USA Today, 6/27/07 (
link):
Ruling may hurt discount pricing
By Christine Dugas, Jayne O'Donnell and Laura Petrecca, USA TODAY
Bargain hunters may find fewer deals on high-end apparel, accessories and electronics following a Supreme Court ruling Thursday.
The 5-4 decision overturned a 96-year-old law that prevented manufacturers from setting minimum retail prices. The majority wrote that lifting the pricing ban could benefit consumers if retailers offer better service or selection.
Richard Doherty of technology market researcher The Envisioneering Group agrees, saying the price ruling could lead retailers to use more free products and better service as sales incentives. "It's sure to be to consumers' benefit this summer and through Christmas."
Others predict a different result. "Many prestigious brands will use the decision to require retailers to sell at a specified price," says Washington, D.C., antitrust lawyer Steve Feirman. "Suggested retail prices had to be suggested to be lawful. Now, they can be mandatory."
Consumer advocates say that will be costly to shoppers. "Over the long term … discounters will be squeezed out of the market," says the Consumer Federation of America's Mark Cooper.
Antitrust lawyer Joe Sims expects limited impact from the ruling. Manufacturers now may set prices, but it will be costly to monitor and enforce that price distribution, says the Washington, D.C., lawyer. And, he adds, if the price is too high, they'll lose customers.
The lawsuit arose when Leegin Creative Leather stopped shipping its Brighton tooled-leather accessories to Dallas-area shop Kay's Kloset because the store was selling the goods more cheaply than Leegin wanted. After Leegin cut the store off, PSKS, parent of Kay's Kloset, filed an antitrust lawsuit.
Burlington Coat Factory, which filed a brief supporting PSKS, worries about the impact on the off-price chain. Burlington attorney Stacy John Haigney called the decision "an open invitation to manufacturers and full-price retailers to fix retail prices at a higher level. It will be detrimental to our business, but I really can't tell how much."
The Consumer Electronics Association says it supports the court decision because, it says, "sales training, industry marketing and after-sales service" are what many TV and audio gear buyers look for in electronics stores.
Bill Gates, of golf equipment maker Ping, says, "Not every consumer is a bargain shopper. Some consumers are looking for quality, innovation, personalization and customer service when they shop."