RMweb Gold Revolution Mike Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 I hope for Bachmann's sake that they have taken good legal advice on this as it certainly enters very dangerous waters for them. Having just re-read articles 101 and 102 of the Treaty of the Functioning of the EU I can't honestly see how Bachmann wouldn't fall foul of them. Specifically: 1. The following shall be prohibited as incompatible with the internal market all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; And: Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States." Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; Even though the second article refers to trade between MSs it has also been used to decide cases on much more localised trading. I have to say that whether it is legal or not, to me it smacks of a PR own goal. Link to post Share on other sites More sharing options...
RMweb Gold The Stationmaster Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 My personal perspective is that this is a laudable move. It's obviously being done to help the smaller retailers out there losing out to the box-shifters on all the initial sales of a product (which has to be good for more of us in the long run I think) as has been the way over the last couple of years. After the 8 weeks is up then further discounts could be applied if the retailer wishes to do so. Therefore if we want stuff cheaper we have to take a gamble on retailers still having stock after the initial period. Hopefully it'll keep a few more local shops in business and keep a wider supply chain in existence. I fully agree with this and to be honest I'm not at all surprised after some of the 'instant heavy dscounting' which we saw with certain products towards the end of last year. I'm sure that this will help the smaller retailers (and some not so small) by putting a more equitable balance into the market at the launch time of new models. Perhaps also relevant is something I heard recently about difficulties (a) manufacturer(s) are having in getting bills settled by (a) retailer(s). I don't know any names, and I wouldn't post them if I did, but one can imagine a situation where a retailer who, say, discounts heavily without shifting sufficient volume or without good price/demand management systems is reducing his own income and profitability while in effect taking business from his more prudent competitors and possibly leaving the manufacturer with a double-edged problem. By trying to control initial discounting the manufacturer is surely also helping to prevent such a situation potentially developing - which, again, can only be a good thing all round for our hobby. Link to post Share on other sites More sharing options...
Pennine MC Posted March 16, 2012 Share Posted March 16, 2012 . I've heard wispers of another manufacturer trying this on, but I as I have no proof, I'll not divulge which it is. So have I, although in this instance (if the info is correct), it certainly *didnt* assist smaller retailers, which does seem to be the gist of the Bachmann initiative. It would be a shame IMO if Bachmann were to get all the flak about this, if others are doing similar. 15% off RRP is not a bad discount for a brand-new product fresh to market. It may not match some of the box-shifters' norms - I really don't know - but is still significant on 3-figure items. In real terms, I'd agree. Admittedly I'm lucky enough to have a decent model shop in town, but over recent years I have tried to buy most of my new locos from him at around 10% discount, for all the advantages that it brings Link to post Share on other sites More sharing options...
RMweb Premium Steven B Posted March 16, 2012 RMweb Premium Share Posted March 16, 2012 If the manufacturers want to support smaller shops (which is great) then they can do this without having to mess about with prices. On several occasions I've pre-ordered models at a shop only for them not to get all the models they ordered. The small shop ended up missing out on sales (and ended up with diaspointed customers) whilst the larger shops had stock to spare. Happy modelling. Steven B. Link to post Share on other sites More sharing options...
40F Posted March 16, 2012 Share Posted March 16, 2012 That I don't doubt for a second, but it will still be an interpretation of the law, and as such subject to scrutiny. I've just had a thought (not fully thought through but I'll posit it here for consideration and burning down in flames): It would surely be better, with the idea of protecting smaller resellers, for the bigger companies like Bachmann to even-handedly 'restrict' supply, rather than try anything that might amount to price fixing. If Bachmann produced 5000 of locomotive A and they have 1000 retailers who they supply, then initially only supply a maximum of 5 to each retailer, regardless of the size of retailer. That way, if the box shifters sell out, the remaining supply is with the smaller retailers. If they can't sell their allotment and return unsold items to Bachmann, then those could be sent back out to the box shifters for further selling. Obviously some buyers would simply put on hold their purchases until the box shifters had them at a lower price but that could be months, years, or possibly never, so that would be for the buyer to risk. I think you will find that this would to expensive and impractical and therefore a none starter. it would lead to all sorts of problems. Link to post Share on other sites More sharing options...
