PULLING THE RUG ON PRICING
In the CE retail industry the lines are as equally unclear. For years, some manufacturers in the industry have practiced unilateral pricing—authorized Apple dealers almost never go below the list price on Apple products—which some say is not far off from minimum price agreements (indeed, the Supreme Court’s ruling noted the history and legal ambiguity of this practice). Also akin to this is the practice of minimum advertised pricing (MAP), in which retailers and distributors can sell a product at what ever discounted price they want, but cannot advertise these same products below a certain price.
David Lorsch, president of DBL Distributing, has long been skeptical of these kinds of practices and is not a supporter of the decision to lift the ban. “I believe it’s against the free enterprise system,” he says. “In and of itself, it is protectionist legislation and I think it is anticompetitive.”
Lorsch is concerned that the ruling will only benefit the larger retailers, who already have the capital to compete with strong advertising and service, while smaller start-ups who use pricing to compete will be left in the cold. He also wonders what it will do to excess inventory situations. “The market has to adjust to consumer demand,” he says, noting that retailers might be hindered from moving inventory that is not in high demand. He worries that it will give the manufacturers too much say in how retailers and distributors operate their businesses.