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A Tale of Two Markets

The stark difference in US and Australian policies towards retail price maintenance was underscored this month with Sony US explaining its ‘three strikes and you’re out’ policy against price-cutting, while the ACCC has signalled opposition to local buying group Narta’s setting of minimum advertised retail prices.

Rod Sims, chairman, ACCC.
Rod Sims, chairman, ACCC.

Narta is a buying group for around 30 retailers, including Ted’s Cameras, Michaels, Diamonds, JB Hi-Fi and Bing Lee. It claims around 25 percent market share in electrical goods and appliances.

The Australian Competition and Consumer Commission issued a draft decision today blocking Narta International’s proposal for minimum advertised pricing.

Narta has proposed ensuring all of its members advertise the same price for particular new releases, such as cameras, televisions, whitegoods, espresso machines and ovens. Under the proposal, individual retailers can negotiate price with customers, but must stick to minimum prices in advertising.

‘The ACCC has concerns that the ability for Narta to set a minimum advertising price on a broad range of electrical goods will reduce competition between retailers and result in higher prices for consumers,’ ACCC chairman Rod Sims said in a statement.

Unfair to online retailers?

‘This is particularly a concern for competition with online retailers, which generally do not negotiate their selling prices down from the advertised price like bricks-and-mortar retailers might do.’

The consumer watchdog is able to grant authorisations when it is satisfied that the public benefit from the conduct outweighs any public detriment. It is seeking submissions on its draft ruling.

Meanwhile, back in the home of the free market, Sony US director for Alpha camera systems Mike Kahn responded to an audience question at PMA@CES 2013 on how bricks-and-mortar retailers can compete with online dealers who can acquire equipment at a lower price: ‘One of the things we have done at Sony, and I think you will start seeing more and more in the industry, is that we have created Sony Unilateral Retail Execution — SURE unilateral pricing.

‘SURE pricing ensures that if you’re selling a Sony Alpha camera or NEX, whether you’re online or in the store, it’s going to be the same price, regardless. If an authorised retailer breaks SURE, then for 30 days they aren’t selling our product. Break it again, 120 days. Break it again, and we can stop the contract. We will stand behind that.’

Unilateral pricing policies were introduced to the US around April last year by a number of leading camera distributors in response to price-cutting from online resellers.

The introduction of higher online prices in the US has helped reduce the price differential between Australian retailers and US-based online retailers.

– It’s somewhat ironic that US competition laws permitting price fixing are helping local businesses more than the ACCC’s consumer-obsessed approach!

One Comment

  1. Mark Mark January 18, 2013

    The ACCC are mad!
    If we don’t adopt a similar program here, we will see (bricks and mortar) retailers dropping like flies.

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