# Fuck You, you underpricing rule-breaking assholes **URL:** \ **Category:** The BBQ Pit\ **Created:** [September 25, 2006, 12:48am UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994 "2006-09-25T00:48:38Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Sweet\_Mercury](https://avatars.discourse-cdn.com/v4/letter/s/49beb7/32.png) [@Sweet\_Mercury](https://boards.straightdope.com/u/Sweet_Mercury)\ **Post date:** [September 25, 2006, 8:27pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/21 "2006-09-25T20:27:22Z")
Doesn’t Widget Inc. share a good deal of blame for not enforcing their own rules and standards on their authorized dealers? And, is there a specific moral obligation that prevents you from pricing as you see fit? It would seem to me that Widget Inc. has absolved you of that responsibility by not enforcing the rule on its other dealers. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [September 25, 2006, 8:32pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/22 "2006-09-25T20:32:12Z")
[QUOTE=mhendo] Nice selective quoting there, **DrDeth**. Let’s look at the whole section, shall we?Bolding mine. The bolded section, and the rest of this quoted section, suggests that there are, in fact, circumstances in which the seller may enforce minimum resale prices. The “rule of reasom” test seems rather complicated, but it seems that arrangements like those described by the OP are allowable as long as they pass that test. [/QUOTE] I gave the link, and I cited that which was relevant and also within copyright laws.. :rolleyes: Why don’t show me a recent CA case where Price-fixing was allowed by the Courts? :dubious: ---
**Author:** ![ShibbOleth](https://avatars.discourse-cdn.com/v4/letter/s/848f3c/32.png) [@ShibbOleth](https://boards.straightdope.com/u/ShibbOleth)\ **Post date:** [September 25, 2006, 8:32pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/23 "2006-09-25T20:32:23Z")
I live in a very similar world to **Cartooniverse**. We sell at what we think the market will bear. Some, although by no means all, of the stuff we sell can be had via Internet dealers who have very low margins and very high volume. The reason they can do this is that they hold no inventory and offer no customer service. Some of our customers, current and potential realize this. Some just don’t bother to shop the internet for whatever reason. But the really annoying customers are the ones who use us to educate them, then buy stuff from the internet. Sometimes there is karma when the stuff they buy at lowest cost from the internet breaks and they ask us to fix it. In the meantime we are instituting a policy to charge consulting fees for people who are obviously just shopping on price. We’ll educate them, for a fee. And then they can buy from whomever they want. ---
**Author:** ![Zakalwe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/zakalwe/32/270_2.png) [@Zakalwe](https://boards.straightdope.com/u/Zakalwe)\ **Post date:** [September 25, 2006, 8:38pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/24 "2006-09-25T20:38:45Z")
[QUOTE=mhendo] Nice selective quoting there, **DrDeth**. Let’s look at the whole section, shall we?Bolding mine. The bolded section, and the rest of this quoted section, suggests that there are, in fact, circumstances in which the seller may enforce minimum resale prices. The “rule of reasom” test seems rather complicated, but it seems that arrangements like those described by the OP are allowable as long as they pass that test. [/QUOTE] Thanks! It doesn’t appear that Widgets is setting the price at which the buyer may resell (the prohibited behavior). The OP quite clearly states that people sell Widgets at many different prices. Widgets simply enforces a minimum price which is, in the absence of a noncompetitive motive, not illegal. On preview: > [@DrDeth](#): > > I gave the link, and I cited that which was relevant and also within copyright laws.. Why don’t show me a recent CA case where Price-fixing was allowed by the Courts? Actually your cite is not relevant, this is not a case of price fixing. Buyers (ie Cartooniverse and his competitors) are free to sell Widgets for any price they want as long as is it above the minimum. ---
**Author:** ![ShibbOleth](https://avatars.discourse-cdn.com/v4/letter/s/848f3c/32.png) [@ShibbOleth](https://boards.straightdope.com/u/ShibbOleth)\ **Post date:** [September 25, 2006, 8:41pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/25 "2006-09-25T20:41:05Z")
[QUOTE=DrDeth] I gave the link, and I cited that which was relevant and also within copyright laws.. :rolleyes: Why don’t show me a recent CA case where Price-fixing was allowed by the Courts? :dubious: [/QUOTE] How is price fixing defined? Is Chevrolet allowed to set pricing across all of their dealers? I suspect so. Are Chevrolet, Ford, Dodge and Toyota allowed to get together and decide the minimum price for a pick-up truck? That’s illegal price fixing for sure. ---
