Hattons and Farish

[red_death]

I think the point about retail pricing was aired when Bachmann and Dapol(?) first started restricting discounts for a new product for a limited period - according to: https://www.out-law.com/en/topics/eu--competition/competition/recommending-and-agreeing-retail-prices-competition-law-puts-limits-on-how-far-you-can-go/

"where a manufacturer introduces a new product, RPM may be permitted for an introductory period where it provides retailers with the means and incentives to increase promotional efforts and expand overall demand for the product, so making the entry a success;"

So in certain circumstances it could be legal to restrict discounts, but as with many things it depends on legal interpretation.

Bachmann's T&C for wholesale are on their website and include such a limited restriction (and possibly the answer to the Hattons situation in a different section on Bachmann's rights to decide who they supply to).

I doubt that this is an easy situation for either parties.

Cheers, Mike

[PLD]

I think the point about retail pricing was aired when Bachmann and Dapol(?) first started restricting discounts for a new product for a limited period

In short; it is permissible for the manufacturer to specify retail price limits (maximum and/or minimum) provided:

1. It is time limited.
2. Non-discriminatory (applies equally to all retailers).
3. They do not themselves sell direct to consumers at a price outside those limits.

It's also common practice in the motor trade for new models. The usual work around is to sell at the specified price with 'enhancements' - throw in a years' insurance/6 months road tax/a 'free' tank of fuel etc...

[longbow]

Exemptions to UK competition law are not well defined. Are you citing case law or just industry practice that has escaped CMA scrutiny?

[nookfield]

"where a manufacturer introduces a new product, RPM may be permitted for an introductory period where it provides retailers with the means and incentives to increase promotional efforts and expand overall demand for the product, so making the entry a success;"

But that is qualified with "Nevertheless, as an exception, it may be possible to justify RPM in certain circumstances, if it would lead to benefits for consumers"

I do not think that restricting retailers to a maximum 15% is in the consumers interest.

[paulprice]

Sorry I'm in shock just seen Farish Stanier coaches are now over £30

[red_death]

"where a manufacturer introduces a new product, RPM may be permitted for an introductory period where it provides retailers with the means and incentives to increase promotional efforts and expand overall demand for the product, so making the entry a success;"

But that is qualified with "Nevertheless, as an exception, it may be possible to justify RPM in certain circumstances, if it would lead to benefits for consumers"

I do not think that restricting retailers to a maximum 15% is in the consumers interest.

You might not, but the argument from the Outlaw website is that it can be deemed to be beneficial if it allows manufacturers to bring to market a new product - the implication being that without the possibility to restrict discounts the product might/would not have been brought to market and that the consumer benefits from increased choice in the market.

As I said I think this has been well-aired and nothing is new about this and it getting well off the original topic.

[longbow]

Revolution might be able to argue that exemption as a new entrant to retail, but not Farish. So Farish would be on shaky legal ground if they are attempting to enforce discount restrictions, especially with their largest retailer.

[red_death]

The link I provided doesn't refer to new company entrants, but new product entrants to the market.

Cheers, Mike

[longbow]

Quite so. My point was that as a new entrant Revolution could conceivably argue that discount restrictions were necessary to secure a retail dealer network. But the exemptions are narrowly cast (see link) and would pretty clearly apply to few if any new products from an established supplier like Farish.

http://www.agentlaw.co.uk/site/briefing_notes/resale-price-maintenance-can-be-lawful

The CMA appears insufficiently resourced to investigate minor competition issues like this so we may never find out.

[njee20]

I thought the Hatton's issue has nothing to do with discounting and is relating to their becoming a manufacturer in direct competition with Bachmann with the 66.

Having dealt with the CMA quite a lot at work they seem largely useless, and seem to make decisions on their own policies based on the whim of whoever you speak to!

[Rabbitaway]

This is only a thought

Hattons are the UK's biggest retailer of model railways and a high percentage of their sales are Bachmann products. Bachmann are on a mission to significantly increase their prices compared to other manufacturers. Therefore even if Hattons are applying the same level of margin sales of Bachmann products will be likely reduced and profits in cash terms will be less. Not good for a business with effectively fixed costs. Hattons may be trying to get a better trade deal to counter this issue through better margins. Hattons may be of the view that Buchmann needs Hattons as a retailer much as they need them as a supplier. The legal issue may be down to changes in the trade contract between the two parties. Is there a who blinks first situation here?

Is there a position where a retailer with significant leverage has just had enough of Bachmann's unreasonable price increases and the way this may effect their sales and is pushing for better deal and scrapping of any restrictions such is the limited retail 15% discount on new models.

I know personally I have not bought any new Farish for at least two years (except the cheap items being cleared by Bachmann through retailers) due to the very high prices

[zopadooper]

very interesting, I would read that as saying that a retailer could not discount by more than 15% would be illegal.
but then I'm a human being, not a lawyer 

Maybe so but a seller can choose who they wish to supply.

I was involved with a large mail-order organisation that was unable to buy supplies from Dapol, Farish or Peco because they did not have a physical presence  on a High Street

[longbow]

The seller would likely be in breach if he threatened to stop supplying a retailer because they refused to apply a maximum discount policy. Otherwise competition law would be easily evaded.

[Dickydcc]

Not sure if this is relevant, to this thread, but for a while Hattons were not offering a fitting service for DCC chips (those of us with fists of ham & bad eyes need to know these things). I notice that they will now fit them again. So, is this a Hattons issue rather than a Farish one?

Of course the irony is that now they will fit me a DCC chip but they don't have any Farish to sell 

[scruff]

I believe that Bachmann are refusing to sell to Hattons as Hattons are classed by Bachmann as a manufacturer and Bachmann will not supply manufacturers with their product, as per Bachmann T & C's.

Cheers
Mark