Funny thing, I had just finished copying the text of Mike's post out to a file, for my own edification, and did a refresh to see if any followup had been posted, and found that the article had disappeared...
If I may be permitted, below is the text I saved out; the formatting isn't exact, as I had downconverted to text, and have now "reconstituted" the html, but the wording should all be the same...
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Benchmade Forum - Minumum Allowable Pricing????
http://www.benchmade.com/ultbb/Forum1/HTML/001338.html
Mike Turber
Member
Posts: 57
From: Visit 1 Stop Knife Shop!
Registered: Sep 1999
posted 01-23-2001 08:41 AM
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I just had this very battle with Microtech and it is costing them a pretty penny.
The laws are very clear here but how they are enforced is very vague. I wont go into the legal aspect of the current MAAP programs other than to say the following.
You can not tell a dealer to change his pricing on a web site. The web site is private property and an extension of the dealers store. You can control the minimum allowed advertised price but not the price that appears on a web site and even then you may have problems if you are not 100% dealer direct and you do not follow certain guidlines established by the FTC.
A web site is NOT a form of advertising.
Why? Becuase you have to go to it, it does not come to you which is the main issue when determining if something is an ad or a marketing tool. A web site is a virtual store and just like a brick and mortar you can price your product at whatever you see fit and there is NOTHING a manufacturer can do about it. Spyderco and Microtech has already figured this out, thanks to me
And it cost and is costing both $$$.
Now if you send out an unsolicited email you are advertising. An email list is excluded from this as it was requested and is not advertising. If you post a sale on a forum site, you are advertising even if it is free. If you post a ad sending people to a specific page that has particualr sale items on it, you are advertising. The grey area is if you just say come see my site.
I believe the manufacturers did not take this into account when making their pricing policies. Now if the dealer sends out an unsolicited email, makes a post on a forum which is NOT owned by them, or whatever means they have to actively leave their domain to promote their product then you have a case. As a side note, an auction is 100% exempt from this.
A class action suit can be brought against anyone who breaks FTC regulations. It is already public knowledge that I have a similar case against Microtech right now. The Spyderco case was already settled. As I found out with Microtech, antitrust law is one of the most expensive battles you can fight. My litigation with them is drawing to a close and settlement may be in the works as soon as Friday. If not we go to trial and seek damages. According to Tim at Microtech they may file Chapter 11 soon anyway so like all other creditors we may have to just get in line.
Now let's get into another issue here.
According to Greg at Benchmade and Les, they will not sell to Internet dealers directly. If so that means this dealer is buying through distribution and is under no obligation whatsoever to follow Benchmade's pricing policies.
So what needs to be done is an entirely new MAAP program which is included into an authorized dealer program and NOT a separate policy. For a separate policy to work your company would have to be 100% dealer direct to be able to enforce a MAAP program (Like the Oakley example). Also you can not punish someone, in any way, for not following a policy which they have not signed or agreed to by placing an order direct with you. Buying though a distributor releases the dealer of any responsibility to abide by a manufacturers policies. Any attempts to enforce a policy on a dealer buying through a distributor would be hard to do and may be illegal. If you do so, you would leave yourself open to legal action on the part of the dealer and the dealer would have a very good case. Also if you give a distributor your program and they publish it for you in their literature you are not out of the woods. This becomes a third party agreement and is not enforceable in most all cases.
So basically you can not punish a dealer who does not abide by your policy as long as they buy through a distributor. You can however reward dealers who do follow your pricing policies and programs and this is the main reason why my program will work. But my program falls on deaf ears at Benchmade. Camillus, Outdoor Edge, REKAT and few others who actually listen to me do not have these problems at all. Amazing ain't it Greg?
As soon as I am done with Microtech I will explore Benchmade's current policies in greater detail and how they have affected me and other dealers and distributors over the last few years. I have already done a good bit with Benchmade so I have a pretty good head start. Also a few years back they changed their policies to try to control pricing and it obviously has not worked. I told Greg this over the phone on December 23'rd 1997. Like Microtech, we now have a couple of years under the belt of lost revenue and although my case would be considerably different than the average dealer the end result would be the same and here is where the FTC comes in.
Benchmade, through actions involving attempts at controlling the price a consumer pays, may have broken one or more FTC laws. We now have direct evidence which the consumer can clearly see. The restriction of free trade and the free enterprise system, IMHO has been proven. Clearly Benchmade's attorney's feel they are doing right by the letter of the law. The question is which law? Les, I think if you ask your attorney's they are going to mention the Colgate doctrine. You may want to have them go over the Sherman act with a fine toothed comb.
