MARP Price Fixing Update - Consumers Win!

offthewall1 · Apr 29, 2009

As many of you know, Off the Wall Scuba, along with others have been fighting the grand fight against illegal price fixing in the SCUBA Industry. Through the Federal Trade Commission, our State Attorney Generals Office and the Maryland State Legislature.

I am proud to announce that the great State of Maryland is the first to act in making the US Supreme Court's aggregious 2007 Leegin ruling illegal. Newly passed legislation now makes it illegal for product manufacturers to require MARP (Minimum allowed retail price) agreements and allows retailers to sue companies that attempt to use or enforce them.

This win will lead to lower pricing on Scuba equipment (and everything else currently being price fixed) in Maryland and hopefully around the country. Please write to your Senator in Support of Senator Kohls bill.

For more information, read this link from the Wall Street Journal. This is the real deal... and thanks to our battle, beginning in October, you will officially be able to get your Scuba gear for less in the state of Maryland! Down with the price gouging shops being protected by mafia style price fixing from manufacturers... and thank you to all of you who wrote in support of this movement to your state and federal polititians. It could not have been done without you!

State Law Targets 'Minimum Pricing' - WSJ.com (Cut and paste link into your browser)State Law Targets 'Minimum Pricing' - WSJ.com

opie · Apr 29, 2009

Bravo

I have always wondered how a manf can tell a store what they can sell some thing for. What difference does it make to them as long as they are getting from the store whatever price they sell it to them for

DA Aquamaster · Apr 29, 2009

Good job, if this works the way the authors of the bill anticipate, (1. able to with stand the usual situation where federal law preempts state law, particularly in areas of interstate commerce, and 2. is enacted in a majority of states) it will probably kill most local dive shops. For the average LDS minimum price policies protect smaller shops from unfair competition from higher volume retailers that otherwise would put the small shop out of business and deny local divers access to the other services local dive shops supply.

A 100% markup on equipment does not equate to a 100% profit margin, especially when you consider that an LDS has to pay up front for product, then stock it for months to make it accessible to customers to look at before finally selling it (to a customer who did not screw the shop by trying it in the store and then buying it on line to save a few bucks.)

Its easy for people to forget or fail to even realize that the motive for dive industry companies in requiring minimum pricing policies is to ensure that they can maintain a wide dealer network in what is a very small market (especially when compared to the Wal-marts, Targets metioned by the authors of the legislation in MD) and that is, in the end, a major benefit to the consumer.

Eliminating that protection for smaller dives shops is incredibly short sighted. If a diver plans on actively diving for more than a couple years, the cost of the initial purchase of equipment becomes a fairly small portion of their total costs when you consider gas, boat trips, air fare to tropical destinations, etc. The 20%-30% more that a diver may pay upfront under a minimum pricing policy is cheap compared to the potetnial cost in gasses and other services if local dive shops dry up.

Kevin, you've been in business long enough to know that dive shops live on a very thin margin and you've blown through several dealerships that have not worked well for you, so you should know enough to know better. I suspect you are just trying to carve a niche in the market by presenting your self as some sort of champion and savior of local divers.

Be careful what you wish for, you might get it, but it won't be what you thought you were getting. The impact of this legislation on Walmart, etc will be far different than it will be on a local dive shop. If the legislation is upheld in the courts, but does not catch on outside of MD, it provides a disincentive for companies to work with shops in MD. If it catches on nationwide, it will probably kill most local dive shops who will get run over by on-line dealers.

offthewall1 · Apr 29, 2009

DA Aquamaster...

Killing most local dive shops is not the intent. It alone does not kill local dive shops... but local dive shops who fail to adjust their poor business practices will fall. That is business in a freemarket... which is what the United States is all about. Being an American... I believe in a freemarket. Socialist commies want to control my free America (through price fixing) - it's time to put an end to that.

There will certainly be a number of LDS's that close nationwide. They are the ones that should not be open in the first place. LDS's with strong business models and principals will remain open and thrive. They will begin selling across borders (such as we have done) and will offer the same fair pricing to their local customers that online retailers currently offer across the board.

If you haven't noticed... LDS's have been dying for many years due to the internet. This legislation levels the playing field... and Local Dive Shop owners who see that and understand how to use it to their advantage will boom. The ones who like to sit on their fat arses and wait for that one customer to walk in the door so they can rip them off will be gone.

LDS's will regain business they have lost to internet sales and gain new customers who otherwise could not afford the sport.

Your evaluation is noted... and not entirely wrong... but I contend that a purging of bad businesses is good business... and well past it's time.

Cheers

PS... I also know you do work for one of my local competitors (doing repairs) - one that this type of legislation may put the final nail into their coffin. Still I appreciate your expession of the other side of the argument. We just happen to disagree on the overall direction the industry needs to go.

Now lets go diving...

SkipperJohn · Apr 29, 2009

offthewall1:
DA Aquamaster...