**Author:** ![tdn](https://avatars.discourse-cdn.com/v4/letter/t/94ad74/32.png) [@tdn](https://boards.straightdope.com/u/tdn)\ **Post date:** [September 25, 2006, 8:52pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/26 "2006-09-25T20:52:55Z")
[QUOTE=Cartooniverse] **tdn** , I cannot do the same as Assoles Inc. is doing, because I am bound to the same dealer agreement they are. The difference is, they’re wilfully breaking it. I ain’t. [/QUOTE] 😕 Maybe I’m just having a case of the Mondays, but I’m still not getting it. If you can’t make any real profit at the artificially lowered price, then how can Assholes, Inc.? When they break the agreement, they should be as bad off as you’d be. What is their incentive? ---
**Author:** ![mhendo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mhendo/32/3159_2.png) [@mhendo](https://boards.straightdope.com/u/mhendo)\ **Post date:** [September 25, 2006, 8:53pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/27 "2006-09-25T20:53:26Z")
[QUOTE=DrDeth] I gave the link, and I cited that which was relevant and also within copyright laws.. :rolleyes: Why don’t show me a recent CA case where Price-fixing was allowed by the Courts? :dubious: [/QUOTE] But this begs the very question we’re seeking to answer here: what _is_ price fixing, from the point of view of California law. Your own citation states, clearly and unambiguously, that “A seller, in the absence of an anticompetitive purpose or effect, may independently (1) announce minimum resale prices and decide to sell or not to sell to a dealer who has not adhered to those prices; and (2) choose those to whom it wishes to sell and refuse to sell to any other buyer.” This suggests that such behaviour is not, by definition, illegal price fixing. We then have the section you quoted, which says that “a seller of a product may not by contract or coercion set the price at which the buyer may resell the product. Such resale price fixing is always illegal whether or not the price set is reasonable.” Then there’s a long paragraph detailing the circumstances that allow for seller enforcement of vertical price restraints. You act as if the first quoted section about minimum resale prices and the later section about the “rule of reason” simply don’t exist. You’re the one who brought up California law; it’s rather stupid of you to now ignore the details of the very law that you cited in support of your claim. I’m not arguing that **Cartoonvierse** ’s situation would be legal under California law. I’m not sure whether or not he’s even given us enough information to make that determination. I’m just saying that you’ll have to do better if you want to argue that all similar cases are unambiguously illegal in California. ---
**Author:** ![Dead\_Badger](https://avatars.discourse-cdn.com/v4/letter/d/848f3c/32.png) [@Dead\_Badger](https://boards.straightdope.com/u/Dead_Badger)\ **Post date:** [September 25, 2006, 9:01pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/28 "2006-09-25T21:01:43Z")
Well it seems like **DrDeth** ’s quoted passage, in combination with the rest, implies that Acme Widgets can’t have any binding control over the prices their resellers set, except that they can choose not to sell to them in future. They may “independently announce” prices, and choose whom to sell to based on adherence, but they can’t sell with the condition that the prices be followed. Once you own something, it appears that the price is yours to set as you like. So by buying the widgets, these other resellers are _not_ promising to adhere to the price controls set by Acme Widgets. This rather puts the lie to the accusations of lying and cheating; they’re merely choosing not to adhere to a voluntary suggestion. It’s gamesmanship; it’s competition; it’s testing whether Acme Widgets have the balls to enforce their non-binding price controls; but lying and cheating, it is not. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [September 25, 2006, 9:08pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/29 "2006-09-25T21:08:47Z")
[QUOTE=mhendo] I’m not arguing that **Cartoonvierse** ’s situation would be legal under California law. I’m not sure whether or not he’s even given us enough information to make that determination. I’m just saying that you’ll have to do better if you want to argue that all similar cases are unambiguously illegal in California. [/QUOTE] I gave the cite. I’ll let the SDMB IRL lawyers argue whether or not the OP’s _exact_ situation would be illegal under CA law (also note I don’t really care 😛 ). However, it is clear from that cite that the State of CA _does_ have the right to"interfere in the private contractual relationship of two business entities" under _certain similar circumstances._ ---
