Sunday, October 01, 2006

Useful Links

For information regarding the Tilli Tomas/Sarah's Yarns issue, please visit Sarah's blog and navigate your way to the September archives (on the right navigation bar), specifically September 5th, 2006 and upwards. Other links to sites, podcasts, and threads discussing keystone pricing are listed below:

Lime & Violet Podcast (Episode 12) (be sure to read the listener comments)
Cast-On Podcast (Episode 38)
Cast-On Podcast (Episode 40)
Sexy Knitters Club website
Pixie Purls Podcast (Episode 15)
Live Journal Knitting Community

Whether price-fixing is illegal is still up for debate (although we have been informed that class action suits are being initiated). What we do know is that whether it's legal or not, most knitters and crocheters do not like the idea of yarn manufacturers requiring retail keystone pricing, consider it unethical, and are apparently willing to stop purchasing the yarns made by these manufacturers. Links to just a few of the sites with information regarding price fixing are listed below:

US Department of Justice website
Federal Trade Commission website
D.C. Office of the Attorney General's Price Fixing & Bid Rigging
Antitrust Law Blog

5 Comments:

At 7:20 AM, Blogger AmyDe said...

This is NOT price fixing. It is only good business. Price fixing would be if all the yarn companies got together and agreed (collusion) that as an industry ALL yarns must be sold in this manner. No such collusion has occured and whay is it that ewveryone is up in arms about keystone pricing in the yarn industry - I don't see anyone compaining about the 600% or so mark-up on furniture or jewelry - it's just the way business is done for them - so why is it that yarn companies are held to a different standard?

 
At 1:16 PM, Blogger Kate A. said...

I responded at some length about the Sarah's Yarns / Tilli Thomas issue on my blog, and generated some discussion. I would love to see more, and am really happy to see this blog dedicated to informing the knitting market about the issues involved. I posted about it twice, here:

http://aastrikke.blogspot.com/2006/09/yarn-market.html

And here:

http://aastrikke.blogspot.com/2006/10/yarn-market-continued.html

 
At 4:15 AM, Anonymous Fixer said...

What the Yarn manufacturers are doing is not illegal. It would be illegal if retailers and manufacturers were colluding to set the price, or if manufacturers were colluding among themselves to set the price. But as long as the price is set unilaterally by the manufacturer, it is not illegal.

The antitrust laws, however, give a manufacturer latitude to adopt a policy regarding a desired level of resale prices and to deal only with retailers who independently agree to that policy. A manufacturer also is permitted to stop dealing with a retailer who breaches the manufacturer’s resale price maintenance policy. That is, the manufacturer can adopt the policy on a "take it or leave it" basis.

Agreements on maximum resale prices are evaluated under the "rule of reason" standard because in some situations these agreements can benefit consumers by preventing dealers from charging a non-competitive price.


http://law.freeadvice.com/resources/gov_material/ftc_guide_to_antitrust_laws_illegal_business_practices.htm

I presume that the reason that the manufacturers wish to set the price is to prevent one or two large retailers (perhaps Internet retailers) from dominating the market through high efficiencies. This might lead to the collapse of the mom and pop retailer which might in turn reduce overall sales (by destroying a channel).

If the retailers were better marketers, they could get this point across in a manner that would probably reduce the level of vitrol around the issue.

 
At 7:21 PM, Blogger Consumer Friendly Yarns said...

Fixer, there are two types of "price fixing". One type is "horizontal price fixing" which is the type of price fixing you're referring to (between competing companies). The other type of price fixing is "vertical price fixing" which is described below.

Vertical agreements between buyers and sellers: Certain kinds of agreements between parties in a buyer-seller relationship, such as a retailer who buys from a manufacturer, also are illegal. Price-related agreements are presumed to be violations, but antitrust authorities view most non-price agreements with less suspicion because many have valid business justifications.

Resale price maintenance agreements. Vertical price-fixing -- an agreement between a supplier and a dealer that fixes the minimum resale price of a product -- is a clear-cut antitrust violation. It also is illegal for a manufacturer and retailer to agree on a minimum resale price.

“The antitrust laws, however, give a manufacturer latitude to adopt a policy regarding a desired level of resale prices….”, meaning that in SOME cases vertical price-fixing is allowed. Not all cases, and likely not MOST cases.

 
At 7:26 PM, Blogger luv2knit46 said...

Amyde -- Personally speaking, I wouldn't want to help support any company (furniture, jewelry, or otherwise) who marked their product up 600%, would you? And if there are companies doing such a thing, it's only a matter of time before their customers get wind of it and demand that this type of business practice stop! And IF other companies are getting away with this, does that justify it within the yarn industry? Do two wrongs make a right?

 

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