Killing most local dive shops is not the intent. It alone does not kill local dive shops... but local dive shops who fail to adjust their poor business practices will fall. That is business in a freemarket... which is what the United States is all about. Being an American... I believe in a freemarket. Socialist commies want to control my free America - it's time to put an end to that.

There will certainly be a number of LDS's that close nationwide. They are the ones that should not be open in the first place. LDS's with strong business models and principals will remain open and thrive. They will begin selling across borders (such as we have done) and will offer the same fair pricing to their local customers that online retailers currently offer across the board.

If you haven't noticed... LDS's have been dying for many years due to the internet. This legislation levels the playing field... and Local Dive Shop owners who see that and understand how to use it to their advantage will boom. The ones who like to sit on their fat arses and wait for that one customer to walk in the door so they can rip them off will be gone.

LDS's will regain business they have lost to internet sales and gain new customers who otherwise could not afford the sport.

Your evaluation is noted... and not entirely wrong... but I contend that a purging of bad businesses is good business... and well past it's time.

Cheers

To support this, when my LDS discounted my regulator to be competitive with one of the internet shops, he told me I could not disclose the price on the warranty. I had to list it as a gift.
Local shops will now have the power to be competitive against the internet giants who didn't care about MSRP.

616fun · Apr 29, 2009

Does this decision also apply to how the retailer is allowed to market the product, ie, can the manufacturer still require the retailer to only sale over the counter and not via mail order/online transactions?

I'd like to see Aqualung and ScubaPro being offered online :mooner:

psychocabbage · Apr 29, 2009

DA Aquamaster:
long winded response..QUOTE]

Being a consumer and having owned businesses I can say that being in business is not a priveledge. Its something you as the store owner need to work and tend to and establish. Just because you carry a line does not mean you get to strong arm people.

If you are good at business and know how to market well and sell product, your smaller profit margin will be made up with volume.

Just about every industry has it. From sunglasses to pizza. Cheap sunglasses? Sell boatloads and pennies for profit and still come out ahead. Or sell the high dollar ones that only a few people could justify purchasing..

For scuba, its very similar to BMX in that some bike manf were not letting online sales of their bikes. Didnt work out too great for them as other brands embraced the online world (back then was just mail order). Now that we have the online world, smaller companies have a chance to make breakthrough innovations and get those sales because their prices will be competitive.

You mentioned saving 20-30%.. Have you bought anything online? OMG, its more like 50-70% most of the time. Do I want to have my money taken or would I rather buy the same exact product, cheaper and therefore leave more money for me to get other stuff of go travelling or whatnot.. If you would rather just throw your money at some "shop" because they offer you some "service" fine. But I dont live my life around anyones shop.

I really wish that dive shop employees and owners would have their own section on this board so we dont have to hear them whine about profits and cost of operating and whatnot. I dont care. I do care if I can get a better deal. I am also one of those that will stop by, look at the product then go to LP and order it. Last I checked, dive shops are not crowded with customers. Typically, I have seen about 2 per hour at local shops. I dont think I am "wasting" anyones time when I walked in, they are usually sitting there surfing the net, browsing magazines or just chit chatting on the phone.

When more states adopt this law then that will let the strong be stronger and the weak die off.. Standard way of operating if you ask me. Its how it should be.

ADAPT AND PROSPER or not... its up to you.

redacted · Apr 29, 2009

I suspect that if local dive shops sold nothing but gas, training, service, incidentals, and rentals; there would still be plenty of business in most areas. Just not enough to support all the inefficient local shops divers are currently expected and coerced to support. I don't see why divers need to support inefficient manufacturers and retailers "for the good of the community".

I'm looking forward to the herds being culled. I believe there is a good chance we divers could benefit from some cutbacks in the numbers of manufacturers and retailers and the business model adjustment both will be forced to make.

Bob3 · Apr 29, 2009

We deal with that annoying "fixed pricing" stuff by refusing to deal with companies that have said policy. :crafty:

In some countries the practice is actually deemed price fixing & is illegal. :no:

vondo · Apr 29, 2009

awap:
I believe there is a good chance we divers could benefit from some cutbacks in the numbers of manufacturers .....

Probably true. I've always wondered how such a niche market can support so many full line manufacturers (full line = masks/fins/BC/regs/computer/etc). Ok, there are less actual companies involved, but the number of product lines is insane. I could probably name a dozen without too much trouble. And then on top of that you add the niche-within-a-niche manufactures like Zeagle, Atomic, etc who make some basic gear but not all of it. AND the tech manufacturers. Leisure Pro (biggest selection I know of) sells about 150 different BCDs from 15+ manufacturers. That's nuts.

Seems to me like we could deal with a lot less "choice" and have stronger manufactures. Just like Plymouth, Oldsmobile, and soon Pontiac, etc. are dead and gone, the same is likely to be true of brands like Aeris, Cressi, etc.

MARP Price Fixing Update - Consumers Win!

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offthewall1

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opie

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offthewall1

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616fun

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psychocabbage

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redacted

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