Manufacturers cannot tell a dealer the price they must charge for an item. The can provide a MSRP. But the dealer can sell the item for any price the dealer wants. Should the manufacturer dicipline the dealer for such a practice, that is an anti-trust violation (price fixing is a term that comes to play here). Until very recently, certain companies (Sony, Pioneer Elite, for example) would allow the dealer to sell at any price point they wanted...they were, however, prevented from advertising a price below a Minimum Advertised Price (giving rise to the common phrase "call for current price"). Recent case law is making variations of that practice no longer legal.
What a manufacturer can do; however, is franchise the dealer to a territory. In other words, prohibt the dealer from selling product outside a defined geographic area. In most cases, these contractual provisions are to restrict mail order/telephone order/internet order sales. In other words, I cannot call a Meridian dealer in Maryland and order equipment from that dealer. I can go to Maryland, visit the dealer, buy the gear and have them ship it to me (basically, the manufacturers are looking for an existing face-to-face relationship between dealer and consumer).
If a dealer starts discounting, advertising that discount (to the umbridge of other dealers), you can bet your sweet b____y, the manufacturer will not drop the dealer for price violations. There are 50 other reasons a manufacturer can drop their lover. Some objective and some very subjective.
Now, all bets are off for big dealers. I know of a Krell dealer that pushes Krell stuff "out the back door" (at one point had an 800 number operation). Krell "unofficially" knew it; on the other hand, they were not about to drop one of their largest volume dealers in the country. A bunch of wink, wink going on here. (There would be an interesting piece of case law that could come from this but most dealers are too small to take on the cost of some expensive litigation. The case would be based upon the fact that dealer agreements have a bi-directional effect. In other words, while the agreement prevents me (for example) from selling discounted products over the Internet, it also provides an implied protection to me that my turf will not be eroded by another dealer discounting outside their franchised area. Thus, if the manufacturer is aware of such practices and does nothing about it, I could get real nasty with 'em. You can just imagine the cost of discovery alone for such a challenge. Thus, the manufacturers policies (and actual practices) are to a degree protected by the dealer's shallow pockets and their deeper pockets.)
The concept of "controlled distribution" is one from a bygone era and many manufacturers have not, or have avoided, this shift. Such practices can NOT be supported by any economic, social economic, consumer behavioral, or marketing theory. Yet the practice persists. I predict, within the next ten years cache brands will either have changed their practices or be absent from the market place.
One such manufacturer came within a couple of months of losing 80% of their U.S. distribution unless they changed that policy (they, BTW, were clueless about what was happening). While this event did not occur, the circumstances that will force this issue, I am certain, will come on the A/V scene againin the near future (if they are not already fermenting somewhere). In the meantime, your choices are to deal with your frustration and/or vote with your pocket book.
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D. Erskine
DEsign Cinema Privee
www.DEsignCinema.com
Imagine what you could do, if you could do all you imagine.