Need direct first hand precedent?
Read the case below and insert Benchmade everywhere you see Nine West. And where each brand of shoe is mentioned insert a knife model Benchmade makes.Let me know if it sounds like what you are doing? BTW My attorney worked on this case and she is really damn good
<font face="Verdana, Arial" size="2">
WASHINGTON (AP) - Nine West Group Inc., one of the nations largest suppliers of womens shoes, settled a price-fixing case Monday by agreeing to pay states $34 million and stop dictating what stores charge for its footwear.
The Federal Trade Commission and attorneys general in 56 U.S. states and territories had alleged that the company violated antitrust laws by stipulating when retailers could offer shoes at reduced prices and distributing lists of shoes that could not be discounted.
New York-based Nine West sells shoes under such brand names as Nine West, Amalfi, Bandolino, 9 & Co., Calico, Easy Spirit, Evan-Picone, Pappagallo, Capezio, Calvin Klein, Selby, and Enzo Angiolini.
The settlement ``sends a strong signal to companies that fixing resale prices violates the law and will result in enforcement actions,'' said Richard G. Parker, director of the FTCs Bureau of Competition.
Retailers who did not adhere to Nine West policies were threatened with cancellations, denied orders or were not given discounts, officials said.
As a result, competition among retailers selling Nine West brands was restricted and the price of the companys shoes were kept artificially high, the FTCs complaint said.
Officials with Nine West, based in White Plains, N.Y., said the settlement was not an admission of liability.
``We believe that this was the most efficient manner in which to resolve this issue, avoiding substantial legal expense and management time,'' said Jacki Nemerov, president of Jones Apparel Group (JNY: Research, Estimates), which acquired Nine West last summer. The alleged price fixing occurred between January 1998 and July 1999.
The company entered into two separate settlements, one with the attorneys general of the 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, Northern Mariana Islands and Guam. The other is with the FTC.
The FTC settlement prohibits Nine West from setting the price at which retailers can advertise, promote or sell shoes or coercing retailers to stick to any one price. The company also cannot notify dealers in advance that they are subject to suspension if they sell Nine West shoes below a designated price. Nine West must also notify its dealers that they have the right to set the price for the companys products.
The agreement with the states requires a payment of $34 million. Of this, no more than $3.5 million will cover attorneys fees, while the rest will be used to fund womens health, educational, vocational and safety programs.
The settlement was filed in U.S. District Court in New York immediately after a lawsuit was filed against Nine West in the same court. The agreement resolves the suit, but gives the court jurisdiction over the terms of the settlement.
``When even one business wont play by the rules and illegally overcharges its customers, everybody gets hurts,'' said South Carolina Attorney General Charlie Condon. He is proposing that the state use its portion of the money to assist rape victims and crisis pregnancy centers.
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Now, as in the past, I have offered my help to you on several occasions to come up with a program that works. The one you currently have will most likely get you into trouble based on what we are currently seeing.
Les, at the Shot Show I specifically asked you if you were going to open the door to Internet dealers so they could buy direct. You said NO. I asked you that question for a reason.
You now have brick and mortar stores with an on-line presence. They are now competing with us and getting new product first and more. Not to mention that the dealers who buy direct get different pricing than those who buy through distribution along with other benefits. Now this can be viewed as unfair competition and it will continue to rise and become more of a problem for established Internet dealers. Eventually this could come back and bite you on the ass like I said over 2 years ago to Greg on the phone. I also told him that one day I would be able to say "I told ya so" and that day is not too far off.
Hummm.........
The above is not to be considered a threat of legal action or an endorsement for some sort of class action law suit. However all options remain open and can be discussed. The above is written without the advice of legal council and is presented for informational purposes only. The deletion of the above may be construed as an attempt to hide facts regarding a possible pending legal matter in which consumers are affected. I would hope that this thread would remain open so we can together explore possible solutions that are both amicable and legal.
I propose that you immediately cease and desist from
not selling to legitimate full time Internet dealers, especially those who have ordered directly from you in the past and can prove they are in fact operating out of a legitimate place of business and not there home. This would be a very large step in the right direction and it would show good faith on your part to solve what will most likely become a larger problem if not addressed soon. There are many other issues that can be explored and I am available to help you set up a policy that would be both legal and very rewarding for all parties involved.
I await your reply.
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Best Regards,
Mike Turber
BladeForums Site Owner and Administrator
www.bladeforums.com
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