6 ms·

It's funny how almost one hundred years after the Phoebus cartel[0], Philips is still participating in anti-competitive behavior. Apparently the invisible hand

by ge0rg 8y ago

It'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 ago
Philips 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 ago
  Wat. Looks like the mean time-between-fines for Philips is three years...
  - TheSpiceIsLife 8y ago
    Just another cost of carrying on a business.
hammock 8y ago
This 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 ago
  And 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.
  - shkkmo 8y ago
    It's clearly anti-competitive. The reason RPM exists is to prevent resellers from competing with eachother on price. What is controversial is whether this is something that should be allowed, not whether it is anti-competitive.
    - dogma1138 8y ago
      It also helps To reduce price descrepency between small and large resellers in both client base and market share which helps to prevent relative price hikes in lesser served areas. The question should be if the outcome of this is or is not beneficial to the end consumer. Manufacturers have an incentive to keep their prices as close to their MSRP as possible and there aren’t many ways of doing that that are not anti-competitive on paper. However I don’t think that a reseller in London should be able to offer a bette deal than a reseller in say New Castle or Leeds because they are bigger.
      - TheSpiceIsLife 8y ago
        > However I don’t think that a reseller in London should be able to offer a better deal than a reseller in say New Castle or Leeds because they are bigger. While I agree a suburban / rural / remote customer shouldn't necessarily have to pay more, how do we reconcile this with the idea of economies of scale? If a larger retailer moves more units and can negotiate a better price from the supplier shouldn't they be able to pass (some of) that saving on to the retail customer? I thought this is, at least one reason, why franchises existed, so retailers can take advantage of bulk purchasing power?
        hammock 8y ago
        >I thought this is, at least one reason, why franchises existed Franchises are a licensing arrangement. You mean chain stores.
        james_in_the_uk 8y ago
- MrQuincle 8y ago
  As a manufacturer it's really difficult to organize distribution. Especially with governments intruding in contracts between commercial parties. A company should be able to dictate or negotiate the margins in their distribution chain.
  - frgtpsswrdlame 8y ago
    >A company should be able to dictate or negotiate the margins in their distribution chain. No they shouldn't. A competitive market would continuously drive those margins lower. To the extent that a company is able to maintain or freeze margins it means they have too much market power. I'd prefer to break them up but in lieu of that we might as well just pass a law that mandates what a competitive market would do anyways: remove any negotiating power the company had.
mr_toad 8y ago
> Both organisations co-ordinated the trading of patents [...] Looking back at the history of the electrical / electronic / computer markets it seems that they have been encumbered by patents, trade secrets, trademarks, copyrights and other intellectual property, going right back to Edison. It wasn’t markets that writ these monopolies into law, it was governments. Is it surprising that these legally granted powers would be exploited and abused?
appleflaxen 8y ago
who claimed the invisible hand prevents monopolies?
- paulddraper 8y ago
  "Invisible hand" refers to the idea that each individual pursuing unencumbered their own best interest results in the best for society in general, as if there were an invisible intelligent force acting in society's interests. [1] In a free economy, a monopoly can be contrary to this idea, as it can result in a suboptimal state for society, as if there were no overall-optimizing invisible hand. [1] https://en.wikipedia.org/wiki/Invisible_hand https://en.wikipedia.org/wiki/Invisible_hand

by ge0rg 8y ago

blattimwind 8y ago

Philips 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 ago
Wat. Looks like the mean time-between-fines for Philips is three years...
- TheSpiceIsLife 8y ago
  Just another cost of carrying on a business.

hammock 8y ago

This 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 ago
And 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.
- shkkmo 8y ago
  It's clearly anti-competitive. The reason RPM exists is to prevent resellers from competing with eachother on price. What is controversial is whether this is something that should be allowed, not whether it is anti-competitive.
  - dogma1138 8y ago
    It also helps To reduce price descrepency between small and large resellers in both client base and market share which helps to prevent relative price hikes in lesser served areas. The question should be if the outcome of this is or is not beneficial to the end consumer. Manufacturers have an incentive to keep their prices as close to their MSRP as possible and there aren’t many ways of doing that that are not anti-competitive on paper. However I don’t think that a reseller in London should be able to offer a bette deal than a reseller in say New Castle or Leeds because they are bigger.
    - TheSpiceIsLife 8y ago
      > However I don’t think that a reseller in London should be able to offer a better deal than a reseller in say New Castle or Leeds because they are bigger. While I agree a suburban / rural / remote customer shouldn't necessarily have to pay more, how do we reconcile this with the idea of economies of scale? If a larger retailer moves more units and can negotiate a better price from the supplier shouldn't they be able to pass (some of) that saving on to the retail customer? I thought this is, at least one reason, why franchises existed, so retailers can take advantage of bulk purchasing power?
      - hammock 8y ago
        >I thought this is, at least one reason, why franchises existed Franchises are a licensing arrangement. You mean chain stores.
        james_in_the_uk 8y ago
MrQuincle 8y ago
As a manufacturer it's really difficult to organize distribution. Especially with governments intruding in contracts between commercial parties. A company should be able to dictate or negotiate the margins in their distribution chain.
- frgtpsswrdlame 8y ago
  >A company should be able to dictate or negotiate the margins in their distribution chain. No they shouldn't. A competitive market would continuously drive those margins lower. To the extent that a company is able to maintain or freeze margins it means they have too much market power. I'd prefer to break them up but in lieu of that we might as well just pass a law that mandates what a competitive market would do anyways: remove any negotiating power the company had.

mr_toad 8y ago

> Both organisations co-ordinated the trading of patents [...] Looking back at the history of the electrical / electronic / computer markets it seems that they have been encumbered by patents, trade secrets, trademarks, copyrights and other intellectual property, going right back to Edison. It wasn’t markets that writ these monopolies into law, it was governments. Is it surprising that these legally granted powers would be exploited and abused?

appleflaxen 8y ago

who claimed the invisible hand prevents monopolies?

paulddraper 8y ago
"Invisible hand" refers to the idea that each individual pursuing unencumbered their own best interest results in the best for society in general, as if there were an invisible intelligent force acting in society's interests. [1] In a free economy, a monopoly can be contrary to this idea, as it can result in a suboptimal state for society, as if there were no overall-optimizing invisible hand. [1] https://en.wikipedia.org/wiki/Invisible_hand https://en.wikipedia.org/wiki/Invisible_hand