnd the reason why it's not "obviously" anti-competitive. A (non-monpolist) in manufacture could sell direct-to-consumer its own product at whatever price it likes. It could sell its products via consignment in many stores. So it's not obvious why negotiating a more complex agreement with its reselling parters is anti-competitive. As long as there are competing products in the store or at other local stores, there is competitive pricing. If stores also refuse to stock competing products, then you have a (local) monopoly, and that is when the price controls run afoul.
- abandonliberty 8y agoThis must be legal in the USA? So many companies do it and it's not even hidden.
- alkonaut 8y agoYes, “resale price maintenance” is legal in the US (by a Supreme Court ruling). I find it pretty hard to see why price fixing is better when dictated by a manufacturer than by collusion between resellers.
- kinnth 8y agoAll mature markets become cartels. The illusion of a free market is maintained to ensure monopoly are not formed but almost all mature markets are some form cartel.
- Gibbon1 8y agoI remember as a kid reading The Pearl by John Steinbeck. I didn't forget the part where all the buyers in the town were part of a cartel. It's a given that eventually established businesses will start to collude with each other.
- dalbasal 8y agoWhether because our antitrust framework was successful, or just because things change over time... This sort of "anti-competitive" behaviour is not the real problem anymore. These days, we have a handful of companies racing to be "the first traded trillion dollar company," with a business model built around >50% market share. We have platforms, with their digital versions of the infrastructure-monopoly problem, just without the capital cost part. We have social networks, with their telephone-like network effects. The value (to users) is in everyone else using it. We have ads-and-data businesses like Google, where the value to ad-buyers grows exponentially with network size. We have investors betting on monopolies. Peter Thiel's definition of monopoly (the only worthwhile strategy) is basically a spectrum. On one end you sell commodities, at cost. On the other end you have a perfect monopoly. Invest in ideas closer to the 2nd type. All sorts of powerful reasons for companies to cut themselves an island of monopoly. All reasons that are not economies of scale. If monopolies really do come with stagnation, higher prices and such... We are headed for trouble. Our current antitrust frameworks don't touch on most of the problem. The likes of fb just don't fit into it. Price fixing, pricing power, dumping and such are the symptoms of last year's flu, not this year's.
- azernik 8y agoSo much for the narrative that the EU's tough anti-trust policy is about keeping out US companies.
- anon12341234 8y ago$130M across four companies is nowhere near as severe a penalty as a $5B fine for one company. When you factor in that they've also extracted fines of $120M, $730M, $1B and $15B from Facebook, Microsoft, Intel and Apple, this is actually pretty clear proof that the EU is much tougher on US companies.
- SubiculumCode 8y agoFor what it is worth I chose not to buy my motherboard from ASUS today, and chose another company (who may be doing other things, but idk).