RMweb Gold Ian Hargrave Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 Do you honestly think that Bachmann did not take considerable legal advice BEFORE publishing/issuing this letter. I think you will find that they did. I would not bet on this being the case. Have you ANY idea of what current legal advice costs ? Recent contact with the system leaves me,personally,under no illusion. Link to post Share on other sites More sharing options...
phil gollin Posted March 16, 2012 Share Posted March 16, 2012 . I am in two minds ; First, I do believe this is illegal (AND also, surely it does not apply to the box shifters so it would SEEM to be protecting them ??????????? - I find that confusing, to say the least ). Second, I am old enough to remember the heavy discounting wars of the early 1990s and the way smaller shops were forced out of business. Anything that stops something like that happening again is "good". ================== Can anyone confirm WHY small retailers should not act as the box-shifters do ? . . Link to post Share on other sites More sharing options...
40F Posted March 16, 2012 Share Posted March 16, 2012 That I don't doubt for a second, but it will still be an interpretation of the law, and as such subject to scrutiny. I've just had a thought (not fully thought through but I'll posit it here for consideration and burning down in flames): It would surely be better, with the idea of protecting smaller resellers, for the bigger companies like Bachmann to even-handedly 'restrict' supply, rather than try anything that might amount to price fixing. If Bachmann produced 5000 of locomotive A and they have 1000 retailers who they supply, then initially only supply a maximum of 5 to each retailer, regardless of the size of retailer. That way, if the box shifters sell out, the remaining supply is with the smaller retailers. If they can't sell their allotment and return unsold items to Bachmann, then those could be sent back out to the box shifters for further selling. Obviously some buyers would simply put on hold their purchases until the box shifters had them at a lower price but that could be months, years, or possibly never, so that would be for the buyer to risk. I think you will find that the logistics and expense would rule this option out. Link to post Share on other sites More sharing options...
Jol Wilkinson Posted March 16, 2012 Share Posted March 16, 2012 From my experience in the motor industry I would have thought that such "retail price control" was illegal. I can understand why Bachmann may have taken this step, although they should have "asked" the retailers to support the initiative, rather than use the word "should". Unfortunately discounting is the usual approach to maximising sales. Local shops can provide service, but with lower turnover than the big online and mail order retailers, they are usually in the position where they cannot usually afford to discount to their customers so much. I don't know if it applies with the RTR manufacturers, but in the R/C model retail business it used to be easy to get bigger discounts for larger orders. That was when I ran a model shop many years ago, but I don't know if it still applies. However, "volume terms" are pretty much normal in most industries, although they are sometimes dressed up as annual bonuses, etc. Unfortunately the value of service is often overlooked in the search for a bargain by many purchasers. How often do we see posts quoting, with some pride, how little someone paid for a particular item? Perhaps Bachmann have recognised the need to have a "service network" by endeavouring to support the smaller retailers. Link to post Share on other sites More sharing options...
Ravenser Posted March 16, 2012 Share Posted March 16, 2012 I hope for Bachmann's sake that they have taken good legal advice on this as it certainly enters very dangerous waters for them. Having just re-read articles 101 and 102 of the Treaty of the Functioning of the EU I can't honestly see how Bachmann wouldn't fall foul of them. Specifically: 1. The following shall be prohibited as incompatible with the internal market all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; And: Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States." Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; Even though the second article refers to trade between MSs it has also been used to decide cases on much more localised trading. I have to say that whether it is legal or not, to me it smacks of a PR own goal. I suspect the key bits here are: 1. "agreements between undertakings, decisions by associations of undertakings and concerted practices" - Bachmann are acting alone, not in concert or agreement with other manufacturers 2. "abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it " - I am doubtful if Bachmann can really be said to have a dominant position in the technical sense (Even Microsoft disputed they had) While I'm not a lawyer , in my working life I had some involvement with the major EU competition cases in container shipping and what Red Death has quoted looks like the current version of my old acquaintances Art 85 (abuse of dominant position) and Art 86 (cartels) . Whether or not what Bachmann have sent out is legally ok or in any way enforceable , I'd have thought UK legislation abolishing resale price maintenance , which predates our membership of the Communities by a decade, would be the relevant issue Link to post Share on other sites More sharing options...
