SICbass Posted August 10, 2021 Share Posted August 10, 2021 (edited) I ran across this story a couple of days ago. It seems the state of Bavaria are charging several firms (including Thomann) over price-fixing. In the interests of transparency, I am a frequent Thomann customer and enjoy their service, so I have no bias one way or another. I just found this interesting. "Germany’s Federal Cartel Office has fined three music brands and two dealers a total of €21m for price-fixing. They are Yamaha, Roland, Fender, Thomann and Music Store. READ MORE: Korg, Roland and GAK fined £5.75m for breaking retail competition law The companies were accused of “systematically” restricting price competition, colluding to set minimum prices on goods in 13 instances between April 2014 and December 2018, said the Cartel Office. This is in accordance with the EU’s competition rules which protects consumers against practices such as price fixing. A statement explained that when the retailers undercut minimum sales prices, staff at Yamaha, Roland and Fender would “on several occasions contact Thomann and Music Store and ask these retailers to adjust their sales prices, which they also did in many cases.” The whole article can be found here... https://www.musictech.net/news/industry/yamaha-roland-fender-thomann-music-store-fined-total-of-e21m-for-price-fixing/ Edited August 10, 2021 by SICbass Quote Link to comment Share on other sites More sharing options...
kodiakblair Posted August 10, 2021 Share Posted August 10, 2021 Yamaha,Fender and Roland also were named in the UK's price fixing case last year. Fender admitted their involvement, cost them a cool £4.5 million fine🙂 2 Quote Link to comment Share on other sites More sharing options...
Mykesbass Posted August 10, 2021 Share Posted August 10, 2021 Crazy law has just led to a race to the bottom, with the company with the deepest pockets able to offer the biggest discounts. Ironically it is supposed to help competition. 1 Quote Link to comment Share on other sites More sharing options...
Downunderwonder Posted August 10, 2021 Share Posted August 10, 2021 36 minutes ago, Mykesbass said: Ironically it is supposed to help competition. Nothing ironic about it. The law says prices can't be fixed, that is all. The manufacturers sell to distributors who sell to merchants who sell to consumers. Each layer under law is free to take whatever margin they need. The end. 1 Quote Link to comment Share on other sites More sharing options...
Mokl Posted August 10, 2021 Share Posted August 10, 2021 I've not been in music retail for quite a few years now, but at the time the independents were putting huge pressure on the likes of Fender abd Yamaha to try and even the playing field so they could compete. Often we'd see instruments priced pretty much at what we could get them at trade price for. It's a tricky one as the consumer both wins and loses through lower pricing but reduced options from where to buy (which is ultimately what happens when independents can't compete any longer). Quote Link to comment Share on other sites More sharing options...
Mykesbass Posted August 10, 2021 Share Posted August 10, 2021 1 hour ago, Downunderwonder said: Nothing ironic about it. The law says prices can't be fixed, that is all. The manufacturers sell to distributors who sell to merchants who sell to consumers. Each layer under law is free to take whatever margin they need. The end. The irony is that the laws were brought in to create competition. Everyone (retail) slashed margins to get market share and slowly but surely, the smaller players started to tumble, all the way up to the situation we have now with a handful of behemoths slugging it out. When there is a final winner they will be able to set their price as high as they damned well please, thereby killing off all competition. 2 Quote Link to comment Share on other sites More sharing options...
Eldon Tyrell Posted August 10, 2021 Share Posted August 10, 2021 2 minutes ago, Mykesbass said: When there is a final winner they will be able to set their price as high as they damned well please, thereby killing off all competition. The winner takes it all The loser's standing small 1 Quote Link to comment Share on other sites More sharing options...
TheGreek Posted August 10, 2021 Share Posted August 10, 2021 Years ago I went to my local music shop to buy a metronome. I quoted the online price to him to which he replied "I can't even get them for that". Business now closed. Quote Link to comment Share on other sites More sharing options...
Mykesbass Posted August 10, 2021 Share Posted August 10, 2021 (edited) Just had a quick look at GAK's figures on Companies House. Now, I'm not the greatest at reading balance sheets, and I know an awful lot of (legal) tweaking is allowed, but they basically made the same profit in 2015 on £10m less turnover as they did in 2020. Like @TheGreek's local shop, this is not sustainable. Edited August 10, 2021 by Mykesbass Removing ambiguity Quote Link to comment Share on other sites More sharing options...
Dad3353 Posted August 10, 2021 Share Posted August 10, 2021 10 minutes ago, Mykesbass said: ...they basically made the same profit in 2015 as they did in 2020 on £10m less turnover... Just curious, but why would this not be sustainable..? Quote Link to comment Share on other sites More sharing options...
Mykesbass Posted August 10, 2021 Share Posted August 10, 2021 3 minutes ago, Dad3353 said: Just curious, but why would this not be sustainable..? If their turnover has to keep increasing at this rate to keep the same amount (not percentage) of profit, that profit margin will become so small that it will only take the smallest of problems to wipe all the profit out. It also shows my point about the deepest pockets forcing out the smaller players. Quote Link to comment Share on other sites More sharing options...
Dad3353 Posted August 10, 2021 Share Posted August 10, 2021 17 minutes ago, Mykesbass said: If their turnover has to keep increasing at this rate to keep the same amount (not percentage) of profit, that profit margin will become so small that it will only take the smallest of problems to wipe all the profit out. It also shows my point about the deepest pockets forcing out the smaller players. Ah, I think I understand the confusion. You mean that the turnover for 2015 was 10m less than that of 2020, yet profit was the same. I read the dates as opposite (it's ambiguous...). OK, thanks; I agree. 1 Quote Link to comment Share on other sites More sharing options...
Mykesbass Posted August 10, 2021 Share Posted August 10, 2021 3 minutes ago, Dad3353 said: Ah, I think I understand the confusion. You mean that the turnover for 2015 was 10m less than that of 2020, yet profit was the same. I read the dates as opposite (it's ambiguous...). OK, thanks; I agree. Thanks - hopefully fixed now. 1 Quote Link to comment Share on other sites More sharing options...
sammybee Posted August 10, 2021 Share Posted August 10, 2021 2 hours ago, Mykesbass said: Just had a quick look at GAK's figures on Companies House. Now, I'm not the greatest at reading balance sheets, and I know an awful lot of (legal) tweaking is allowed, but they basically made the same profit in 2015 on £10m less turnover as they did in 2020. Like @TheGreek's local shop, this is not sustainable. Maybe they had some fixed capital costs (or other one off expense) in 2020 that they didn't have in 2015. I wouldn't read too much into it Quote Link to comment Share on other sites More sharing options...
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