Hornby 2018 Announcements

[jjb1970]

I worked for an organisation that was raided by the EC as part of an investigation into collusion and monopoly practices. In the end there was a typically messy euro compromise which didn't really satisfy anybody and actually ticked off the rest of the world. What irritated people in the organisations concerned was that at least two EC directorates relied on them (and still do) for specialist technical expertise.

 

That said, it isn't a European thing, British laws on these issues were around before we joined the EC and will remain after we leave. Just about all functioning economies have equivalent rules.

[Andy Hayter]

Politics of fear.

I doubt the EC has even heard of the GCR and GER let alone understand them from modelling purposes.

 

EC aka DG IV do not need to be involved.  Try a google of CMA and re-sit your 101 competition law.

 

I agree unlikely, but never say never - that is what the salt producers thought in the 1980s*.  And remember despite an apparently water tight reason they lost and paid handsomely.

 

Re-Piko, well why not - we do have Heljan.

 

* Edit:  I doubt they actually thought about it at all, and there lies the real danger.  Things that seem natural and normal can still be construed as anti-competitive. 

Edited December 24, 2017 by Andy Hayter

[Chamby]

@charmby

Cooperation around standards - fine, collaboration on what products to produce per ADB’s post - illegal. We as consumers benefit as a) each product has to be better than the oppositions b) they can’t charge more. If they are caught doing that, they will face large fines.

If two manufacturers agreed to not both produce item a, then they could reduce the spec and maintain/increase the price. We lose out as consumers on both counts. Hence why it is illegal.

See cleaning company I linked to above where they agreed how to carve up the market leading to million plus fines.

So by your definition Rails and Locomotion have behaved illegally then, with their Duchess of Hamilton and the Black 5 commissions? You do the red one and we’ll do the black one... that sounds like co-opetition to me.

 

It’s a win-win-win situation, with more choice for the customer, better value for the commissioners and extra volume for the manufacturer.

[Legend]

Maybe Hornby offered retailers various versions. Rails chose one, Locomotion the other

[Clive Mortimore]

I can recall when Replica Models first came on the scene. They introduced a GWR 7 plank mineral wagon, we were selling them at £2.50. Within a week or so Dapol produced an almost identical wagon which we were selling at £1.25. There was never any cry of foul play that I was aware of. 

 

Off we trundled to Wembley and the Model Engineers Exhibition I set out the wagons in their boxes, and put the two wagons next to each other. My boss then placed a large box full of Dapol wagons without boxes, at £1.50 on the stand. They sold like there was no tomorrow.  I asked by boss why are we charging more for the unboxed ones than the boxed ones, "Someone got to pay me for opening the boxes."

 

I don't think we sold a boxed Dapol one , which was cheaper. We did sell a few Replica ones, as one customer put it "These are a higher standard."

 

Duplication happens, for various reasons. I am sure the long lead times some companies have from announcement to goods in the shops stops the competitor companies from making their version sometimes or hastens up development. 

 

So Hornby get yer finger out and let's have that class 21.

[Clearwater]

So by your definition Rails and Locomotion have behaved illegally then, with their Duchess of Hamilton and the Black 5 commissions? You do the red one and we’ll do the black one... that sounds like co-opetition to me.

It’s a win-win-win situation, with more choice for the customer, better value for the commissioners and extra volume for the manufacturer.

With respect, we are not privy to how the commercial negotiations with the parties were structured and therefore virtually no-one here can say whether or not they have behaved in accordance with the law or not. However, given the organisations involved, I'm sure their internal legal counsels will have proferred appropriate advice. I very much doubt it was on the basis of "we'll give X, y and you, z" for the reasons others and I have pointed out.

 

For example, and to be abundantly clear, we do not know how these deals are structured, however if Hornby approached a number of retailers and said "we are making 500 of each of variant x and variant y that you will be allowed to sell on an exclusive basis via your outlet, please provide me with your best bids to take the full 500 of those variants. You will be able to sell for no more than RRP of £x (and whatever other T&Cs Hornby wish to put in place - eg advance payments ahead of delivery for the privilege to help their working capital etc etc)" The shop that wins will have offered to pay the most but critically the offer to market will have been on a level playing field basis. H wins as they maximise their own wholesale price for the model. It's a win for all parties - the winners will have had to think what they can sell and at what margin but cruciallly it's on a transparent and fair basis between market participants.