**Author:** ![Cartooniverse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cartooniverse/32/3084_2.png) [@Cartooniverse](https://boards.straightdope.com/u/Cartooniverse)\ **Post date:** [September 25, 2006, 10:27pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/30 "2006-09-25T22:27:29Z")
[QUOTE=Sweet Mercury] Doesn’t Widget Inc. share a good deal of blame for not enforcing their own rules and standards on their authorized dealers? And, is there a specific moral obligation that prevents you from pricing as you see fit? It would seem to me that Widget Inc. has absolved you of that responsibility by not enforcing the rule on its other dealers. [/QUOTE] Lemme address your question first, which is a really good one. Yes, they do. In fact, they **do** enforce this rule and standard- but nobody on staff is assigned to constantly surf the Internet, looking for rule-breakers. As I said way up there, two other huge vendors ( both walk-in business and Internet sales ) did this in the last few months. I cotttoned to both of them, notified Widget Company and they were straightened out- and lo and behold, they now comply. This third company will do the same, I have no doubt. Yes, there is a specific moral obligation. I was told, when I was offered the chance to sell the Widgets, that this is how it works. Period. I want to play, I play by the rules. From where I sit, and how I was raised, that **is** my moral obligation. I cannot speak for the deals they have with “the majors” in the field. I have no written contract. I sell a lot, I get commissions, they are happy to sell me Widgets so I can re-sell them. I am also a recognized expert in my field. **Shibboleth** and I are living parallel lives. ( Daddy always loved you more. 😉 ). I too dispense a lot of advice by email and phone to people who then turn around and buy a Widget from somebody else. That irks me, but in the end they will come back to me. Why? Because 99.9 % of the Widget dealers in the country sell. They do not train. They lack the professional experience and ability to train at all. So, even if Joe Pickelsucker goes and takes my advice, sage and brilliant as it may be, and goes and buys a nice new Widget from Assholes, Inc. , Joe will still come to me to learn _how to use it._ So, they appreciate my honest answers and suggestions, knowing I may or may not get a sale. They come back for more advice, which I give freely- and frequently come to me for formal training. My time is what I have to sell- and like **Shibb** , I do spend a portion of my time on non-sales. I can spend an hour with someone who is being honest, and intelligent. ( " I am hunting for the best price. I saw your website- you have a lot of experience, and I wanted to ask you some things about the Widget. Can you help me? ") I can also politely shut down and move on in 5 minutes if the person is clearly just surfing for a deal, and free info and has no interest in being reasonable or polite about it. Again, my time and expertise are what I have to sell, to a much greater extent than boxes of Widgets. The issue that has arisen with California law is relevant, and interesting since apparently as long as precedent has been set, Widget Company **may in fact** do what they are doing. ( This comes as no shock to me. Widget Company has been around for 50 years, give or take, is a recognized leader in the industry and surely knows how to obey the laws of the land. ) **tdn** , the incentive is that they will not lose the right to sell the item. They are The Majors, the huge sellers. They will be slapped around some by one of the VPs of Widgets, and told to cut it out. And, they have in the past and no doubt will be glad to do so again- when caught. They can sell a bucketload of Widgets before getting caught, however. There’s yer incentive. > [@Dead Badger](#): > > Well it seems like DrDeth’s quoted passage, in combination with the rest, implies that Acme Widgets can’t have any binding control over the prices their resellers set, except that they can choose not to sell to them in future. They may “independently announce” prices, and choose whom to sell to based on adherence, but they can’t sell with the condition that the prices be followed. Once you own something, it appears that the price is yours to set as you like. > > So by buying the widgets, these other resellers are not promising to adhere to the price controls set by Acme Widgets. This rather puts the lie to the accusations of lying and cheating; they’re merely choosing not to adhere to a voluntary suggestion. It’s gamesmanship; it’s competition; it’s testing whether Acme Widgets have the balls to enforce their non-binding price controls; but lying and cheating, it is not. I dunno about that, **Badger**. Widgets Company is in no way _obliged_ to allow Assholes Inc. to sell the Widget. In fact, once a year, new deals are made with all dealers big and small. ( I may be one of the few exceptions, because I am a sole proprietor with no storefront at all, and because I also train. I’ve not raised my prices in 2 years, and aside from the increases in my dealer cost because of unit price increases, I will not alter my pricing. ) Widget Company holds the cards here. Not Assholes Inc. Yes, no doubt, once you own something it is yours to give away for free if you are so inclined. It is also Widget Company’s right to stop selling to you if you violate the terms of an agreement. You do realize that an agreement between Assholes Inc and Widget Company is binding, even if it flies in the face of what some may consider to be normal business practices. What if, for example, Assholes Inc. refused to sell to anyone for 36 hours every single week of the year, year round. And what if they also refused to sell any Widgets for several weeks a year, a week or so at a time. No Internet sales, nothing. Widgets Company can either agree to those terms, and sell Widgets to Assholes Inc, or decide they don’t like that business plan. I am feeling as though there is a huge chasm between legally and mutually agreed upon business plans and the law. I chose to call it cheating. Legally it may not be. However, this is The Pit and it’s my rant and by god, I think they’re cheating sneaky motherfuckers who are breaking agreements that were arrived at in GOOD FAITH. ---