RMweb Gold The Stationmaster Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 One important thing is that we are mainly debating here the legality, or otherwise, of the Bachmann letter without knowing exactly what it said. The OP, to quote his words, wrote - 'he was somewhat astonished when he came to part of the letter which went something like this' (my bold) As we don't clearly know the exact way in which it was put - and it might well have been worded as a request and possibly not as an instruction or mandatory requirement - it is in my view really rather difficult to comment on its legality, although the meaning seems to have been conveyed. Link to post Share on other sites More sharing options...
RMweb Gold Revolution Mike Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 Removed as not really relevant what I was I was going to say! Cheers, Mike Link to post Share on other sites More sharing options...
RMweb Gold Ian Hargrave Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 On top of all of this,I've just received one of my routine e-mails from 'Rails' which is headed---'Latest Bachmann Products at New Special Lower Prices'-----drastically slashing their former pre-release prices. I've just placed a pre-order for a weathered ROD---at £102 .50. What on earth is going on here? Link to post Share on other sites More sharing options...
Andy Y Posted March 16, 2012 Share Posted March 16, 2012 What on earth is going on here? The point under discussion relates to newly announced items at their point of release, not current models. Perhaps Bachmann have recognised the need to have a "service network" by endeavouring to support the smaller retailers. Bachmann have steadily supported a retailer network through only supplying to retailers with premises, not supplying wholesalers or discount sheds (although I accept remaindered Underground Ernie items did go that route), providing a spares/repair service to those retailers and charging the same price across the board irrespective of volume (discounts are applicable for early settlement of accounts). Link to post Share on other sites More sharing options...
Guest Belgian Posted March 16, 2012 Share Posted March 16, 2012 On top of all of this,I've just received one of my routine e-mails from 'Rails' which is headed---'Latest Bachmann Products at New Special Lower Prices'-----drastically slashing their former pre-release prices. I've just placed a pre-order for a weathered ROD---at £102 .50. What on earth is going on here? The last item (the pack of three conflat wagons) is an interesting one RRP is shown as £29-95 and Rails are offering them at a 'new lower special price' of - £29-95!!!! Link to post Share on other sites More sharing options...
Mike at C&M Posted March 16, 2012 Share Posted March 16, 2012 The point under discussion relates to newly announced items at their point of release, not current models. The letter was written just ahead of the recent trade fair in Coventry. We therefore assume that it applies with effect from the new items announced this week for the Bachmann and Graham Farish ranges. Any items announced prior to this fair, are assumed to fall outside the scope of the letter. Link to post Share on other sites More sharing options...
37114 Posted March 16, 2012 Share Posted March 16, 2012 While I admire and agree with Bachmann's intent, the savvy retailers and those of larger volumes could feasibly comply with Bachmann's letter and still discount through vouchers offering money of next purchase /free postage to protect their business and drive up customer loyalty. Link to post Share on other sites More sharing options...
RMweb Gold Ian Hargrave Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 However--the sting in the tail is--'Price Correction--Due To Unexpected Bachmann Price Increase-'-new Desiros rise to £144.50 ! Looks as if sanctions are beginning to bite. Would someone please make some sense of this before there are casualties in what seems to be a self -inflicted--and totally unnecessary price-war. Link to post Share on other sites More sharing options...