[Fenman]

... for the GER the gap crying out to be filled is the J67/69 0-6-0T. ...

Interesting how we see things differently. I think the obvious gap for the GER is the E4 2-4-0. Which also has the merit of being cute, and not looking like anything else in anyone's current catalogues.

 

Though I thought Coachman's logic seemed sensible, too.

 

Paul

[Chamby]

Maybe Hornby offered retailers various versions. Rails chose one, Locomotion the other

 

Hornby also sell direct to the public, in direct competition with Rails and Locomotion.  It is NOT illegal.

 

The point I am making here is that co-operation can work, and brings benefits to all parties.  Volkswagen and Ford compete ferociously with the rest of their ranges, but collaborated to produce the Sharan/Galaxy seven seater.  The EU didn't declare that illegal either.  The equivalent for us might be Hornby and Bachmann collaborating to produce an improved spec GW 4-6-0... one might produce a Manor, the other a Grange.  One might upgrade their Hall, the other their modified Hall.  The important thing is that a large chunk of the tooling fixed costs would be shared.  In these days of rising costs and price sensitivity, the outcome would only be beneficial to all parties.

 

Phil

[Tim Dubya]

[jjb1970]

Hornby also sell direct to the public, in direct competition with Rails and Locomotion.  It is NOT illegal.

 

The point I am making here is that co-operation can work, and brings benefits to all parties.  Volkswagen and Ford compete ferociously with the rest of their ranges, but collaborated to produce the Sharan/Galaxy seven seater.  The EU didn't declare that illegal either.  The equivalent for us might be Hornby and Bachmann collaborating to produce an improved spec GW 4-6-0... one might produce a Manor, the other a Grange.  One might upgrade their Hall, the other their modified Hall.  The important thing is that a large chunk of the tooling fixed costs would be shared.  In these days of rising costs and price sensitivity, the outcome would only be beneficial to all parties.

 

Phil

 

There is nothing stopping companies co-operating on a whole range of issues, including joint research and joint product development. However, if VW approached Ford to fix prices or carve up certain markets between each other then that would (quite rightly) be a different matter and fall foul of the law. Joint development programs and joint ventures are common, I've worked on joint projects with people from competitor companies but there were pretty robust controls in place to avoid things running foul of anti-trust laws.

[Andy Hayter]

Hornby also sell direct to the public, in direct competition with Rails and Locomotion.  It is NOT illegal.

 

The point I am making here is that co-operation can work, and brings benefits to all parties.  Volkswagen and Ford compete ferociously with the rest of their ranges, but collaborated to produce the Sharan/Galaxy seven seater.  The EU didn't declare that illegal either.  The equivalent for us might be Hornby and Bachmann collaborating to produce an improved spec GW 4-6-0... one might produce a Manor, the other a Grange.  One might upgrade their Hall, the other their modified Hall.  The important thing is that a large chunk of the tooling fixed costs would be shared.  In these days of rising costs and price sensitivity, the outcome would only be beneficial to all parties.

 

Phil

 

you are right that collaboration can be beneficial and can work and is even allowed in some situations.

 

At the risk of repeating myself and others, competition law is complex.

 

The key point (simplistically) to consider is whether a collaboration creates a market dominant position.  Locomotion and Rails getting together on one model (or even for all operations) is unlikely to be viewed as such given their positions as "manufacturers" or even traders in the market.  There are lots of others producing and/or selling similar models.

 

Likewise your example of Ford and VW in a very specific part of the "van"/SUV market based on a single model*.  Ford and VW working together on every model might raise a lot of eyebrows however.

*and I would be surprised if their lawyers had not flown this in front of the authorities before the project proceeded.