**Author:** ![Dead\_Badger](https://avatars.discourse-cdn.com/v4/letter/d/848f3c/32.png) [@Dead\_Badger](https://boards.straightdope.com/u/Dead_Badger)\ **Post date:** [September 25, 2006, 11:27pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/31 "2006-09-25T23:27:10Z")
[QUOTE=Cartooniverse] I dunno about that, **Badger**. Widgets Company is in no way _obliged_ to allow Assholes Inc. to sell the Widget. [/quote] Well, no; according to the laws cited in this thread (which I realise are state-specific), Widgets Company is in no way obliged to _sell_ to “Assholes Inc.”, or whomever may choose to try and buy their product. Once someone else owns the widget, AIUI the law says they can sell it for whatever they damn well please; there’s no question of “allowing” someone to sell it. It is either their property, or not. As far as I can see it, US law says that once you own something, you own it, and that means you can sell it for whatever price you deem suitable. What the laws cited _do_ say is that the original manufacturer of a given item can use your price behaviour to restrict supply to you _in future_. So if you think that a competitor has broken an entirely voluntary price code, you’re able to report it to the manufacturer in the hope that they will then preferentially deal with you in future, and cut out the company that undercut you. I don’t find that a particularly pleasant thing, as in my opinion it smacks of price fixing; however it seems to be the law as it stands. I don’t really see that you can accuse people who sell their own property for a price of their choosing of anything other than personal short-sightedness, however. The risk they are running is entirely theirs; they have no obligation to you, or the supplier. Frankly, you should really be cheering the manufacturer for protecting your artificially high margins. I don’t understand why you feel entitled to have competitors allow you a comfortable profit according to your own valuation function. > [@](#): > > Widget Company holds the cards here. Not Assholes Inc. Yes, no doubt, once you own something it is yours to give away for free if you are so inclined. It is also Widget Company’s right to stop selling to you if you violate the terms of an agreement. You do realize that an agreement between Assholes Inc and Widget Company is binding, even if it flies in the face of what some may consider to be normal business practices. The CA law cited specifically states that there can be no legally binding sales agreement that binds a buyer to restrict the subsequent sales price for the goods that they have bought. It says that, right there in black and white. It _also_ says that a producer may legally use price adherence as grounds for denying _future_ sales, but it quite categorically says that an agreement between a vendor and a customer can have no legally binding conditions on subsequent sales prices. > [@](#): > > What if, for example, Assholes Inc. refused to sell to anyone for 36 hours every single week of the year, year round. And what if they also refused to sell any Widgets for several weeks a year, a week or so at a time. No Internet sales, nothing. Well, yeah; what if? So Widgets Inc. go and sell to someone else. As far as I can see, CA law carves out an explicit exception for trade discrimination, allowing for _voluntary_ price codes. The _only_ method of enforcement for these codes appears to be withholding future wholesale stock. There is no legal remedy for selling goods for less than the MAP. There isn’t even any implicit agreement to sell for more than this price in the act of purchasing the wholesale goods. That decision is between that retailer and their expectation of future stock. I simply don’t see a moral dimension here. They are your competitors; why are they morally obliged to guarantee you a profit? How are they negatively affecting the manufacturer, when the goods are already paid for? ---
