Let's see what the FTC has to say about vertical price restraints in the biz.

[TCDiver1]

Aquamaniac once bubbled...


Im not agreeing or disagreeing, I was just asking the question, legitimatly.

So let me ask the owners and service people following this.....Would you knock back my gear?

No prob, did not intend to imply your question wasn't legit, apologize if i did.

Of the two LDS's i deal with, both would have no problem getting your kit serviced even if they didn't sell what you have.

After you have been dealing with them for awhile and they find out you bought something online AFTER you started dealing with them, both would give you a hard time, only one would service your gear.

Like i said, don't agree with it, but i don't own their business.

 

[CincyBengalsFan]

We would most likely call the manufacturer or distibutor and see if it is warranted. If it's not then we would charge you the normal fee for servicing. As far as being concerned for your safety. That used to be #1 on everyones list. Now that everyone sues at a drop of the hat and we are liable for looking at a reg wrong...It's everyman for himself and we, now, unfortunetly come first.

 

[Genesis]

and you'd find me on the sidewalk outside your shop with a billboard on my front and back pointing out to anyone who might think of walking in that if they EVER bought something online they are unwelcome, per the owner of the shop.

Couldn't be sued for it either - since it would be true, and I'm on public land. Free Speech, you know.

I wouldn't give that shop long to live, since I could be there literally every day and it doesn't take long for something like that to spread like wildfire and wreck any retailer.

 

[TCDiver1]

Genesis once bubbled...
and you'd find me on the sidewalk outside your shop with a billboard on my front and back pointing out to anyone who might think of walking in that if they EVER bought something online they are unwelcome, per the owner of the shop.

Couldn't be sued for it either - since it would be true, and I'm on public land. Free Speech, you know.

I wouldn't give that shop long to live, since I could be there literally every day and it doesn't take long for something like that to spread like wildfire and wreck any retailer.

You mean if i bought a pair of socks on the net, i wouldn't be welcome in his store? Wow, that is harsh. I'm with ya now Genesis!

 

[MikeFerrara]

If you bring in a product that we service we don't know where you bought it and we don't care. If the warrenty is good I'm ok with it. However, I know that I have never sold a
Sherwood Maximus since they decided to allow on-line sales. I also know that they had a recall and we were asked to repair them for free. The manufacturer/distributor has not said that they would pay me for labor. hmm...let's see they screwed up your reg and I never sell these regs because they put me out of the business of selling them and now they want me to fix them for free. I don't think so. I will not fix this reg for free no matter where you bought it.

Now let's take another case. You have a reg that is broken. It is fairly new and covered under warrenty. Let's say you bought it from me and my markup was reasonable (and this is more than 10%) Warrenty or not , I will take care of you one way or the other. If I dump in a little labor so be it. If I need to provide a loaner, ok.

Now lets say that you didn't buy it from me or I was forced to sell at a break even, or lower, price. I can't afford to spend any money or time here. If the manufacturer provides parts I will install them and bill someone for the labor. If I can send it to the manufacturer for repairs, ok, but they will need to pay shipping. Am I going to provide a free loaner? No. For that kind of price you get a reg and that's it and of course whatever the manufacturer will do for you.

 

[Aquamaniac]

Mike.

That sounds like a very legitimate protocol.

What you have said makes perfect sense, both ethical and economical.

I would never expect any more than that from a shop.

Thanks

Dave

btw, why IS your shop?

 

[dgangi]

Reading all of these posts has been very interesting (and entertaining!) to say the least. I've always felt the dive manufacturers border on some illegal business practices in the way they discriminate how their products are sold, for what price, and how they are warranted.

I never really understood why mail order and on-line sales were forbidden, as it totally screws the manufacturers out of a legitimate market, not to mention the millions of divers in the world that *don't* live near a dive shop or *don't* live near a dive shop that carries the product they want. If I am interested in a Scubapro regulator and there are no LDS's in my area that carry Scubapro, then I may either buy something else on-line (since Scubapro doesn't smile on on-line purchases) or buy something else from an LDS (if there is one). Either way, Scubapro loses business.

But that's where the antiquated, strong-man style business practices start to cloud these manufacturers minds. Instead of giving the public what they want and how they want it (mantra of our capitalist society), they have been giving us what *they* want and how *they* want to deliver it (like the General Motors of yore).

Why should the manufacturer care if an item is bought on-line or in a dive shop? All they should worry about is that their products are being represented accurately by their outlets (on-line or LDS) and that they are being serviced appropriately by their service centers. I think it is OK for manufacturers to require that regular service be done to their products by a certified technician. So why should that have any bearing on how I purchase the product? If I bought it mail-order or on-line, then the same rules should apply to me as anybody who bought the same product in an LDS. Require me to either hand-deliver or mail the product to an authorized dealer for service. Fine.

