LP Warranty on AquaLung, SP, Apex etc.

[gj62]

If price fixing like that is illegal, why doesn't a shop (say, Scubatoys) just file a lawsuit against SP, Halcyon, Seaquest, Dive Rite, etc?

Price fixing is illegal (at least in the states - don't tell OPEC), but this is not price fixing (where 2 or more competitors collude to set prices). This is a manufacturer saying, "Follow our policies our we won't sell to you" - perfectly legal, which is why they've been doing it for 25+ years...

Gas prices projected at $3/gal this summer. Makes air fills seem down right cheap!

 

[jonnythan]

http://www.atg.wa.gov/trust/past.shtml

The lawsuit claimed that Nine West's illegal price-fixing included occasions when the manufacturer distributed lists of shoes that could not be discounted by retailers outside time periods dictated by Nine West. The group told many retailers that the purpose of the policy was to protect them from competition. In order to enforce the policies, Nine West allegedly granted discounts to cooperating retailers and withheld discounts or threatened to cancel or refuse to take orders from uncooperative companies. "As a result of pricing agreements, consumers were denied an open and competitive market for certain Nine West shoes and, as a result, paid higher prices,"[/quote

It sounds like that's exactly what Nine West was doing - telling retailers the prices they're going to sell gear for.

What's the differnce?

 

[Genesis]

You got that right GJ.

Oh, sure, there was much fanfare and noise at the SP meeting. I'm sure of it, even though I wasn't there. I've seen this script played out dozens of times before; in the camera business, for example, 20 years ago.

Division President who is "too soft" on backchannels gets canned and replaced. New guy gets some salary structure based on the volume in the "protected" market. Sounds like a good deal with teeth, right?

Well, maybe. Except that those "back channels" sell a LOT of the total market of the product. Let's say, for the sake of argument, that Europe was 30% of SP's market, and of that, half was going to LP - one way or another.

If that 15% of their total revenue was to disappear, SP would be in SERIOUS trouble. If Helen thinks that shutting that pipeline will redirect the business to the LDS, at twice the price, she's had way too many hits off a crack pipe.

What it'll do instead is shove the business over to Apeks, which has EU and British retailers that are happy to ship piecemeal overseas, or who won't shut THEIR backchannels down. All that'll do is cost 'em the volume - perhaps permanently.

LP, just as one example, sells more product than most manufacturers. One store. Do the math folks - none of the manufacturers really want them to go away.

Of course the dealers, many of who scream for "protection" (never mind that if you read that Nine West case, it looks like it might be against the law!), want to see "soemthing done." So arm-waving is the order of the day - but in reality, no, it won't stop and the channels won't be closed down. Not really.

The manufacturers know full well that such an opening to the competition won't be left unserved. There is no free lunch, unless you want to be a niche manfuacturer (and there are a few - such as Halcyon.)

 

[scubatoys]

If price fixing like that is illegal, why doesn't a shop (say, Scubatoys) just file a lawsuit against SP, Halcyon, Seaquest, Dive Rite, etc?

You know - both my brothers are attorneys, and it has been said many times that attorneys are about the same as cockroaches... which is insulting... to cockroaches...

But hey... call me simple... I don't want to go sue anyone... I want to teach bikini clad women how to dive... and sell air. Sounds like a good job to me. And I would prefer if we could take government and courts out of the whole equation. Does someone need to get millions because they don't realize coffee is hot? Do we have to pay a lawyer to tell us to put the disclaimer on razor blades "Caution Sharp" (it's really there) to try to avoid a suit? Is it really necessary to notify people they should not put their feet under a mower or use it manicure shrubs?

I guess so... Hell... keeps my brothers busy so they stop bothering me. But I'd rather let the companies decide who they want to sell to and how they want to sell... then I can decide which companies I want to support, and the consumer can decide which store they want to... but maybe that would all be too easy - my brothers would be out of work - and I'd have to give them a job in the snorkel section....

 

[firedogut]

BTW, Helen and family are trying to take Johnson Outdoors private. And, by the way, they've said they're not interested in "other offers", meaning that the entire transaction will a behind-closed-doors, board-rubber-stamp deal - if they pull it off.

What's wrong with this? The started it, they made it public, and now they want to spend 69 million in cash to own all the stock. It will still be public.
I don't think will affect products to much. they already own majority of the stock so they have the votes to anything they want. They just want to keep it in the family.

 

[gj62]

As I understand it, SP can state that you cannot discount our products more than 10%. Where it would get into problems is if they let you, a larger dealer, discount their product more than me, a smaller dealer. Or if they were to say, you can discount regulator X, but not regulator Y.

I'd dearly love for an attorney to let us know how this is different, but this is how I've always heard it explained - and since SP's been doing it for 25+ years, my guess is there is some loophole they are getting through...

 

[Genesis]

http://www.atg.wa.gov/trust/past.shtml

The lawsuit claimed that Nine West's illegal price-fixing included occasions when the manufacturer distributed lists of shoes that could not be discounted by retailers outside time periods dictated by Nine West. The group told many retailers that the purpose of the policy was to protect them from competition. In order to enforce the policies, Nine West allegedly granted discounts to cooperating retailers and withheld discounts or threatened to cancel or refuse to take orders from uncooperative companies. "As a result of pricing agreements, consumers were denied an open and competitive market for certain Nine West shoes and, as a result, paid higher prices,"[/quote

It sounds like that's exactly what Nine West was doing - telling retailers the prices they're going to sell gear for.

What's the differnce?

There isn't one.

The only difference is that women's shoes is a big market and every woman buys some. Scuba is a small market and few people buy any.

But - the Scuba market has gotten the FTC's attention before. Go back over to Google and punch in "Scuba Retailers Association Antitrust".

Can't happen again? It sure can.

Are you (as both a customer AND dive shop) part of the problem, or part of the solution?

 

[jonnythan]

I can understand Larry's unwillingness to sue anybody, but I'm really kinda surprised no one has.

Am I missing something? Seems to me like it would be an open and shut case.

 

[Genesis]

What's wrong with this? The started it, they made it public, and now they want to spend 69 million in cash to own all the stock. It will still be public.
I don't think will affect products to much. they already own majority of the stock so they have the votes to anything they want. They just want to keep it in the family.

A lot is wrong with it Fire.

When you take a company public, or even when its not, you owe a duty to your shareholders to act in the way that is commensurate with maximal value for them.

By stating that they refuse to listen to any other offers, they are stating, right up front, that they will not provide the holders of their stock (other than themselves, of course), the best possible price for their shares.

This is a problem because it is directly contrary to how public companies are supposed to operate, and the board's responsibility to ALL of the shareholders.

There is no problem with the family participating in an auction for the shares; if they are willing to pay more than anyone else who wants to buy the shares, that's fine.

What's NOT fine is forcing the sale of the firm back to themselves at a below-market price. Indeed, that kind of inside dealing often generates lawsuits - as it should, because it is effectively stealing from the public that holds the shares. Their "offer", at $18/share, is below the current trading price. It is thus on its face insufficient.

If Helen and company did not want the responsibility of a duty to public shareholders, they should have never sold shares to the public.

 

[gj62]

There is a difference in the SRA case. This was when an outside agency threatened a buyer/seller relationship. If the seller chooses to not have a dealer as a dealer, that gets very tenuous.

I could be all wet here (frankly, I wish I were, in more ways than one!), but SP's policies have been looked at before and I've not heard an informed (read: legal) opinion state that they have done anything that is against the law in how they work with their dealers (at least not overall).