Possible impact of enforcement of old law

[boulderjohn]

I just read an article about possible legal action against Coke and Pepsi and the possibility that a very old law that has never been enforced may be used against them. I am wondering about the effects on the scuba industry if it becomes active. (I am by no means an attorney.)

Pepsi, Coke soda pricing targeted in new federal probe

The FTC probe comes as the agency looks to dust off a decades old, but long dormant price-discrimination law.

www.politico.com

As I understand, a law was passed many decades ago requiring manufacturers to sell their products to all retailers at the same price, regardless of the size of the retailers. They are going after Coke and Pepsi for selling their products at lower rates to the big stores and higher rates to small stores. The law was specifically designed to create a level playing field between small and big stores.

If this is enforced for all products, what will the impact be on scuba?

Here in Colorado, we have close to zero need for nitrox analyzers. When I needed to buy a trimix analyzer (about $900), the shop where I worked offered to get one for me from Analox for their dealer price. They did not have a contract with Analox, and they CC'd me on all negotiations. In summary, if the shop agreed to sell 5 Analox nitrox analyzers a year, they would sell them a nitrox analyzer a certain dealer price. The shop would never sell 5 nitrox anayzers in its lifetime, so that did not happen. The dealer price our small shop could have had from Analox was about $80 more than the full retail price offered by Dive Rite in Scuba for the same item. DRIS then sold me one at a big discount, so you know their dealer price was significantly lower than what we were offered.

 

[wetb4igetinthewater]

That would disrupt a lot of industries if enforced.

 

[tursiops]

That would disrupt a lot of industries if enforced.

....and some scuba agencies.

 

[Vicko]

That would disrupt a lot of industries if enforced.

Only if you consider all of them a lot. I wonder how would discounts work under that law.

 

[wetb4igetinthewater]

Only if you consider all of them a lot. I wonder how would discounts work under that law.

Well to be fair, consolidating shipping of a large volume of physical product typically results in lower per unit shipping costs.

 

[VikingDives]

From the FTC:

Q: I operate two stores that sell compact discs. My business is being ruined by giant discount chains that sell their products for less than my wholesale cost. What can I do?

A: Discount chains may be able to buy compact discs at a lower wholesale price because it costs the manufacturer less, on a per-unit basis, to deal with large-volume customers. If so, the manufacturer may have a "cost justification" defense to the differential pricing and the policy would not violate the Robinson-Patman Act.

 

[wetb4igetinthewater]

From the FTC:

Q: I operate two stores that sell compact discs. My business is being ruined by giant discount chains that sell their products for less than my wholesale cost. What can I do?

A: Discount chains may be able to buy compact discs at a lower wholesale price because it costs the manufacturer less, on a per-unit basis, to deal with large-volume customers. If so, the manufacturer may have a "cost justification" defense to the differential pricing and the policy would not violate the Robinson-Patman Act.

I don't think this same claim can be made for PICs (or whatever an agency calls the processing of certifications).

 

[GiraffeMarineSalvage]

Well to be fair...

We would then live under a very different socioeconomic system...
There's nothing wrong with passing on savings due to consolidated shipping but realistically Coke and Pepsi (and insurance companies like State Farm, and many other big businesses...) use their sheer size to do anything and everything they can to create an unfair advantage in their respective industries :-/

 

[NW Dive Dawg]

Not sure if this really applies to this discussion but I also think that some retailers sell items as a total "loss leader"..... Costco Hotdogs and Rotisserie Chickens come to mind!

When I was teaching up here in the PNW...... the PADI shop I worked out of actually had some periodic $99 "special" OW classes including materials and rental gear. Even though the students had to buy mask, snorkel, boots and gloves at retail, that's just nucking futs!

 

[wetb4igetinthewater]

We would then live under a very different socioeconomic system...
There's nothing wrong with passing on savings due to consolidated shipping but realistically Coke and Pepsi (and insurance companies like State Farm, and many other big businesses...) use their sheer size to do anything and everything they can to create an unfair advantage in their respective industries :-/

There is the labor savings per unit of product when shipping a large order.
But yes, companies often do anything they can legally, and sometimes illegally, to maintain marketshare and squash competition, and maximize profits. An industry contact said to me once "the area of maximum profit is just short of what is illegal".

Ethics are a rarity in the business world.

Regarding the article, it will be interesting to see how this pans out.

Maybe there can be a class action lawsuit by instructors who due to their smaller volume pay more for PICs than dive centers. That would be interesting.