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Wednesday, 31 May 2017

Price fixing and the TYT MD-2017

A post on Trilogy's website suggests that TYT may be engaging in resale price maintenance with radio dealers in the UK and possibly worldwide. Is this legal in the UK? A review of online documentation would suggest not.

Resale price maintenance (RPM) is defined by the Competition and Markets Authority: "RPM is where a supplier and a retailer agree that the retailer will not resell the supplier’s products below a specified price."

Note: I used the term price fixing in the title of this post. Technically retail price maintenance is not the same thing as price fixing, however they are both actions that harm the consumer by causing a price not to lower with competition. Both of these practises are illegal in many countries.

Screenshot of the webpage on Trilogy's website

In communication assumed to be directly from TYT, price fixing is openly discussed:
"Regular price is 110(simple)/118usd(GPS) 
But please note that our MOQ is 50pcs ,and retailer price should not less than 219/229usd"

This also reveals that the actual price the dealers are buying the radio at is only $110, and currently, the only dealer selling the radio in the UK is reselling them for £199.99! ($257 USD)

The webpage suggests that TYT may be deliberately limiting the market to artificially maintain a high cost for its radio, not only by fixing the price, but also by only allowing a single retailer in the country to sell the radio.

In a guidance document published by the Competition and Markets Authority, the following advice is given to retailers:
"You may still be involved in an unlawful RPM agreement where a supplier:
  • imposes restrictions on how far you can discount its product
  • prevents or limits your ability to advertise lower prices online (so-called ‘minimum advertised price policies’)
  • has linked a resale price for the product to what other retailers are selling it for"
They also state that "Suppliers must not take any action that interferes with a retailer’s ability to set their own price of the supplier’s goods online or through other channels. Any attempt to do so is likely to be illegal."
Screenshot showing that TYT will not sell the radio to dealers who do not agree to fix the price.
Back in May 2016, the CMA fined a supplier of commercial refrigeration equipment over £2 million in a case where the supplier had set a minimum advertised price and threatened to stop the supply if dealers did not follow it.

Setting of a recommended retail price is legal. RPM is different because in RPM the manufacturer forces retailers to sell at the price they set, otherwise they cut off the supply.

Other websites also suggest that resale price maintenance is also illegal in the USA. If you are a citizen of the USA or any other country where RPM is illegal, and are affected by this RPM, you may wish to report it to the relevant authorities so that a free market can be established and consumers like yourself can benefit from competition in prices.

See this page for more information on resale price maintenance in the UK.

Do you think this constitutes illegal resale price maintenance?

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  1. Don't all radio manufacturers do this when they list a MSRP? Or is this different as the manufacturer is saying, don't sell below this price?

    1. MSRP is a suggested retail price. Once they force retailers into selling at their suggested price it becomes resale price maintenance, from what I understand. I'm not a lawyer though so this is just what I understood from reading stuff online.

  2. We are the uk reseller HamDMR and we have decided all our prices ourselves. No influence from tyt at all. I find this offensive in suggesting we would do this.

    1. Hi Adam. You've set your prices well above the minimum that TYT have been telling dealers to charge, however a lot of other dealers are selling the radio exactly at the price TYT have told them to. It seems pretty obvious that they are sticking to the minimum price set by TYT.

      I was not trying to suggest that you specifically are doing this, but that ALL dealers are doing it (right now at least). I have yet to see anyone price the radio below TYT's minimum price, even though in some regions there is a decent amount of competition, unlike in the UK. They are mostly all selling the radio for exactly $219.

      I'm sure that eventually TYT will drop their minimum price, but I wanted to warn consumers now so they could see that TYT was using anti-competitive practises that are unfair and immoral in my opinion, as well as illegal in many countries.

  3. RPM is illegal, and has been for over 30 years, but doesn't stop it happening - more common in white goods. Anyone ever notice Hotpoint washing machines are exactly the same price in every shop.

    In the case of radios, the supplier is out of the EU, and therefore can do whatever they want, and if you sell cheaply, your supplies will dry up, and there's nothing you can do. At the moment it's a unique product and they will sell every one they can source, so why would any sensible business cut a margin they don't need to. It's still, reading reviews, a bargain at £200 - it would be stupid to cut the price because it won't be a volume seller for long once the enthusiasts have got theirs worldwide.

  4. So basically what you're saying is that manufacturers don't have a right to try to control supply while ramping up production to better handle future demand? I can understand wanting to prevent such price control on an established product, but new ones should have a grace period where such regulations don't apply fully.

  5. I can't speak to laws in other countries, but MAP price policies are quite common within the U.S. It happens all the time from both large manufacturers and small. What they are trying to avoid is a few large dealers using cut-throat pricing on some select products to hurt the smaller dealers.

    Another point I'll make (since you suggest that some dealers are making a killing on profit), is that Chinese manufactures require orders to be 100% paid in advance upon order placement (and shipping can take weeks to get), AND - Chinese suppliers routinely jack up shipping costs (2x normal is quite common, sometimes higher). Shipping charges and inventory pre-payment costs should also be calculated into what the dealer(s) actually pay for the products, which are higher than what's shown in this posting.

  6. I'm not too sure, but this may come under 'the sale of goods and supply of services act'? (UK)
    Trading standards can investigate this can't they?


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