Slashdot Log In
Ban On Price Floors Abandoned, Internet Prices May Rise
Posted by
kdawson
on Thu Jun 28, 2007 03:44 PM
from the 96-year-old-precedent dept.
from the 96-year-old-precedent dept.
paro12 and i_like_spam informed us of a 5-4 decision by the US Supreme Court which abandons a 96-year-old ban on manufacturers and retailers setting price floors for products. The Slashdot community discussed the issue when the case was argued back in March. The ruling means that anti-competitive complaints based on price-fixing will have to be argued case-by-case and will be harder to prove. Discounts and discounters in all venues may be under pressure, with internet sales possibly the hardest hit. "Importantly, this case points a dagger at the heart of the most consumer-friendly aspects of the Internet. The Internet has shifted power to the consumer in two ways. First, it allows consumers to search for and gather information in a cost-effective, efficient manner. Second, it provides a low-cost means of retailing, making it easy for discounters to offer products to the public. This combination squeezes excess profits and inefficiencies out of product prices. Retail price maintenance seeks to short circuit this extremely consumer friendly process. By setting minimum prices, manufacturers can build in excess margins for themselves and for their favored retailers -- prices that consumers have no choice but to pay."
Related Stories
[+]
SCOTUS Case May End Sale Prices 527 comments
An anonymous reader writes "If you own a mom & pop store and can't get rid of some of your inventory, you can always clear out some shelf space by holding a sale. If the Supreme Court sides with business interests in a case they heard today, however, such sales may no longer be possible. Since 1911 it has been illegal for manufacturers to force retailers into setting a price floor for products — individual retailers get to decide how much they sell products for. But today the Supreme Court heard oral arguments in a case seeking to overturn this longstanding rule. Should the Court do so, it would drive up consumer prices across the board. This case is particularly salient in the era of Internet shopping: consumers are now easily able to shop around to multiple retailers to find the best price. The Court could wipe out this advantage." From the article: "Should the Court abandon the... rule against minimum resale price maintenance... it would send a signal that the Roberts Court will continue to narrow the application of the antitrust laws and that the Court may disregard settled precedent and Congressional will in other areas of the law as well."
This discussion has been archived.
No new comments can be posted.
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
Full
Abbreviated
Hidden
Loading ... Please wait.

Let me guess... (Score:5, Insightful)
Re: (Score:3, Insightful)
I wonder how many 5-4 votes have gone through in the last six months, with votes falling the same way every time.
Americans: I feel sorry for you.
Re:Let me guess... (Score:4, Insightful)
Yep, isn't it great that the one branch of government that should be completely apolitical has just become yet another neoconservative-controlled institution?
Re:Let me guess... (Score:4, Insightful)
Good thing we got rid of all those "activist" judges who thought their job was to rewrite the law!
Oh, wait...
I guess judges are only "activist" - and that activism is only a bad thing - if they're liberals.
Kinda like being a conservative means you don't believe in big government... except for the military, the CIA, the DHS, the Justice Department (which has been converted into an agency for enforcing a political agenda), the FCC... it's only big government that helps people that's bad. Just like laws that help people are bad; they're perfectly okay to overturn. Overturning a law intended to help people apparently doesn't make a judge "activist", it makes him a "constructionist". Free market price competition? Who needs it? Let big business set the minimum price retailers are allowed to charge. Screw consumers.
I guess I should be glad that our Constitution was apparently written with the interests of global conglomerates first. After all, if a constructionist judge writes a ruling that says so, then it must be true. They can't possibly be following their own political agenda.
Re:Let me guess... (Score:5, Informative)
Re:Let me guess... (Score:5, Insightful)
Maybe instead of directing anger towards the few voters that actually exercised free will, you should instead point it towards (a) the sheep that stick to party lines, and (b) the fucked up voting process that forces you to vote for 'who you think can actually win' rather than who you actually want to represent you.
Re:Let me guess... (Score:5, Interesting)
Talk about a fantasy world. That's the one where we 3rd party voters only need to make the imperfect choice "sometimes." Give me a break. I make this imperfect choice every election. Yes, it pisses me off. But what happens if 3rd party voters vote instead for one of the big two parties? Nothing. The two big parties are equally corrupt, just in different ways.
