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I agree that if companies A and B both AGREED to sell at X price, that is collusion, and leads to the formation of an oligopoly. That kind of cartel behavior sh

• franciscop 8y ago
  Asus was colluding with other resellers to inflate their selling price of their stores. Not of laptops in general, but of Asus laptops themselves: > The Commission found the manufacturers put pressure on ecommerce outlets who offered their products at low prices So it is literally company A telling/forcing company B to sell at X price.
  • cepth 8y ago
    Respectfully, I'm a little confused here. Your previous comment said: > If company A improves their margins and can sell for a lower price, then company B has to either improve their margins, differentiate somehow or stop selling the product. This comment implies that companies A and B are in direct competition. The case you're now describing is a supplier/customer relationship. What we're talking about here is a Company C (Asus) having stores A and B as retail distribution customers. Store A decides to undercut Store B's price. Store B says to Asus, I can't compete with those prices. So Asus has two options now. -It can allow Store A to continue selling at whatever price it wants. Long term, this likely removes Store B as an Asus customer. Store A becomes a more and more important customer to Asus, and is able to demand additional wholesale price decreases in the future. -Company C tells Store A, you need to maintain X price, so that both Store A and Store B can continue to sell our products. Now imagine that Store A is a giant retailer like Amazon. If your interest is in protecting consumers and ensuring the long term competitiveness of the market, how do you achieve that by allowing the better funded player to sell at a cost that Store B can't match? Further, Store A is notorious for low wages, and the health costs its workers incur in the physical nature of the job are socialized losses borne by the broader state. Store B may be "inefficient", but it pays its workers a better wage, spends in its local economy etc. Lastly, we're talking about pretty commoditized markets here. If Asus's "price fixing" leads to higher priced mediocre laptops, consumers have hundreds of other options. I appreciate you engaging in this discussion with me. EDIT: Not to mention, unless Asus has some kind of wild brand loyalty in Europe that I'm unaware of, Store B is free to find a different laptop supplier if it finds Asus's terms unacceptable. This doesn't change the fact however, that the antitrust considerations remain because Store A can likely beat Store B's prices on EVERY product.
    • franciscop 8y ago
      I agree, I see I was wrong since store vs manufacturer is quite a different relationship than manufacturer vs manufacturer. I haven't thought that well so please ignore those confusing bits. > Further, Store A is notorious for low wages, and the health costs its workers incur in the physical nature of the job are socialized losses borne by the broader state. Store B may be "inefficient", but it pays its workers a better wage, spends in its local economy etc. This is a larger issue that IMHO should be solved independently, and I think the EU is doing quite well there compared to other parts of the world (I'm from Spain working in Japan now and I've heard way too many horror stories around here). > How do you achieve that by allowing the better funded player to sell at a cost that Store B can't match? Even if Amazon is better funded, they still need to make money per-sale (with few exceptions) so the prices won't be disproportionately different. And you can achieve that with differentiation in many ways, from the sales channels to the support, localization, etc. And that is the whole point, if Amazon innovates and everyone else is protected so they can stay behind then there would be no progress at all. They should be allowed to offer better prices if their processes allow for it and not be forced to sell more expensive because another company is very wasteful.
• alkonaut 8y ago
  > I agree that if companies A and B both AGREED to sell at X price, that is collusion Now look at it this way: if the manufacturer says to all resellers “you have to collude and use this price” then it’s way to see that price cartels and resale price maintenance aren’t so different. Whether the resellers actively collude to use the same price, or are forced by the manufacturer to do so is practically indistinguishable from the consumer end. Which is why in general neither is accepted.
  • cepth 8y ago
    In the US at least, MAP (minimum advertised price) policies are not an illegal practice, and speaking from my personal experience, the big box chains will give you no trouble if you ask for a MAP price. Apple does it (https://www.macworld.com/article/2024257/how-apple-sets-its-prices.html https://www.macworld.com/article/2024257/how-apple-sets-its-...), high end brands like Tiffany or Coach do it, beverage makers like Bai do it. In American physical retail/distribution negotiations, any vendor agreement is going to specify very clearly what kind of markdowns are allowed, whether or not the vendor has to take back unsold inventory ("consignment basis"), and whether the vendor has to provide allowances to dispose of unsold inventory. As I've mentioned in the adjacent comments, the most troubling implication of the EU ruling is that if something like it was adopted in the US, Amazon would have an even greater competitive advantage. If I'm now no longer allowed to set policies that allow my various distribution channels to compete on roughly equal footing, it leads to the party that is willing to accept the least profit taking virtually all market share for a given product.
    • alkonaut 8y ago
      > it leads to the party that is willing to accept the least profit taking virtually all market share for a given product. Apart from fears of oligopoly/monopoly, isn’t that the market working as it should? EU Regulation usually doesn’t allow for predatory pricing to take market share either
      • cepth 8y ago
        I would say that the monopoly fear is a pretty significant one? Walmart and Amazon are the largest US retailers in the physical and online retail spaces, respectively. Yes, they have helped reduce prices on goods for the average American consumer. The question is, at what cost? The US taxpayer also picks up the welfare tab for Walmart and Amazon employees, as well as the costs associated with un- or under-insured people getting sick from physically demanding work. The American taxpayer directly subsidizes these companies [1][2]. If you create a system where the lowest cost retailer now has government-backed authority to lower prices to whatever it wants, this means that stores that pay their workers a fair wage are naturally at a disadvantage. Over time, the consumer may benefit from lower prices, but on the supply side (retailer + manufacturer), an increasing share of the profits accrue to the retailer as they are able to negotiate lower and lower prices from the manufacturer due to their increased scale. The kicker is that the enforcement of predatory pricing laws is difficult. Short of selling the goods at a cost below the invoice price paid to the manufacturer, on what basis can the government intervene? Physical retailers generally need to markup goods 50-100% depending on the industry. If Amazon is willing to sell the goods at a 0.5% markup to gain market share, can the government intervene? What's the brightline for markups below which the state can intervene? --- [1] https://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/ https://www.forbes.com/sites/clareoconnor/2014/04/15/report-... [2] https://newfoodeconomy.org/amazon-snap-employees-five-states/ https://newfoodeconomy.org/amazon-snap-employees-five-states...