Here is section 4 of MT's pricing policy.
4. Dealers shall sell Microtech products at the manufacutrer's suggested retail price (hereinafter referred to as the "MSRP") promulgated from time to time by Microtech with no variations either above or below said MSRP greater than $10.00. All rules and requirements set forth in this agreement, including as may be subsequently developed from time to time by Microtech, shall apply to dealer, irrespective of whether dealer is acting sole as a dealer or as long as acting as a retailer.
Dealer shall monitor all dealers and retailers to whom and to which dealer has sold or is selling Microtech products in order to assure that pricing is maintained and retailers preserve the manufacturing integrity or the Microtech products.
Well folks what do you think?
I will tell you what I think. This agreement is not legal and is better known as price fixing. It does not state that they wish to control the advertsied pricing.
This is against the FTC rules and is a direct violation of US law. Here is the FTC's statement on their site.
The FTC's antitrust arm, the Bureau of Competition, seeks to prevent business practices that restrain competition. As a result, purchasers benefit from lower prices and greater availability of products and services.
The Bureau carries out this mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. If the Commission does decide to take action, the Bureau will help to implement that decision through litigation in federal court or before administrative law judges.
There are several laws and acts which govern how the market is to be regulated and how manufacturers are to react to the pricing of their products in the market place. A quick visit to the FTC web site will give you tons of info. Simply use their search feature and look up "price fixing" and you will find 222 links to more info.
www.ftc.gov
Read over some of that and come back. Of course I can copy and paste what I have found but it makes a better impact when you read it.
More from the FTC.
Illegal Business Practices
Horizontal agreements among competitors:
Agreements among parties in a competing relationship can raise antitrust suspicions.
Competitors may be agreeing to restrict competition among themselves. Antitrust
authorities must investigate the effect and purpose of an agreement to determine its
legality.
Agreements on price. Agreements about price or
price-related matters such as credit terms potentially are the most serious. Thats
because price often is the principal way that firms compete. A "naked" agreement
on price -- where the agreement is not reasonably related to the firms business
operations -- isillegal. Hard core -- clear or blatant -- price-fixing is subject
to criminal prosecution.
Are similarity of prices, simultaneous price changes or high prices
indications of price-fixing? Not always. These conditions can result from price-fixing,
but to prove the charge, antitrust authorities would need evidence of an agreement to fix
prices. Price similarities -- or the appearance of simultaneous changes in price -- also
can result from normal economic conditions. For example, vigorous competition can drive
prices down to a common level. A general increase in wholesale gasoline costs due to
production shortages can cause gasoline stations to increase retail prices around the same
time. As for the appearance of uniformly "high" prices, collusion may not be the
only basis for the situation. Prices may increase if consumer demand for a product is
particularly high and the supply is limited. Ask any shopper in search of a particularly
popular childrens toy.
Agreements to restrict output. An agreement to restrict
production or output is illegal because reducing the supply of a product or service
inevitably drives up its price.
Boycotts. A group boycott -- an agreement among competitors not
to deal with another person or business -- violates the law if it is used to force another
party to pay higher prices.
Boycotts to prevent a firm from entering a market or to disadvantage a
competitor also are illegal. Recent cases involved a group of physicians charged with
using a boycott to prevent a managed care organization from establishing a competing
health care facility in Virginia and retailers who used a boycott to force manufacturers
to limit sales through a competing catalog vendor.
Are boycotts for other purposes illegal? It depends on their effect on
competition and possible justifications. A group of California auto dealers used a boycott
to prevent a newspaper from telling consumers how to use wholesale price information when
shopping for cars. The FTC proved that the boycott affected price competition and had no
reasonable justification.
Market division.Agreements among competitors to divide
sales territories or allocate customers -- essentially, agreements not to compete -- are
presumed to beillegal. At issue in one recent case was an agreement between cable
television companies not to enter each others territory.
Agreements to restrict advertising. Restrictions on price
advertising can be illegal if they deprive consumers of important information.
Restrictions on non-price advertising also may be illegal if the evidence shows the
restrictions have anticompetitive effects and lack reasonable business justification. The
FTC recently charged a group of auto dealers with restricting comparative and discount
advertising to the detriment of consumers.
Codes of ethics. A professional code of ethics may be
unlawful if it unreasonably restricts the ways professionals may compete. Several years
ago, for example, the FTC ruled that certain provisions of the American Medical
Associations code of ethics restricted doctors from participating in alternative
forms of health care delivery, such as managed health care programs, in violation of the
antitrust laws. The case opened the door for greater competition in health care.
Restraints of other business practices. Other kinds of agreements
also can restrict competition. For example:
A large group of Detroit-area auto dealers agreed to restrict their
showroom hours, including closing on Saturdays. The agreement reduced a service that
dealers normally provide -- convenient hours -- and made it difficult for consumers to
comparison shop. The FTC challenged the agreement successfully.