And it sure doesn't make sense to convince otherwise reasonable voters that Gore and Bush were fungible.
Hindsight is 20/20, the grass is greener on the other side, and you can't predict the future of America if Al Gore had won. Perhaps instead of dumping our money into the war, we'd be dumping it on further social security and medicare waste, and imposing draconian environmental laws to curb greenhouse gases, economy be damned. You know, people die due to bad economies as well as wars.
In my view, the big parties are one giant party designed to increase their power and decrease ours. One side wants to limit what you. The other side wants to limit what you can do with the money you earn. Both increase taxes and spending and the size of government. Both parties want to infantilize the citizens so that they rely on bigger and bigger government -- which provides them with more power.
So yes, I do blame Nader as a spoiler, and the nuckleheads who helped him along.
You can continue to blame them all you want. I'll continue to vote my conscience. That means I'll be voting for Ron Paul. If he doesn't win, I don't care who wins.
Re:Let me guess... (Score:4, Insightful)
Yep - and the use of executive privilege to ignore congressional subpoenas - and the evisceration of the Presidential Records Act...
We have a Court that's willing to let public schools strong-arm students into the confines of politically correct speech at an off-campus event.
We have a Supreme Court that believes that no one has standing to challenge the White House's massive donations of funds to religious organizations - that such spending is "discretionary." (That's funny; they neglected to teach me in law school that the Establishment Clause is optional.)
We have a chief justice expressing the opinion that the CIA is absolutely above the law, because a jury won't convict anyone of wrongdoing as long as they flash their nifty "War on Terror" badges.
Folks, what we have is an extremely deferential Court that's willing to give authority a pass for any old excuse: national security, executive privilege, whatever. We have five justices who see no problem in letting government do whatever the hell it wants. And so, we have the greenlight for fascist America.
Thanks, justices. You've wholly failed to uphold the Constitution, protect the American public, and preserve any teeth for the judicial branch of the federal government. You can go ahead and turn in your "jurisprudence" badges any time now.
- David Stein
Re:Let me guess... (Score:5, Insightful)
We'll live. The U.S. Supreme Court has done a lot of good, especially in reigning in the worst excesses of the legislature, and one result of an independent judiciary is sometimes they're going to do things you don't like.
I feel sorrier for the people in those countries where the courts simply apply the law, and are never allowed to challenge it.
Re:Let me guess... (Score:5, Informative)
To summarize:
Prior to this decision, any price floor set by a manufactorer was automatically considered a violation of anti-trust laws designed to increase competition.
Apparently there are some specific situations where a price floor would lead to more competition, not less. The specific cases in question included some of those situations. The argument was that since they led to more competition, not less competition, they didn't violate the relevent anti-trust laws.
Therefore the court took another look and said "You're right, there are some specific situations where a price floor wouldn't violate the law against being anti-competitive, since in those situations it actually leads to more competition". As a result, you may now set a price floor and not have the Feds come after you as long as you are able to show a federal judge that your price floor actually leads to more competition, not less.
If your price floor leads to less competition, then you still can do it as it's still a violations of the relevent anti-trust laws designed to encourage more competition.
So, having read that summary, why the hell does anyone think there is anything wrong with that decision? True, now people who can justify their price floor on more competition grounds might have to defend that in court, but how is that worse than those same people being not able to encourage competition that way in the first place?
For specifics on exactly how a price floor may in rare cases lead to more competition, please read the actual court briefs and decision.
Re:Let me guess... (Score:5, Insightful)
Because the rule will prompt businesses of all kinds to set up price floors, that's why.
By creating a "balancing test," the Court has changed the operative rule from "don't set price floors under any circumstances" to "you can go ahead and set price floors, so long as you can create a facade of competitiveness in case the DOJ brings an antitrust violation against you."