**Author:** ![Shayna](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/shayna/32/17976_2.png) [@Shayna](https://boards.straightdope.com/u/Shayna)\ **Post date:** [September 25, 2006, 11:44pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/32 "2006-09-25T23:44:17Z")
[QUOTE=tdn] 😕 Maybe I’m just having a case of the Mondays, but I’m still not getting it. If you can’t make any real profit at the artificially lowered price, then how can Assholes, Inc.? When they break the agreement, they should be as bad off as you’d be. What is their incentive? [/QUOTE] Of course I can’t speak specifically to Widgets, but often companies with deeply discount items (sometimes even _below_ cost) as what’s referred to as “loss leaders.” Those items at that price will draw people into the store, where they can be sold other, more profitable items, often things that “go with” the loss leader item. So that could potentially be one incentive some of the Widget resellers might have. ---
**Author:** ![Cartooniverse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cartooniverse/32/3084_2.png) [@Cartooniverse](https://boards.straightdope.com/u/Cartooniverse)\ **Post date:** [September 25, 2006, 11:56pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/33 "2006-09-25T23:56:11Z")
[QUOTE=Dead Badger] They are your competitors; why are they morally obliged to guarantee you a profit? How are they negatively affecting the manufacturer, when the goods are already paid for? [/QUOTE] Oh. I didn’t mean to say at all that they are morally obliged. I just hate that they do it. **I feel morally obliged** to adhere to an agreement that I made with Widget Company, and I am fully aware ( having had quite a few detailed talks with the company folks ) that all dealers are held to a similar deal. It is my own desire to adhere to my word that is the moral obligation. I did not mean to say that anyone else in the business is supposed to be moral. 🙂 How are they negatively affecting the manufacturer. Good question. In theory, one company could dump Widgets for one dollar over Wholesale. They could sell on the Internet, effectively making the entire planet their storefront. They could drive all other dealerships out of business, thus collapsing the entire dealer network carefully cultivated and developed _by Widget Company_ over the last four or five decades. They could try to do all of that, but as you yourself have pointed out- monthly billing and shipping can stop…this month. Forever. And ever. Widget Company can and would in a heartbeat, stop selling to someone who sold at Wholesale plus a dollar. Why? Because it does not suit their needs to supply to a worldwide, or countrywide, or regionwide monopoly. Additionally, I would ask you to show me one cite that is not a mom and pop outfit that sells table trivelts, a company of some size and repute, that deals with wholesale items, that routinely flouts the prevailing market pricing and simply dumps. Far below “loss leader” status, and well in to the realm you are describing, which could be charitably described as " fuck you buddyboy, this is MY pallet of Widgets now and if I wanna sell them on streetcorners for five dollahs, I will and fuck you for not liking it". Find me the large sized retailer that does this- and keeps on having access to the manufacturer’s product. I suspect you cannot, because the business model you have described _could_ exist, but in fact does not exist for more than a week or two or a month at a time- until the manufacturer’s dealer rep gets wind of it, and sets things straight. **Shayna** , you are correct. Loss Leaders are sold all the time. However, this Widget, it is a bit unique and I suspect that other items would be sacrificed as loss leaders, to get people to come into the store to buy a package of things including the Widget. ---
**Author:** ![Martini\_Enfield](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/martini_enfield/32/11123_2.png) [@Martini\_Enfield](https://boards.straightdope.com/u/Martini_Enfield)\ **Post date:** [September 26, 2006, 11:30am UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/34 "2006-09-26T11:30:17Z")
[QUOTE=Shayna] Of course I can’t speak specifically to Widgets, but often companies with deeply discount items (sometimes even _below_ cost) as what’s referred to as “loss leaders.” Those items at that price will draw people into the store, where they can be sold other, more profitable items, often things that “go with” the loss leader item. So that could potentially be one incentive some of the Widget resellers might have. [/QUOTE] This is what I came in here to mention… It’s quite possible that Assholes, Inc is a large company who can afford to sell their Widgest for $1 profit, because they’re making a $100 profit on the Glow-In-The-Dark Widget Cover, DeLuxe Widget Thingy, or the Optional Whatchamacallit Add-On for the latest Widget Neon model… \*What rolls down stairs alone or in pairs And makes your neighbours fidget? It fits on your back, It’s great for a snack, It’s Widget, Widget, Widget! It’s Widget Widget It’s big, it’s heavy, it’s cheap! It’s Widget Widget Better than bad, it’s good! You’re going to love it Widget Come on and get your Widget! _Announcer_ New Widget, from WidgetCo!\* 😃 ---