RMweb Gold The Stationmaster Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 However--the sting in the tail is--'Price Correction--Due To Unexpected Bachmann Price Increase-'-new Desiros rise to £144.50 ! Looks as if sanctions are beginning to bite. Would someone please make some sense of this before there are casualties in what seems to be a self -inflicted--and totally unnecessary price-war. Surely this depends entirely in a retailer (unless Bachmann are charging revised prices on items for which they have not already been paid)? The retailer obtains stock and puts it on sale - that's it and all he then has to do is pay the manufacturer. For example near here there is a superb, good old fashioned' builders merchants/hardware shop - they charge the retail price on everything as the same as it was when they bought in the stock, pop in and buy some specialist or very slow moving types/sizes of screws and you might well be paying what the retail price was a decade ago. I bought some woodscrews there last year and the price was the same as it had been in 1998, they simply change the price when they renew their stock of whatever. Link to post Share on other sites More sharing options...
Verityboo Posted March 16, 2012 Share Posted March 16, 2012 There is Competition law covering the UK so I am surprised at the idea to say the least! It was last updated in April 2010. Failure to comply with UK or EU competition law can have very serious consequences. Whether an arrangement is anti-competitive is assessed on the basis of its objective, or its effect on competition, rather than its wording or form. This means that verbal and informal 'gentlemen's agreements' are equally capable of being found to be anti-competitive as formal, written agreements. Examples of the types of arrangement which are generally prohibited under Chapter I and Article 101 include agreements which directly or indirectly fix purchase or selling prices, or any other trading condition (for example, discounts or rebates, etc) I can’t really see the likes of Hattons and rails taking this lying down as it would appear to be so blatantly unlawful! It’ll be interesting to see how things develop Link to post Share on other sites More sharing options...
Mike at C&M Posted March 16, 2012 Share Posted March 16, 2012 In the case of the latest 'Desiro' (31-031) to be released, it has been supplied out of Bachmann after a recent price increase across the range, so hence the higher price. This individual price increase has nothing to do with the content of the retailers letter. Link to post Share on other sites More sharing options...
Trains4U Posted March 16, 2012 Share Posted March 16, 2012 From what I've been hearing - the general response has been positive. I certainly won't be challenging it. I can only think of three or four retailers who may have a problem with this, and my guess is, Hatton's isn't one of them. Given that they have a healthy and loyal customer base, I'm sure they'd be grateful of the additional profit! Bachmann have put this through their solicitors and I've been assured it is legal. Link to post Share on other sites More sharing options...
Verityboo Posted March 16, 2012 Share Posted March 16, 2012 Price fixing is simply illegal, end of! If Bachmann want to support small suppliers, which I think most would agree is an excellent idea, they can do so by controlling things within their power. These things include the number of models they supply to different companies and the level of discount that they give. Link to post Share on other sites More sharing options...
RMweb Gold PhilH Posted March 16, 2012 RMweb Gold Share Posted March 16, 2012 I really don't understand how this is going to improve relations with customers - if anything it will make them more determined to shop round for a bargain. And please don't tell me that every high street model shop is a mine of helpfulness, information and customer service, because they're not. It might be alright for those with higher incomes who can afford to introduce a degree of altruism into their purchases, but there are a hell of a lot of people who can't afford to do that. Link to post Share on other sites More sharing options...
Pennine MC Posted March 16, 2012 Share Posted March 16, 2012 It might be alright for those with higher incomes who can afford to introduce a degree of altruism into their purchases, but there are a hell of a lot of people who can't afford to do that. Maybe they could just lower their expectations then Phil, and buy less models, or look for decent secondhand ones, or clearance bargains? I'm not saying it's easy, but it's what I did for many years, when the kids were young and money was tight. Leaving aside the question of whether I now enjoy a 'higher income' (which could take this thread all sorts of places it doesnt really want to be going), I dont see my own support for my local man as altruism, I see it as helping to ensure his survival - for when I want to return a faulty purchase, buy the proverbial packet of railjoiners, or just have a cuppa and a chat. Yes, I know, I'm living in the 1960s Link to post Share on other sites More sharing options...
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