The sad reality is that the DOJ's antitrust division is toothless. It does nothing. Its last victory was in 1982, against the Ma Bell cartel. It has fought one significant case since then, against Microsoft, and it got whipped. Even clear-cut, admitted perpetrators of antitrust activities get off with a slap on the wrist (Samsung was caught red-handed in DRAM price fixing, and was fined $90MM... even though its annual *profits* are $3,000MM.)
So what has this rule done? It's shifted business from a "we can't, we'll get slapped" stance to a "we're gonna go ahead and do it - prove us wrong, we dare ya!" stance. Prepare to see every good in America sold at the same price through all outlets. This sucks.
- David Stein
Re:Let me guess... (Score:4, Interesting)
Re:Let me guess... (Score:5, Informative)
You do realize that the US ranks 45th in the world [cia.gov] in terms of life expectancy, right below Saint Helena and right above Cyprus, right? The average life expectancy in Cuba, an impoverished nation which is under an embargo that covers much medical technology is only one year less than that in the US, the wealthiest nation on the planet. Meanwhile, we spend twice as much as anyone else [typepad.com] for this worse care. Check out all of the cited studies linked from that page, too.
Re:Let me guess... (Score:4, Informative)
First, medical care isn't the only thing that affects life expectancy, nor are they directly proportional. The culture in the U.S. and the average person's diet and exercise regimen may have as much or more to do with how long they live than the quality of medical care.
Second, we live in a competitive country and world. Paying twice as much as other countries for medical care doesn't surprise me in the least, since we typically pay more than that for just about everything else. Do you think people in Cuba all buy $200,000 houses? I don't think so. Yet that's common here.
In fact, normalized to the cost of living in any place, twice as much doesn't sound bad at all.
Re:Let me guess... (Score:5, Interesting)
Competition reduces prices. What we have here is a case of market manipulation by insurance companies and pharmaceutical companies (among others) which drives up prices and in fact reduces the quality of care because it limits available treatments (insurance companies decide by fiat what they will or won't cover, and most Americans who do have health care get it from their employer and can't afford their own insurance.)
I can actually get dental work done in Mexico, with a reputable dentist who people I know have patronized, for less than the cost of my fucking co-pay here in the states. That includes my round trip flight (sacramento to san diego), and all the week's expenses including booze, transportation, and lodging. And I'm talking about minor work here.
If I get my major work done, I can probably squeeze a month's vacation in Thailand out of the deal (getting the work done there) and still come in under my co-pay. I have two impacted wisdom teeth and they are very large. And that price will include at least an hour of massage every day :P
The health care system is broken here in the US, plain and simple. It has been broken in the name of profits, due to illegal business practices (price fixing, but not this kind of price fixing) engaged in by health care providers, insurance companies, and pharmaceutical companies (the latter being one of the most morally bankrupt industries in existence, probably second only to the military-industrial complex.)
You can tell yourself any lies about it you want, but the fact is that the quality and availability of health care in the US have gone down while prices have gone up.
Re:Let me guess... (Score:5, Interesting)
Read the links on the page that I provided; it goes into treatment of specific diseases and looks at how they fare in the US versus other countries.
Second, we live i.a competitive country and world.
Competition lowers prices.
Paying twice as much as other countries for medical care doesn't surprise me in the least, since we typically pay more than that for just about everything else. Do you think people in Cuba all buy $200,000 houses? I don't think so. Yet that's common here.
Have you priced living expenses in Europe lately? Europe, east Asia, and Canada are the nations we're comparing to, so let's look at the world's most expensive cities [finfacts.ie]. London is number two (after Moscow). Copenhagen 6th, Geneva 7th, Zurich 9th, Oslo 10th, Milan 11th, and so on. Seoul is #3, Tokyo #4, and Hong Kong #5. The most expensive city in North America is NYC, and it's only #15. LA, our only other in the top 50, is #42.
American *salaries* are higher than European salaries (although that's changing), but as far as expenses go, Europe is more expensive. The simple fact of the matter is that our healthcare system is overpriced and under-effective, and there are countless studies out there on the subject. Start reading them.
