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    1. Harry_shipper's Avatar
      Harry_shipper is offline

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      #1

      Can a supplier force me to sell above a set price? Is It Price Fixing?

      Okay. I have a question related to pricing. Will it be considered price fixing if a supplier forces me to sell above a set price?

      And therefore is it legal? To the best of my understanding it violates some Sherman or anti-trust law which is supposed to protect consumer interests.
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    2. Softlily is offline

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      #2
      It is actually a kind of vertical price fixing but is not necessarily illegal. In a historic case, Leegin Creative leather products vs. PSKS Inc, the Supreme Court actually rejected the 96 year old Dr. Miles’ precedent, by which any kind of price fixing was deemed illegal under the Sherman Act. Now, all vertical price restraints or specifically retail price maintenance will be judged according to the `rule of reason’. Which simply put, makes it a grey area.

      In the above ruling, Leegin showed that setting some kind of minimum price actually helps competition rather than stifle it which is probably what is happening in your case as well. What the supplier may be suggesting is that you consider using the extra margin that they give you to make profits for yourself rather than posing a threat to other sellers who may not enjoy the same margins for various reasons.

      You need to appreciate that in a traditional supply chain there are 2-3 dealers between the manufacturer and the customer. The dealer closest to the manufacturer also termed wholesalers, picks up in bulk and performs a distribution function for the company. Let us say this is price x. They then sell at a profit say x+1 to the next guy in line which could be another distributor or even a retailer. The company has to ensure margins for all participants in the supply chain if it wants to sell the product at x+1+1 to the final customer. If the wholesaler starts retailing at wholesale prices or x, it will render all retailers uncompetitive since they will be selling at x+2.

      The important point is that to survive, they will take losses and match your pricing even if it means coming down to x. But this will impact the healthy functioning of not only the supply chain but the organization survival which can’t be good news for you.
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      #3
      It is ridiculous to call it price fixing. Different sellers invest different amounts in selling the brand. An exclusive store spends a lot more than the guy in a multi brand outlet. If they start selling at different prices to the customer, not only does the brand stand to get devalued, but there will be a price war with everybody under-cutting each other. I’m not sure if that’s what the customer is looking for.

      All brand manufacturers have a retail suggested price and it is in everybody’s best interests to follow that guideline. Not doing so will get you nothing and ruin everyone else’s profits as well.

    4. Wonderbiz is offline

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      #4
      I’m not sure I see what you have to gain by selling at less than the suggested price. You could make 1 maximum 5 successful sales after which your seller privileges will be in jeopardy for having killed profitability for all concerned.

      You want to turn a civilized business into a vegetable market.

    5. JoeBlofromKokomo is offline

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      #5
      Supplier relationships are based on mutual trust and respect. Whatever the legal standing on the matter might be as regards price fixing, it is clear that they expect something that you, for whatever reason, are not comfortable adhering to. The relationship will never work.

      Why not try and find suppliers whose terms work for you rather than trying to arm-twist people into following your terms.

      Not sure if this could be called illegal price fixing looks like the guy is just trying to protect the business.

    6. Harry_shipper's Avatar
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      #6
      I plan to sell on E bay and a few other online sites. If I don’t offer the discount, then I don’t see how I’ll compete with the other guys.

      I have not been able to sell anything at the minimum price suggested by them.

      Plus how can overcharging the customer be legal in any country?

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      #7
      Ok. You need to understand that your price advantage will not last. You give 10% off, somebody with bigger stakes will go down to 20%.

      This never works.

      Plus it doesn’t seem probable that the company is not recording sales at a given price – they would be considering a price revision on their own by now in that case.

      You seem to have an advantage that you are turning into a disadvantage. Let me illustrate with an example – All major brands offer wholesale prices for a service performed – it could be bulk stocking, events, retailer expansion…etc. If you have been given the margin with no apparent costs attached, you need to stop drawing attention to yourself.

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      #8
      Maybe what you are seeing is just their way of saying that there is no alternative for them to this arrangement. It’s a question of their survival. And if you want your business to grow, it is best to work in the interest of your partners.

    9. Woodchuck is offline

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      #9
      Whatever the legal position on the matter, it wont make a difference because there can be no legal binding on them to work with you.

      If you threaten to sue them for price fixing, they will relieve you on some pretext or the other in some time. Even if they dont, they have a million other ways of making your life really difficult as a seller.

    10. Harry_shipper's Avatar
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      #10
      But I was under the impression that all forms of price setting – either between competitors or even between channel partners violate some major anti-trust law and was a criminal offense. I’m sure I read it on this forum somewhere. Btw what is the `rule of reason’?

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