Restraint of trade?

[sjprg]

It’s also rumored Canon will regulate the price of this camera starting in May. Which means, there will be a certain price point that a retailer cannot go below to sell the camera. This sort of regulation will also make such things advertising “free” things to bundle with the camera not allowed. This is good for retailers if true.

Dosen't this come under the legal heading "Restraint of trade"? Which as far as I know is illegal in the USA.

[5dmk.iii]

You mean like when employers force non-compete clauses? From my experience... a corporation will get away with things like this... they will not view it as restraint of trade, rather preservation of brand value.

[Ryan708]

Canon could just keep their wholesale price high. amazon iwould gobble them up at 20 bucks profit or 200 bucks. Alot of companies restric going below MSRP however. ECHO power equipment in a home depot is the same as in a local small engine shop and the exact same price (unless small engine shop jacks prices) but home cheapo is not allowed to undercut. Im sure you will see canon kits with all sorts of goodies for 1$ more so they are not "free"

[Mt Spokane Photography]

Do you mean like Sony, Nikon, and Apple?  All of these companies require retailers to sell within a certain price range.

[scottkinfw]

More like price fixing, but they are not a monopoly so don't know if that applies.  If they fixed prices with all camera companies, maybe it would be a crime.  I'm not a lawyer though.

[unfocused]

Of course this is legal. Canon has the right to set the price they will sell their product at, just as any commercial photographer can set his or her price for photographs.

Companies have the right to set the terms of their agreement with retailers and retailers who don't accept the terms have the right to refuse to offer the product for sale. Apple, Adobe, Microsoft and hundreds upon hundreds of other companies set the price that retailers can sell their products at.

You can't collude with competitors to fix the price of all the available cameras. But each manufacturer is free to charge whatever they want. Just as consumers are free to buy or not buy the product at the price the manufacturer sets.

Canon has apparently made a decision to tighten up the pricing that dealers can offer on their products. The most likely reason is that Canon wants to protect its network of dealers from unfair competition by outfits like Amazon, that don't have a physical presence and don't pay taxes.  They can't do anything to force Amazon to pay taxes, but they can give their responsible dealers a fair opportunity to compete against the vultures.

[Hillsilly]

In most jurisdictions, its legal. Its only when there is collusion between different suppliers that its a problem.  But with Nikon and other manufacturers implementing similar policies, it could be argues that competiton is being obstructed.  Most countries have a regulatory body that investigates cartels, price fixing and anti-competive behaviour.  Track them down, make a complaint and see what happens.  But like most government bodies, they'll probably be quite useless.

Personally, I think its very poor form.  If you have an online shop and can take advantage of lower costs to supply at a lower price, its in everyone's interest to buy from you.  This leaves more money in the consumers pocket to go and buy additonal things.  The economy as a whole improves as there are more goods being produced.  What's better for everyone? You buying online and having some extra cash to buy a new lens?  Or you paying more for the camera simply because the retail shop has to pay high rent on their high street location to a fatcat landlord?

[RedEye]

some things may have to be understood such as cash flows.  For instance, its possible that canon sells the product allowing the dealers a 1% margin, and then giving them a 30% 'bonus' commission at the end of each month for a job well done.... not that this is happening, and while some of this may defacto appear to achieve some of the same economic result as the above, the process may be sufficiently different to be allowable. 

-reddy

[Positron]

It's legal, but that doesn't mean it's ethical. Also, the argument I've heard a bunch of times that it's "good for the independent retailers" may apply in regards to competing against B&H and Adorama, but not being a Canon Authorized Dealer is not going to stop Amazon in the least (heck, I don't even know if they are one now). Canon can legally punish dealers that don't agree to their pricing scheme by doing things like revoking their authorized status, but they cannot legally do things like refuse to sell product or sell product at a higher price to a company that violates their pricing edict.

As I see it, there are a couple main reasons to declare a minimum selling price. One is to suppress the gray market. That's a lost cause, both because money will always trump some silly label a manufacturer gives to a shop and because there are ways for the more unscrupulous dealers to circumvent the issue. The second reason is to increase the impact of sales and to give them more freedom to modify the price in the future (either direction). This one generally works.

[5dmk.iii]

It's legal, but that doesn't mean it's ethical. Also, the argument I've heard a bunch of times that it's "good for the independent retailers" may apply in regards to competing against B&H and Adorama, but not being a Canon Authorized Dealer is not going to stop Amazon in the least (heck, I don't even know if they are one now). Canon can legally punish dealers that don't agree to their pricing scheme by doing things like revoking their authorized status, but they cannot legally do things like refuse to sell product or sell product at a higher price to a company that violates their pricing edict.

As I see it, there are a couple main reasons to declare a minimum selling price. One is to suppress the gray market. That's a lost cause, both because money will always trump some silly label a manufacturer gives to a shop and because there are ways for the more unscrupulous dealers to circumvent the issue. The second reason is to increase the impact of sales and to give them more freedom to modify the price in the future (either direction). This one generally works.

+1:

I think ethically Canon can sell to any reseller at any price they wish; however trying to dictate once that Re-seller has taken ownership and paid for the product is a bit over-reachuing IMHO. Thats taking away the rights of the reseller to position the product and vary his margins according to Market conditions. Ofcourse Canon is not the only one doing this, and there are arguments on both sides of the Pond...

[traveller]

Authorized Dealer is not going to stop Amazon in the least (heck, I don't even know if they are one now).

I think that legally a retailer has to be an authorised dealer to describe the products that they sell as "new", otherwise they must describe them as "used", even if they caviat this with "as new". 

[unfocused]

  If you have an online shop and can take advantage of lower costs to supply at a lower price, its in everyone's interest to buy from you. 

Unless of course, you think your home might catch on fire someday and you would need a fire department. Or maybe your car gets stolen and you need a police department to go after the thief. Or you have a heart attack and you need a rescue squad to revive you.

Amazon has built tax avoidance into their business plan. I'm no fan of high taxes, but I understand that when someone pays zero everyone else has to pay more because, like it or not, we still do need roads, police, firefighters, etc.

[Hillsilly]

I've seen similar comments about Amazon not paying taxes before and taking advantage of different sales tax regimes.  But their profit before tax for 2011 according to Yahoo Finance (http://finance.yahoo.com/q/is?s=AMZN&annual) was $934m.  On this they paid $291m in tax.  In the prior year, they paid $352m in tax. In addition, they provide employment to 56,000 people.  Sounds to me like they are paying their way.  I'd be thinking we'd want more Amazons?

[AJ]

I wonder if this'll affect the spread between U.S. and grey-market prices.

[Jim K]

I wonder if this'll affect the spread between U.S. and grey-market prices.

Looking on B&H there does not seem to be much of a difference in price between their grey market and USA items. Twenty years ago there seemed to be a larger gap.