What we need is a system like France's (yes, I know France is a dirty word, but hey
Re:Let me guess... (Score:5, Informative)
Re:Let me guess... (Score:4, Insightful)
Re:Let me guess... (Score:5, Informative)
Justice Breyer wrote the dissent [supremecourtus.gov]. Here's a piece:
They forgot the internet is GLOBAL (Score:4, Interesting)
But as any economist will tell you price fixing generally doesn't work well for the economy or consumers as a whole. It may temporarily benefit one industry or sector but is generally undesirable. It is better to let uncompetitive companies face the pressure of competition and either become competitive or go out of business.
If people have a finite amount of money to spend and prices are higher they simply buy less.
They may buy less of different products, for example if the price of gas goes up and people still need to buy the same amount gas, but may not go on vacation or buy a new TV (this is why the price of oil is so important).
Basic concepts of supply and demand (http://en.wikipedia.org/wiki/Supply_and_demand [wikipedia.org])
drive pricing. Price elasticity (http://en.wikipedia.org/wiki/Supply_and_demand#E
Tariffs and other trade barriers are coming down with globalization, and price fixing involving collusion is highly unlikely between a competitive manufacturer, and an uncompetitive one. The competitive (ie lower cost) manufacture is better off selling at a lower price and taking the business for themselves and putting their competition out of business.
Besides the internet puts global manufacturers within reach of US customers. If prices go up in retail stores in the US because of all US manufacturers setting bottom prices, people will simply buy from outside of the US, and a huge gray import market will open up. At least for high value items, where the difference in price is significant.
If anything this is just one more nail in the coffin of US manufacturing. The legal changes may give them a temporary false sense of security, but realistically companies that fail to please the market (ie consumer) by providing good value simply don't last.
Just think what artificially high CD prices have caused people to do. They've found their music online (legal or otherwise).
Or think region codes and DVDs. Many Europeans buy their DVDs online from the US because they don't want to wait for the European release.
This is no different. Shipping costs are not that high (especially not for large volume gray market imports).
Re:An Original Idea! (Score:5, Insightful)
Sorry. Doesn't work that way in the real world. Those cheap t-shirts they sell at Wal-Mart are often not the same ones you buy in another store, for one thing. Thus, this ruling has little impact on their products. In addition to often carrying products by different manufacturers, they also quite frequently get special sourcing of custom, cost-reduced versions of products (particularly in electronics). Such products won't be affected in any way.
Even ignoring that, though, the Wal-Mart chains of the world, however, who have huge buying power, will still be able to do what they do now: say "You don't like it, fine. We're not carrying your product." Most manufacturers can't cope with the sudden drop of revenue when this occurs, and basically keel over and die. Thus, Wal-Mart is pretty much insulated from strong-arm tactics by nearly all manufacturers.
The people this will hurt most, contrary to the opinion of five SCOTUS justices, are the mom and pop shops. Now, the manufacturers will be able to tell those stores that they have to meet a minimum price while other manufacturers of similar products are still caving to Wal-Mart's price demands. The result will be that the disparity between Wal-Mart prices and prices at smaller stores will increase, driving those smaller stores even more quickly out of business.
There is simply no way to not see this as a serious blow to consumers.
Re:An Original Idea! (Score:4, Insightful)
Please explain. (Score:5, Insightful)
Re: (Score:3, Funny)
Okay, mods, don't let me down.
Re:Please explain. (Score:5, Insightful)
The way equipment vendors of all kinds have gotten around the previously illegal activity was to set up "Authorized Dealer" agreements. Most corporations at the top of their respective food chains use them. Authorized dealers have pricing sent to them. Pricing includes regular, msrp, and promotional pricing. Big retailers normally do deals above and beyond those offered by the brand in question thereby crushing the small retailer.
Look at Apple as an example. Every retailer's price is about the same except for the unauthorized dealer that got some units somehow.
Just because the Supreme Court handed down a decision some people don't like doesn't mean it's unchanging. That's what the legislature is for. That's what your democratically elected officials are for.
Oh wait, most Americans don't vote so, they got exactly what they put in. If you are that angry, get involved.