A group of dentists refused to make patients X-rays available to
insurance companies. The FTC maintained that the agreement restricted a service to
patients, as well as information that would be relevant to reimbursements. The Supreme
Court upheld the FTCs ruling.
Proving a violation in these kinds of cases depends largely on proving
the existence of an agreement. An explicit agreement can be demonstrated through direct
evidence -- a document that contains or refers to an agreement, minutes of a meeting that
record an agreement among the attendees, or testimony by a person with knowledge of an
agreement. But an agreement also can be demonstrated by inference -- a combination of
circumstantial evidence, including the fact that competitors had a meeting before they
implemented certain practices, records of telephone calls, and signaling behavior -- when
one company tells another that it intends to raise prices by a certain amount. This
evidence must show that a companys conduct was more likely the result of an
agreement than a unilateral action.
Vertical agreements between buyers and sellers
Certain kinds of agreements between parties in a buyer-seller relationship,
such as a retailer who buys from a manufacturer, also are illegal. Price-related
agreements are presumed to be violations, but antitrust authorities view most non-price
agreements with less suspicion because many have valid business justifications.
Resale price maintenance agreements. Vertical price-fixing -- an
agreement between a supplier and a dealer that fixes the minimum resale price of a product
-- is a clear-cut antitrust violation. It also is illegal for a manufacturer and retailer
to agree on a minimum resale price.
The antitrust laws, however, give a manufacturer latitude to adopt a
policy regarding a desired level of resale prices and to deal only with retailers who
independently decide to follow that policy. A manufacturer also is permitted to stop
dealing with a retailer who breaches the manufacturers resale price maintenance
policy. That is, the manufacturer can adopt the policy on a "take it or leave
it" basis.
Agreements on maximum resale prices are evaluated under the "rule
of reason" standard because in some situations these agreements can benefit consumers
by preventing dealers from charging a non-competitive price.
Non-price agreements between a manufacturer and a dealer.Manufacturer-imposed limitations on how or where a dealer may sell a product, e.g.,
service obligations or territorial limitations, are generally not illegal. These
agreements may result in greater sales efforts and better service in the dealers
assigned area, and more competition with other brands. Some non-price restraints may be
anticompetitive. For example, an exclusive dealing arrangement may prevent other
manufacturers from obtaining enough access to sales outlets to be truly competitive. Or it
might be a way for manufacturers to stop competing so hard against each other. Take the
case against the two principal manufacturers of pumps for fire trucks. It involved
agreements that required their customers, the fire truck manufacturers, to buy pumps only
from the manufacturer that was already supplying them. That meant that neither pump
manufacturer had to fear competition from the other.
Tie-in sales. The sale of one product on condition that a
customer purchase a second product, which the customer may not want or can buy elsewhere
at a lower price, is a tie-in. Requirements like these are illegal if they harm
competition. A recent example: The FTC charged a pharmaceutical manufacturer with tying
the sale of clozapine, an antipsychotic drug, to a blood testing and monitoring service.
You don't see Leatherman getting upset about their tools being sold to cheap now do you? There is a very good reason for this and I would suggest that MT and others talk to the lawyers of Leatherman to find out why.
A huge stink can be created if one wants. It would be in the best interest of all parties to work together to a mutual resolve.
I am no longer a Microtech distributor and I will never be one again.
I would not sign their agreement. I sent it to my attorney and he laughed. If anyone enforces the agreement, they too are basically breaking the law according to my attorney. So I could not sign or work with them until they changed the agreement. They have yet to change it and I will not support them anymore. Not to mention a bunch of other issues I have that should not be aired here as it is purely distributor info.
Also a note to all dealers. Your web site is not a form of advertising. It is an extenion of your store and therefor private property. You can do basically whatever you want. Manufacturers can have pricing agreements but they can not force you to sign and the can not enforce a third party agreement when you buy through distribution.
An agreement is not an agreement until you agree
You don't see Leatherman getting upset about their tools being sold to cheap now do you? There is a very good reason for this and I would suggest that MT and others talk to the lawyers of Leatherman to find out why.
A huge stink can be created if one wants. It would be in the best interest of all parties to work together to a mutual resolve.
I am no longer a Microtech distributor and I will never be one again.
I would not sign their agreement. I sent it to my attorney and he laughed. If anyone enforces the agreement, they too are basically breaking the law according to my attorney. So I could not sign or work with them until they changed the agreement. They have yet to change it and I will not support them anymore. Not to mention a bunch of other issues I have that should not be aired here as it is purely distributor info.
------------------
Best Regards,
Mike Turber
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[This message has been edited by Mike Turber (edited 19 December 1999).]
[This message has been edited by Mike Turber (edited 19 December 1999).]
[This message has been edited by Mike Turber (edited 19 December 1999).]
