Is Shimano Attempting to Manipulate the Market ???

[Louis]

The text below was lifted from the Branford site (http://www.branfordbike.com/) It’s always been a super site, filled with lots of great technical info, but who know how long they can last if they can’t sell Shimano stuff also? I know this is just one side of the story, but it doesn’t sound good:

Shimano bids Branford Bike Adieu

Shimano America is implementing a new distribution program that authorizes select retailers to sell Shimano products via the web and mail order. In a recent letter to Branford Bike Shimano America stated that the purpose of their new sales policy was to "ensure that consumers are provided with the highest levels of service, receive proper product and warranty information, and that Shimano's products are promoted in a manner that furthers Shimano's reputation for quality products."

We called Shimano America and asked George Eubanks, the policy creator, for a clarification. George Eubanks stated that he was not familar with Branford Bike and then added that we were not on Shimano's list of six "authorized web retailers". However if we agreed to stop selling all Shimano products over the web we would still be allowed to purchase them for resale through a brick and mortar store. We explained to him that we only sold Shimano products via our online catalog and previously with a paper catalog. We added that Branford Bike has sold Shimano products for over 28 years and currently serviced riders on every continent including Antartica. George Eubanks explained that this was their policy. However in a year or so there may be an opening and we could apply for "authorized web retailer" then. He added that soon they would be sending a list of banned retailers to Shimano distributors. He assured us that we would be included on that list if we continued to sell Shimano products via our online catalog.

As a result we have decided to discontinue all Shimano products from our Online catalog. Many are on sale already and they will be removed from our catalog once our stocks are sold out. We regret that we can no longer offer Shimano's fine products to our customers around the world. If you would like to speak with Shimano America or George Eubanks you may call them at 800-423-2420 or fax them at 800-206-0010. You may also call them at (949)951-5003.

Recent Developments...
Bicycle Retailer and Industry News (BRAIN) did some excellent investigative reporting in regards to the Shimano price fixing issue. They established that there is an active and ongoing effort by multiple manufacturers in the bike industry to blacklist specific dealers so as to prevent them from selling their (the manufacturer's) product at a discounted price. BRAIN discussed how it is illegal for a manufacturer to require a retailer to sell at a specific price if that retailer is buying the manufacturer's products from a middleman or wholesale distributor. However, it is legal for a manufacturer to require that a retailer sell their products at a specific price if the retailer buys those products directly from the manufacturer. Thus the idea, we believe, behind Shimano's policy of forbidding their distributors from selling to any internet or mail order retailer. By setting up "Authorized" Web/Mail Order retailers Shimano can legally require that the prices of their products be fixed at a price Shimano believes riders should pay.

[M_A_Martin]

http://www.hydromedia.com/serotta/read.php?f=1&i=39285&t=39285#reply_39285

[Louis]

Sorry if it's old news. It was new to me.

Louis

[BumbleBeeDave]

First, I would be curious as to who the six “authorized” online resellers are.

Second, how did they get to be “authorized” . . . volume? Paying fee to Shimano? Other shady arrangements?

If true, is this arrangement ethical? Of course not. Is it legal? Probably not. Will Shimano get prosecuted? Good question, though I am not hopeful.

So how can the average customer who gives a hoot, and is already heavily into Shimano, get around this? I see nothing in this post that would prevent a “brick and mortar” retailer from advising customers on their web site that they sell Shimano, but only through their store. So I would call the store or e-mail them and do it that way.

Shimano is dreaming if they think that hard-core cyclists are simply going to roll over for this, assuming it is true.

BBDave

[M_A_Martin]

No need to be sorry, there was new stuff in your post. I was trying to figure out if this was new news or old news or different news...and thought I'd post the link to the old thread for all of those who said to themselves:
Hmmmm I thought Shimano did this to someone before? Maybe not?

[slowgoing]

It's old news. And over the last year or so shimano has increased the numbers of authorized internet resellers to the point that their distribution policy doesn't bother me anymore.

[Needs Help]

However, it is legal for a manufacturer to require that a retailer sell their products at a specific price if the retailer buys those products directly from the manufacturer.

That's blatantly false. A manufacturer can never legally tell a retailer to raise their prices.

[vaxn8r]

Shimano was trying to protect the dealers....the local bike shops who were often buying wholesale at what some dealers were selling on the web retail. The authorized dealers agreed to stop the steep discounts which were undercutting bike shops. The policy has not negatively affected prices for those who buy from their local shops. I recently bought a DA 10 group from my local shop at about $500 less than the best catalog price.

Evening the playing field I guess.

[Kevin]

Just another reason to ride Campy.

:beer: :beer: :beer: :beer:

Kevin

[Too Tall]

I don't "get it". There are a bunch of websites with the QBP stock interface. Are all of them "authorized?"