In my opinion, the dive equipment manufacturers are going to lose this debate. One way or the other, this is going to be a non-issue over time. On-line shopping is here to stay and will only get more popular. The more people get accustomed to on-line purchasing, the more they will demand it...in everything from cars to airline tickets to clothing, and yes, to dive equipment. And if the dive equipment manufacturers keep fighting this, they're going to lose business. And all it will take is 1 "brand name" dive company to open up on-line shopping and it will *force* everybody else to follow suit. Just wait...one of these companies will wake up and realize the business potential of on-line shopping and a more "free" way of working with the LDS's. Then they'll start getting their products sold in far more numbers than the other guys and the other idiots will wake up and say "hey...brand X just took away 10% of my market share in the past year due to on-line sales and heavy recuitment of local dive shops -- I gotta do something about this". And they'll follow suit.

I just hope this happens sooner than later. For everybody involved -- the consumers and the dive shop owners -- whom are being squeezed by the ridiculous business practices of the dive equipment manufacturers.

I've said this many times before, but it is so true. Capitalism and technology are wonderful things. And you can't stop either one.

Thx...Doug

 

[Aquamaniac]

Well spoken Doug.

 

[nk5]

Mike, what would you do if I brought over my Sherwood reg. , that I bought online, for service and offered to pay you for the parts and labor? Would you refuse?

I don't consider my LDS (which I like and support) a retail store like staples or Kmart. The term "shop" is a misnomer, the LDS's are really a part of the service industry, just like physician, lawyers, dentists, etc. And I think that you Mike, should be properly compensated for your services. If you don't like the way the manufacturers and distributers treat you (which is aweful and I'm with you 100%), well, maybe you should write a letter to the FTC or your congressman.

 

[Genesis]

What I don't understand is why the dive shops, who are clearly being jacked on the warranty end of things, aren't doing something about this.

I did warranty repairs for various vendors. If we put in shop time it was billed back to the manufacturer. Or we sent the product out to them and THEY did the work.

I would have NEVER - and I do mean NEVER - accepted a dealership agreement where I was expected to service warranty items but was not compensated for the time my people put in.

This kind of thing leads me to wonder exactly what kind of "warranty" is really offered, and whether the claim of a "warranty" is in fact fraudulent - particularly if ALL authorized dealers are not REQUIRED to handle (whether in-house or by shipping it out) ALL instances of the product that is defective under that warranty.

Never mind that in many states it is illegal to require anyone to do anything that costs anything to make a warranty valid, regardless of the amount of that cost (including putting a stamp on a warranty card), and in other states it is illegal to condition a warranty on registration of the product.

There are plenty of issues here, and most of them appear to be falling on the LDS owners. Why aren't they banding together and going after these distributors and manufacturers?

Gents, if you have an agreement from one of these companies that explicitly sets a price floor, you have a prima-facie unlawful agreement that is in violation of the Sherman Act. Why the LDS owners aren't getting together and going to the FTC, along with the courts, demanding that all of their lost business to the mail order joints like LP as a direct consequence of these policies be returned to them by the manufacturers and distributors is beyond me.

Folks, this stuff is serious. Here's the cite from the Department of Justice's page:

Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in any Territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, is declared illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.

Note those penalties. $10 million bucks. Per vendor, per violation.

Nor does it stop there.

The court can order seized any material in transit. All the stock at the distributors and in transit to them could be seized and forfeited to the US Government as well.

Nor does it stop there.

Dig THIS cite:

Except as provided in subsection (b) of this section, any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee. The court may award under this section, pursuant to a motion by such person promptly made, simple interest on actual damages for the period beginning on the date of service of such person's pleading setting forth a claim under the antitrust laws and ending on the date of judgment, or for any shorter period therein, if the court finds that the award of such interest for such period is just in the circumstances.

Triple damages.

The LDS owners could reasonably claim that but for the illegal price-fixing they would have garnered a significant amount, or perhaps even all, of the gross receipts of the mail order firms such as LP and others, including those overseas. They would be entitled to recover three times those damages!

Now tell me, ladies and gentlemen, why the LDS owners aren't raising he|| about this? They certainly have an incentive, do they not? Particularly when the conduct in question - price floors that are confirmed by written contract, are a per-se violation of the anti-trust laws in the United States.

Things that make you go "hmmmm...."