Re:Please explain. (Score:4, Insightful)
That is blatant nonsense. First, Americans can't vote on federal legislation. Second, Americans can't vote on supreme court members. Third, Americans can't control the political parties. Fourth, no person not a member of the two political parties and compliant with the two parties agenda can obtain power in congress. Fifth, almost no elected official even tries to do what they say they are going to do after they are elected (and they can't succeed unless that goal is in line with the goal of the two parties, anyway.) Sixth, the vast majority of power, specifically meaning control of legislation, in Washington is wielded by corporate and money-rich groups with specific interests that have nothing to do with the needs and wants of the average citizen.
"Voting" in the federal political process is no more than a sop to keep the citizens somewhat quiet and bewildered, part of a larger process involving propaganda), disenfranchisement, federal power grabs and more. It works, too; your post is a good example of someone who is under the completely mistaken impression that voting at the citizen level makes any difference at all at the federal level.
The largest voting swing seen in many years just put Democrats in power with the specific intent of getting us out of Iraq; are we out of Iraq? No. Has the funding for Iraq been altered? No. Have any deadlines been set? No. Has anything outside of a bunch of rhetoric been accomplished? No. Well, wait - some things got done: We have more troops in Iraq. We have more funding for the war. Haliburton has more income, more roles, more people working in Iraq. And more soldiers and Iraqi citizens have died. So yes, things are getting done, all right, it is just that, as per usual, they have nothing to do with what the majority of the voters want. Which tells you, if you'll just think for a moment, why some people don't bother to vote. It also completely breaks your idea that the current state of affairs can be laid at the feet of the non-voting.
The president is doing whatever he wants. He is refusing court orders, continuing his aggression on Iraq, issuing signing statements, ignoring the law, and generally making a hell of a mess. Congress and the Senate won't do squat, as they have repeatedly shown us both prior to and post the recent election. Your laying the responsibility for this mess at the feet of the citizens who don't vote is the ultimate act of bewilderment. It isn't the citizens who have set up this system; it is a relatively small group of political animals with money, power, and access.
However, you are right about one thing, even if only peripherally: The citizens do have the power to stop this bloody mess. As King George III of England found out.
Cuts out savings if you know what you want. (Score:5, Insightful)
For example, a few years ago, I decided on a specific LCD HDTV (an extravagant purchase that I still regret to this day). At the time, MSRP for the set was $8999. All retail outlets sold it for that price. However, I was able to go online and buy it for only $5499. Had the price floor been set at MSRP or something else favorable to the big retailers, I could've lost thousands of dollars in the purchase.
As an internet shopper, I am pleased by this decision because this will also mean the end of the stupid bargain/rebate/shoparound/missed discount remorse routine.
Yeah, well to nuts to that, my friend. I'd rather know that I missed out on the best deal possible than to know that I never had the opportunity to avoid getting gouged because of legalized price fixing. Besides, price comparison search engines will let you easily get pretty close to the best possible prices out there if you look right. Froogle exists for a reason.
Also, if you're going to argue that the existence of alternate products makes this irrelevant, then you should consider that having to compare alternate products negates the advantage of not having to look around for the best discount. I seriously can't believe, though, that you'd rather everyone be gouged than you feel the remorse of missing out on a sale.
Re:Please explain. (Score:4, Insightful)
It is bad for everyone. There are liberty aspects to be concerned with. If I buy something from you, just like a dealer, I own it. You no longer have any say in what I do with it, nor should you. If you do retain a say, then you have not actually sold me the item; only a share in it. Do we really want to support a commerce model that (further) dilutes the concept of ownership?
As near as I can tell, there is very little high level reasoning going on behind these kinds of decisions. Not that I expect such things from a constitutionally errant court that just said a US citizen couldn't display a banner in a public venue.
How the heck? (Score:4, Funny)
Re: (Score:3, Informative)
It's called the "Firehose".
No choice? (Score:4, Insightful)
Most of the price-fixed stuff like this is crap you don't need anyway, like movies and music (especially music!)
All they're really going to accomplish is to end up devaluing their merchandise, because it will be harder to get rid of excess stock.