 

Hornby and Bachmann agreeing to some sort of split of market or collaboration might well be considered like a Ford VW total collaboration and could well be considered as anti-competitive - even in a small market in the totality of things.

[Roy Langridge]

Therefore before indulging in jingoistic EU bashing in any other thread can I ask people to:-

 

(i) Remember that the EU does not draw up laws - it draws up directives which it is up to the various members states to draft into law as they see fit.

(ii) Our own Westminster Government has a track record of 'gold plaiting' or going well beyond the actions requested by said directives

(iii) Most of the 'EU' directives actually only build on legislation that already existed before we joined the EC (as it was back then).

Really? Not quite sure what those EU laws I help write are then!

 

The EU develops regulations (laws) and directives. A law applies, directives must be adopted as you say.

 

Roy

Edited December 24, 2017 by Roy Langridge

[jjb1970]

Really? Not quite sure what those EU laws I help write are then!

 

The EU develops regulations (laws) and directives. A law applies, directives must be adopted as you say.

 

Roy

 

The current fashion seems to be for regulations, I've noticed that a few directives in my own field have been superseded by EU regulations.

[Clive Mortimore]

FB_IMG_1514040708734.jpg

Hasn't someone already announced they are going to make it?

 

Edit, and it's Scottish.

Edited December 24, 2017 by Clive Mortimore

[Clearwater]

And to amplify a point in Andy H's point. Competition Law is complex and any material collaboration agreement/JV/co-operation pact, joint development agreement, call it what you will, will have been reviewed and drafted not just by internal advisers but heavy hitting external law firms. Those are not cheap. I was going to say that I'd wager that you'd easily spend more than the cost of a tooling but I think you'd definitely spend more. If tooling a new loco is say £150-200k, then I'd be amazed if you could bring in the costs of drafting a robust legal contract that would not leave the participants at risk of a material (up to 30% I think) fine of a proportion of their turnover.

 

The car comparison is apt - it makes sense there to collaborate and spend a few hundred grand/couple of million on lawyers and competition experts when the prize is in the millions of savings. On a £150k/£200k cost (per comments on other threads) of bringing a model to market, that sort of spend doesn't make sense. Even more so when the actual tooling and R&D is a small percentage of that total cost of bringing a model to market.

 

Anyway its 11pm on Christmas Eve and whilst I find intellectual arguments about competition law stimulating, I need to go and play Santa!

 

David

[Clearwater]

Hasn't someone already announced they are going to make it?

Haven't you already scratch built it in plasticard?

[Andy Hayter]

Merry Christmas Clearwater, and everyone else.

[Clive Mortimore]

Haven't you already scratch built it in plasticard?

Now there's an idea.

[Clearwater]

Merry Christmas Clearwater, and everyone else.

And to you Andy and to others!

 

David

[adb968008]

EC aka DG IV do not need to be involved. Try a google of CMA and re-sit your 101 competition law.

 

I agree unlikely, but never say never - that is what the salt producers thought in the 1980s*. And remember despite an apparently water tight reason they lost and paid handsomely.

 

Re-Piko, well why not - we do have Heljan.

 

* Edit: I doubt they actually thought about it at all, and there lies the real danger. Things that seem natural and normal can still be construed as anti-competitive.

 

I think Heljan, Hornby and Bachmann are probably better placed, they have multiple scales and pan-EU markets and brands. Roco, Fleischmann (as one company) and the other myriad of DACH producers whom haven’t moved from a sweet spot in decades, and have some what sustain disproportionate pricing to that of the UK, and more recently by challenge from Piko probably have more to be concerned about....indeed if they dropped their pants to respond on pricing it’s an easy question to ask, similarly if they don’t..after all they claim to be in dire straits.

 

But that it hasn’t been raised to attention indicates no one is bothered, or there is no case, after all its not as if there’s monopolies in the industry, it’s full of competition, with more and more new entrants... 20 years ago there may have been more reason, after Lima’s exit, Dapols tooling sold to Hornby and Replica’s supply stopped, there was a period where there really only was two OO producers, the UK industry is much healthier now.