[Andreu]

Everybody who sells manipulates the market.....its called marketing and the system is called capitalism.
A
PS Am I likely to be chucked off this forum for sounding like a communist?

[saab2000]

...why is it that Oakleys seem to cost exactly the same everywhere? Don't get me wrong, I like Oakleys. They are easily the best eye protection I have ever had for riding, but there is no advantage for me to buy them anywhere over another place. I can get them at Sunglass Hut or the LBS or on the 'net for exactly the same price.

If price fixing is illegal, how is this possible?

This question is legit. I am not a business person and know nothing about the law, except where it directly affects me, in my airplane. :D

[JohnS]

REI won't let you use your discounts or rebates on Oakleys. either. I won't buy them, on principle.

[Bill Bove]

With Oakley as with many other companys, Oakley says "Sell at this price or we won't sell to you". SpeedPlay also holds a hard line there too. Compitition is tough, I'm trying to get a web page going for my shop but it is hard to sell anything on it because of dealer agreements that I have to abide by with mfr's and distributers, what annoys me is if CC can sell something on the web, why can't I sell the same product at my site? Even if it's at the same price. If Shimano really wanted to protect the LBS they'd stop all internet/catalog sales.

[Tom]

JohnS can probably fill us in on this one, but you can get glasses with superb opticals at a gun shop, they're literally bullet proof (or at least fragments) and they're cheap. I guess the Cabela's crowd won't stand for a ten dollar piece of plastic sold for a hundred and ten bucks.

They might be butt ugly and really suck in the wind. I don't know. For that little money, I may go over to the Pistol Parlor and try out a set and let you know.

I need to get another thousand rounds for my brother anyway. Every family needs a lunatic that can hit a fence post insulator at six hundred yards. Sometimes they can be useful.

[JohnS]

I'm that person in my family. I used to shoot for the state rifle team. :D
Zeiss and others make optically correct impact resistant glasses for about $40-50. They are the aviator style. Some even have nosepieces that slide up or down so that you can set your eye in the middle of the lens.

[Tom]

I slide my eyes up and down my face.

I think Smith and Wesson had something.

Wesson has good cooking oil, too, but that's for other recreational pursuits.

[JohnS]

It's okay to use the Wesson oil on your chain, but not your crank! :D

[Ginger]

I've used $7 wrap around clear eye protection available at Home Despot when mountain biking in low light and they keep your eyes in your head but they scratch easy and I'm sure the optics aren't all that. I'm sure you can get more stylish shooting glasses at not much more. Shooters today are much more style consious than you think.


PS. The whole lunatics and guns thing is a bit much. Grow up on a farm and you'd find that when the neighbor's St. Bernard "Pookie" who wouldn't harm a flea is in the middle of his 12th sheep of the morning, a good varmint rifle with a good scope and the ability to use it is a good thing. The sheep certainly thinks so.
(Never killed a livestock killing dog. Our method was to salt them, track them, call the sheriff, have the dog put down, call the vet, nurse the sheep for weeks, bury the sheep.)

[JohnS]

Scopes are for sissies. :)

[Tom]

I agree. I was there when my Dad had to shoot two dogs that were, in fact, in the process of tearing up his sheep. The guy a couple of ridges over lost his job and couldn't feed his dogs, so he let them forage all winter. Eventually they learned that livestock were easier than deer.

My brother, though, he is a lunatic. In a nice kind of way, however. I use poetic license and exaggerate a bit.

[BumbleBeeDave]

. . . that sunglasses are often overpriced?!?!?!?! How can this be a surprise to you guys? :confused:

PS . . . Tom, you are REALLY beginning to worry me. Remind me to always draft on you so I can keep you in plain sight! No telling what you might do next with that Wesson oil and your eyes sliding up and down your face! :eek:

BBDave

[Climb01742]

people, we're riding serottas and complaining about how much oakleys cost? in both cases, we're getting what we pay for. :beer:

[Too Tall]

Optically correct eyewear with good UV filtering is a MUST for extended riding. Your eyes will go all wonky if they distort...no wait...maybe I am having a flashback to about the 50th hr. of PBP where I damn near went blind looking through my "CLEAR" Oalkey's. E-yeah that was it. Sorry.

[jpw]

If you don't like it don't buy it.

So singlespeed and save a lot of money.

Alternatively, try a Rohloff.

[JohnS]

Oakleys are like Nikes. You don't get what you pay for...you get a "cool" name.

[saab2000]

....to say that I do not like Oakleys or their price. I DO like Oakleys and will continue to buy them. I consider them to be better than other eye protection out there.

My question regarded price fixing. Is it legal or not?

Irrespective of what the answer is I will purchase Oakleys again. I have owned other brands and have always thought my Oaks were worth the money. If cared for properly they last years and so the cost is really not so much.

