Avoiding Problems with the FTC

[Disclaimer:  I am not a lawyer.  I don't play one on television.  The following should not be considered legal advice.  When in doubt, consult with your attorney.]

This post was inspired by a conversation on another forum about pricing.  To make a long story short, Dealer A was selling an item at a fair markup.  Dealer B was selling the same item barely above cost.  The question was, how could dealer A convince Dealer B to charge a more reasonable price?

The answer to the question is "He can't."  The Federal Trade Commission doesn't look kindly on two or more competitors agreeing on retail pricing.  In fact, it's a felony.  I don't know about you, but the last place I want to be is in federal prison, surrounded by murderers and thieves, when they found out I got busted for "acting together (with a competitor) in ways that can limit competition, lead to higher prices, or hinder other businesses from entering the market."  It could be a very long twenty years.

Seriously, the FTC defines "Price Fixing" as "companies getting together to set prices."  So, what's Dealer A to do?  First, contact the manufacturer.  US courts have established that manufacturers do have some rights when it comes to setting retail pricing.  Let them handle it.  Worst case–your rep might go to jail, but you won't.  (Be sure to send him/her a card at Christmas.)

If that doesn't work, stop carrying the offending line or product.  If you  can't make money on it, why carry it?  If it's a traffic-building brand, then you have to carry a profit line where you can make money.  [Hint:  Contact your Tacony Corporation representative.  He/she can help.]

Or, if you absolutely must sell the item in question, find ways to add value to justify your price.  Free delivery, free service, and free accessories are just a few things you might add.

Finally, the FTC has a booklet called "Competition Counts" that sheds some light on this whole "anti-trust" thing.  It's short and to the point, and you should have a copy of it on hand.  It's free.

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