Letter going out tomorrow morning....
Let's find out if these policies are legal or not.... this ought to draw some attention.... comments?
Office of Policy and Evaluation
Room 394
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave, NW
Washington, D.C. 20580
Dear Sir or Madam:
I write to you today to inquire about the legality of a common practice within the recreational scuba diving equipment industry.
A majority of the leading manufacturers in this industry have adopted policies that appear to serve to control prices to the retail consumer.
Specifically, according to multiple local dive shops that I have discussed the matter with, many of these manufacturers write into their dealer agreements a policy that bans discounts from list price of more than a nominal usually 10% - amount.
Further, manufacturers specifically disclaim any and all warranties on their products if they are purchased outside of authorized channels, and many ban any direct marketing or sales at all, including Internet and mail order purchases, regardless of price. Several of these manufacturers actually display materials in local dive retailers explaining that these sales channels are both unauthorized and will result in the voiding of all warranties, and I have personally seen these materials displayed by retailers. Further, two vendors with which I have personal experience appear to require that the purchase price of their products be disclosed to register their warranty, and that registration is required for the warranty to be valid both requirements appear to enhance their enforcement of retail pricing policy. One such vendor allows online registration of consumer warranties but it cannot be completed unless you identify an authorized dealer of their products as the source from which the product was obtained effectively barring registration of purchases from online retailers.
As a former CEO of a company in Chicago who commonly dealt with retail sales to consumers and business interests, it is my understanding that policies that act to restrain the actual retail price at which products are sold frequently constitute a per-se violation of anti-trust law. For instance, I operated for years under the understanding and belief, as a consequence of conversations with corporate counsel and my general understanding of business law, that if I, and other companies in my line of business, were to meet and discuss fair trade pricing, or if we were to collude with others (including the manufacturers of products we sold) to effectively accomplish the same goal, we would be in direct violation of the law.
One vendor, in particular, actually publishes these prices, denotes their purpose, and calls them Fair Trade pricing on their web site! All they leave out is what, if any, enforcement mechanisms they may employ to keep their dealers in line!
There are, in fact, internet-based discounters. But these products are commonly known as gray market or are explicitly sourced and provided outside of the United States, and manufacturers typically refuse to provide any warranty or support for these products.
As a concerned consumer and a recreational scuba diver who has purchased over $2,000 worth of products from local retail sources specifically to avoid having the warranty voided by going to online and mail-order dealers, I urge your office to investigate these practices to determine whether they conform to applicable United States Law, and to take appropriate action to redress any violations you may find as a consequence.
I would appreciate being informed of the FTCs understanding of the legality of these practices, and kept up to date on any investigation you may conduct in this matter.
Thank you.
Let's find out if these policies are legal or not.... this ought to draw some attention.... comments?
Office of Policy and Evaluation
Room 394
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave, NW
Washington, D.C. 20580
Dear Sir or Madam:
I write to you today to inquire about the legality of a common practice within the recreational scuba diving equipment industry.
A majority of the leading manufacturers in this industry have adopted policies that appear to serve to control prices to the retail consumer.
Specifically, according to multiple local dive shops that I have discussed the matter with, many of these manufacturers write into their dealer agreements a policy that bans discounts from list price of more than a nominal usually 10% - amount.
Further, manufacturers specifically disclaim any and all warranties on their products if they are purchased outside of authorized channels, and many ban any direct marketing or sales at all, including Internet and mail order purchases, regardless of price. Several of these manufacturers actually display materials in local dive retailers explaining that these sales channels are both unauthorized and will result in the voiding of all warranties, and I have personally seen these materials displayed by retailers. Further, two vendors with which I have personal experience appear to require that the purchase price of their products be disclosed to register their warranty, and that registration is required for the warranty to be valid both requirements appear to enhance their enforcement of retail pricing policy. One such vendor allows online registration of consumer warranties but it cannot be completed unless you identify an authorized dealer of their products as the source from which the product was obtained effectively barring registration of purchases from online retailers.
As a former CEO of a company in Chicago who commonly dealt with retail sales to consumers and business interests, it is my understanding that policies that act to restrain the actual retail price at which products are sold frequently constitute a per-se violation of anti-trust law. For instance, I operated for years under the understanding and belief, as a consequence of conversations with corporate counsel and my general understanding of business law, that if I, and other companies in my line of business, were to meet and discuss fair trade pricing, or if we were to collude with others (including the manufacturers of products we sold) to effectively accomplish the same goal, we would be in direct violation of the law.
One vendor, in particular, actually publishes these prices, denotes their purpose, and calls them Fair Trade pricing on their web site! All they leave out is what, if any, enforcement mechanisms they may employ to keep their dealers in line!
There are, in fact, internet-based discounters. But these products are commonly known as gray market or are explicitly sourced and provided outside of the United States, and manufacturers typically refuse to provide any warranty or support for these products.
As a concerned consumer and a recreational scuba diver who has purchased over $2,000 worth of products from local retail sources specifically to avoid having the warranty voided by going to online and mail-order dealers, I urge your office to investigate these practices to determine whether they conform to applicable United States Law, and to take appropriate action to redress any violations you may find as a consequence.
I would appreciate being informed of the FTCs understanding of the legality of these practices, and kept up to date on any investigation you may conduct in this matter.
Thank you.