Ultimately you DO have a choice, except when purchasing necessity goods from monopolies - and again, that is typically not the purpose of a price floor. Usually it's for crap goods, which are from monopolies (artificial ones) but which you don't need anyway.
You do have a choice: if it's too expensive, don't buy it! And if you want to see the price come down, send a letter (preferrably a handwritten one, unless your writing is illegible) explaining why you didn't buy it, and why you bought their competitor's product.
Re:No choice? (Score:4, Insightful)
Those are extremely ridiculous examples. The price of gasoline will not change one whit due to this legislation: gasoline prices are already controlled through collusion and price fixing. Big Oil is the world's largest price-fixing cartel. Their day-to-day activities along these lines are illegal practically everywhere... But no one seems to be interested in pissing them off for obvious reasons. There are many competing vendors for milk. Lucerne can tell Safeway that they can't sell their milk below a certain dollar level, but they don't have shit to say about the price of milk from Berkeley Farms. (mooooo)
Your price on what? On Hitachi DVD-ROM drives? Buy a ToshibaSamsung. Your price on intel processors? Buy AMD. Your price on a Viewsonic LCD panel? Buy something else.
I'm not clear on precisely how this is supposed to be related, because we're concerned about manufacturers raising prices.
I just don't understand how Wal-Mart's ability to drive down prices (which is coupled by a willingness to take all the crappiest product) is supposed to be a threat.
Re:No choice? (Score:5, Insightful)
This is affecting small groups that cannot negotiate prices directly and can harm them on BEHALF of wal-mart.
Wal-Mart can demand a lower price, something they already do, but smaller groups cannot demand lower prices.
This makes it so that everyone just goes to Wal-Mart because Wal-Mart now has the ability to severely undercut prices while smaller, local groups have to sell them at high prices or not sell them at all. At worse they will even be forced to keep stock that they cannot return because they cannot sell the stock. That is the reason you have sale prices in the first place, it is to get rid of stock that you can't sell at the regular price.
Now they will just have to burn the stuff or something, not sure exactly, but in the end the company that sold it to them got their money already.
I thought price floors already existed ... (Score:5, Interesting)
Could somebody elaborate?
Re:I thought price floors already existed ... (Score:5, Interesting)
But some people seem to think that's okay ...
"no choice but to pay"? (Score:4, Insightful)
Re:"no choice but to pay"? (Score:4, Funny)
well (Score:3, Interesting)
second - this ruling seems to allow for more judgment - so that if there is no reason to view that there have been anticompetitive practices, then there is no reason not to let it slide. I think that is good. There should be leeway for reason. Look at what a mess has come from mandatory sentencing. People should be able to look at a situation and let what happens fit a reasonable view of the circumstances - not some inflexible letter of the law approach.
Re:well (Score:4, Informative)
I'll grant that much of the stuff that this will affect is fluff that people can generally get along without, but depending on the situation, that may not necessarily be the case. Consider some of the indirect players such as patent licensors. Further, what about the people who actually do sell the necessities of life like electric power service? You know those competitive third parties that encourage a level of competition to keep costs lower? What about those people like DelMonte who actually does the packaging for generic-branded products that compete directly with their own brand names?
This sort of price fixing being allowed can truly raise the general cost of living... and the cost of doing business.
The intent of these demonstrably successful laws has been to keep the invisible hand doing its job and preventing underhanded schemers from controlling the market unfairly.
Nothing good will come from this
Doesn't matter. There's Wal-Mart. (Score:5, Interesting)
It doesn't really matter. Retail price maintenance was an issue when manufacturers were big and retailers were little. Today, it's the other way round. Wal-Mart can dictate prices to manufacturers.
Might matter for some luxury goods, like the iPhone, but that's about it.
competition on quality and service, not price (Score:5, Insightful)
I'm not sure I buy this argument, no pun intended, but the race to the bottom has got to stop. I know it's in Walmart's interest that I need to buy a new tv every two years, but it's not in mine.
(Sidenote: I've never entered Walmart/Sam's Club due to this policy and the way they mistreat their employees. Costco, baby, Costco!)
You Consumers are S T U P I D ! (Score:4, Interesting)