 

all of this though is just FUD distraction..coming back to why GCR / GER would be of interest to the commission in the original post. This to me is a nonissue.

 

Model trains isn’t Salt, which has had restrictive practices going back to Roman times.

 

Anyways my original point I still stand by.. it’s not competition law that’s the issue. I believe it’s limited choice in marketable profitable UK prototypes still to be done, too many cooks and too long a cycle in R&D that causes the overlap on some models and lack of production on others.

Edited December 24, 2017 by adb968008

[Clearwater]

But that it hasn’t been raised to attention indicates no one is bothered, or there is no case, after all its not as if there’s monopolies in the industry, it’s full of competition... all of this though is just FUD..coming back to why GCR / GER in the original post.

Hence my point that why is you're Bachmann, you wouldn't run the risk of someone becoming interested by buying Hornby. As has been observed elsewhere, for a sub £50m market cap entity, Hornby gets disproportionate news coverage.

[adb968008]

Maybe Hornby offered retailers various versions. Rails chose one, Locomotion the other

My guess is it was the opposite, the retailers asked the manufacturer to make it. This is an example of collaboration that allows competitors (in this case at retail level) to bring a product to market, Rails is an NRM partner (in some form we don’t know) with locomotion, but neither here is a manufacturer, supplying to the market, so there’s nothing wrong with it. They are just two retailers asking a manufacturer to make them something bespoke.

 

If a manufacturer sets up an exclusive deal to one retailer at detriment to others where they seek to use size to dominate a market (ie sell at a loss to Greece to kill out competition) or for example restrict supply to certain retailers unless they agreed keep prices at a certain level , then your also falling foul of restraint of trade. (There was a UK manufacturer who used to enforce RRP back in those days, similarly there used to be the net book agreement enforcing RRP on books). But the retailer can, if they chose, give stuff away for free if they like or refuse to sell or price the product in anyway they choose. For example: Orange can give Free iPhones on 2 yr contracts for example, but Apple wouldn’t be allowed give away unlimited numbers if iPhones in the UK as it would force out competing brands, given the overall market dominance they have... Google is here fouling now, as was internet explorer with Microsoft a few years back.

 

A manufacturer cannot force or set the price of how a retailer sells there product or restrict them to sales only in a certain geography* using things like restricted warranties or discounts.

 

*They can assign sales territory, including exclusivity, but the retailer is free to sell to any customer from any territory who happens to walk past the door/website/trade show, similarly price discount is enforceable on new releases as it’s applied evenly across the market, for selected products for a limited duration as it’s keeping a level playing field during a product launch.

Edited December 25, 2017 by adb968008

[No Decorum]

FB_IMG_1514040708734.jpg

It’s obviously a Bulleid but not one I’ve come across before.

[phil-b259]

Really? Not quite sure what those EU laws I help write are then!

 

The EU develops regulations (laws) and directives. A law applies, directives must be adopted as you say.

 

Roy

 

EU directives , as issued by EU bodies have no immediate effect on the laws of any member state, until said directive becomes adopted / interoperated into each member states legislative system. What makes any particular EU measure apply to the UK is the fact that the UK parliament has passed legislation that makes it law to follow certain directives* - if the UK wanted to it could easily delay the implementation of things it doesn't like by years - you just need Civil Servants with the right mindset!

 

* It can of course be the case that legislation refers to a EU directive that is subsequent expanded / changed by the EU - but that does not override the fact that Westminster legislation was needed in the first place!

 

There have been many cases where member states have been fined for not doing so in a timely fashion - the French with their dislike of doing anything that allows non French companies to make inroads into the domestic market being a prime example of a country that is very good at blocking EU directives for years, even decades in some cases. Its a complete right wing fabrication to pretend the UK Government could not have done likewise if it had wished to do so.

[Steamport Southport]

It’s obviously a Bulleid but not one I’ve come across before.

 

To be honest I'm unsure whether Bulleid was involved in it. But the details are here.

 

https://www.lner.info/locos/Experimental/ReidMacLeod.php

 

 

 

 

Jason