[Climb01742]

not all oakleys are great. not all nikes are great. but quite a few of the best running shoes i've ever worn have been nikes. and i've had some really good oakleys. as we've discussed a million times about the ottrott, value and worth are two very personal things. with that in mind, i'll amend my previous statement: when i choose carefully among nikes and oakleys, i feel as though i get what i'm paying for. my oakley half-jackets are the best shades i've worn. as they say on TV shows, the views expressed here do not necessarlly represent the views of anyone else. :banana:

[shinomaster]

shimano has always manipulated everything. Monopoly city!!

[Needs Help]

My question regarded price fixing. Is it legal or not?

Price fixing in any form(e.g. vertical price fixing, horizontal price fixing, etc.) is illegal. If you want to read up on it, check your state's attorney general's page under the Consumer Protection section, or more generally look up vertical price fixing.

Western style capitalistic economies try to promote competition and price fixing is the enemy of competition. Unrestrained capitalism leads to monopolistic pricing and hurts consumers, so the anti trust laws were enacted. Microsoft is a recent example of anti trust enforcement action.

[djg21]

Originally posted by Needs Help
However, it is legal for a manufacturer to require that a retailer sell their products at a specific price if the retailer buys those products directly from the manufacturer.

That's blatantly false. A manufacturer can never legally tell a retailer to raise their prices.

Actually, having worked in antitrust enforcement for many years, I can assure you that you are incorrect. A basic tenet of America AT law is that a manufacturer, such as Shimano, can unilaterally choose to do business, or not to do business, with whomever it wants. Any illegality necessarily must arise out of concerted action, e.g., an "agreement in restraint of trade."

Moreover, it's perfectly legitimate for a manufacturer such as Shimano to unilaterally impose a policy of terminating dealers who sell below MSRP.

What is illegal is conduct of the manufacturer intended to illicit an express agreement from the distributor regarding price-point. This can take the form of an express price-fixing agreement, or punitive conduct intended to coerce a pricing agreement from a distributor. Again, the touchstone is an "agreement in restraint of trade."

That being said, you can be sure that a company like Shimano is well-counseled, and knows how it may achieve the same pricing ends without offending the antitrust laws, simply by adopting a unilateral policy of terminating dealers who price cut. The dealers thus remain free to sell at any pricepoint, but should they discount, they risk being terminated.

Perfectly legal!

[Needs Help]

Even though you claimed my statement:

"a manufacturer cannot legally tell a retailer to raise prices"

was incorrect, nothing you said demonstrates otherwise. I'll respond to each of your statements:

1) A basic tenet of America AT law is that a manufacturer, such as Shimano, can unilaterally choose to do business, or not to do business, with whomever it wants.
I never claimed Shimano couldn't terminate a retailer.

2) Moreover, it's perfectly legitimate for a manufacturer such as Shimano to unilaterally impose a policy of terminating dealers who sell below MSRP.
Legitimate? I wouldn't say that it's legitimate at all due to the fact that its purpose is to circumvent the antitrust laws and harm consumers. However, it can be legal.

3)What is illegal is conduct of the manufacturer intended to illicit an express agreement from the distributor regarding price-point. This can take the form of an express price-fixing agreement, or punitive conduct intended to coerce a pricing agreement from a distributor. Again, the touchstone is an "agreement in restraint of trade."
Now we're getting to the heart of the matter. Actually, the touchstone is: "will the consumer been harmed". Since, the consumer will be harmed by allowing manufacturers to force retailers to inflate their prices, it is prohibited . As you admit, it’s illegal for a manufacturer to coerce a pricing agreement from a dealer. That prohibition makes it illegal for a manufacturer to tell a retailer to raise their prices. The implied threat behind such a statement is coercive and violates the antitrust laws.

4)That being said, you can be sure that a company like Shimano is well-counseled, and knows how it may achieve the same pricing ends without offending the antitrust laws.
I'm sure people said that about Enron, a company that dwarfed Shimano in its day, and among other things engaged in fixing the price of electricity sold to California. I'm sure Ken Lay(CEO), who made hundreds of millions of dollars would say that Enron was well counseled, but the shareholders of Enron have a decidedly different point of view. Corporations commit crimes daily and are rarely brought to task for it. The SEC's resources are spread way too thin, and relying on plaintiff's lawyers, in this case Branford Bikes attorneys, isn't going to rectify the situation: a bike shop or online dealer can't muster enough resources to take Shimano to court, and Shimano is well aware of that.

5)The dealers thus remain free to sell at any pricepoint, but should they discount, they risk being terminated.
Actually, dealers are not free to sell at any pricepoint. A well known exception prevents dealers from selling above a maximum price set by the manufacturer. Why? Because the touchstone "will the consumer be harmed" leads to a different conclusion in that situation. The consumer isn't harmed by preventing a dealer from raising prices.

Yes, a manufacturer can terminate a dealer, but to avoid running afoul of the anti trust laws, a manufacturer cannot tell a retailer to raise prices.