**Author:** ![Zakalwe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/zakalwe/32/270_2.png) [@Zakalwe](https://boards.straightdope.com/u/Zakalwe)\ **Post date:** [September 26, 2006, 2:11pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/35 "2006-09-26T14:11:04Z")
[QUOTE=Shayna] Of course I can’t speak specifically to Widgets, but often companies with deeply discount items (sometimes even _below_ cost) as what’s referred to as “loss leaders.” Those items at that price will draw people into the store, where they can be sold other, more profitable items, often things that “go with” the loss leader item. So that could potentially be one incentive some of the Widget resellers might have. [/QUOTE] Not in California they can’t. Further down from the cite listed above by DrDeth and mhendo: > [@](#): > > Below Cost Sales > > The Act also bans “sales below cost” by selling or offering to sell > products at prices below the seller’s cost in the intent to injure the > complaining party or destroy competition. See Business and Professions > Code 17043; Western Union Financial Services, Inc. v. First Data Corp. > (1993) 20 Cal.App.4th 1530; Sandler v. Gordon (1949) 94 Cal.App.2d 254. > > The evidence that may be used to determine the costs involved is set out > in the Business and Professions Code (Business and Professions Code > Sections 17071 et. seq.) varies contingent upon the types of components > that make up the seller’s cost of providing the product. > > Loss Leader Sales > > The Act also bars “loss leader” sales, defined as sales (1) below cost, > (2) to induce, promote or encourage the purchase of other merchandise, > and (3) with the intent to injure competitors or destroy competition. > Business and Professions Code 17044. ---
**Author:** ![Dead\_Badger](https://avatars.discourse-cdn.com/v4/letter/d/848f3c/32.png) [@Dead\_Badger](https://boards.straightdope.com/u/Dead_Badger)\ **Post date:** [September 26, 2006, 7:28pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/36 "2006-09-26T19:28:06Z")
[QUOTE=Cartooniverse] Oh. I didn’t mean to say at all that they are morally obliged. I just hate that they do it. **I feel morally obliged** to adhere to an agreement that I made with Widget Company, and I am fully aware ( having had quite a few detailed talks with the company folks ) that all dealers are held to a similar deal. [/quote] Fair enough. I guess my personal feeling is that a non-binding agreement in business terms may as well not exist. I’m not saying I’d make then break one, but I certainly wouldn’t expect my competitors to honour one without monitoring. And while it’d certainly be irritating to catch them at it repeatedly, I don’t think I’d expect them to be concerned about my family’s lack of TV dinners. But I do realise you were on a rant. 🙂 > [@](#): > > How are they negatively affecting the manufacturer. Good question. In theory, one company could dump Widgets for one dollar over Wholesale. They could sell on the Internet, effectively making the entire planet their storefront. They could drive all other dealerships out of business, thus collapsing the entire dealer network carefully cultivated and developed _by Widget Company_ over the last four or five decades. Well, I think dumping for less than cost is a separate issue; as **Zakalwe** showed, there are separate laws to deal with that in some jurisdictions, and your rant seemed to be more relating to someone else just lowering their profit margins. I certainly see how the value of a given product could be artificially reduced by a retailer using it as a loss leader, but it seemed to me that we were more talking about creating a protected dealer network with fluffy profit margins here. As you say, these Widgets apparently are too high-value an item to be sold as a loss leader, so that’s not really the issue; it’s about whether a manufacturer gets to decide what a fair price for the customer is, or whether the customer and retailer get to do that. Obviously, I naturally favour the latter; as a consumer, I would rather that a dealer makes a profit by offering a service of value, rather than by manufacturer fiat. (I’m not saying you don’t offer value, incidentally.) Selling products well below their natural market value I can see as being damaging. Simply not adhering to pre-agreed profit margins is not, AFAICS. The only benefit (that I can think of) to manufacturers from maintaining artificially high prices is to create an illusion of quality. This is borne out by the earlier Rolex example; a huge part (perhaps all?) of Rolex’s reputation is based on the simple fact that they are very expensive (despite being hideous), so I can see why they’d want to protect that illusory image. I don’t see the disadvantage in having your dealers compete to try and maximise your product’s sales, however, and if I were a manufacturer, I’d be wary of removing one of the main ways they have of competing with each other. ---
**Author:** ![Shayna](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/shayna/32/17976_2.png) [@Shayna](https://boards.straightdope.com/u/Shayna)\ **Post date:** [September 26, 2006, 7:44pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/37 "2006-09-26T19:44:48Z")
[QUOTE=Zakalwe] Not in California they can’t. Further down from the cite listed above by DrDeth and mhendo: [/QUOTE] I don’t necessarily agree with your interpretation. I’ll highlight the relevant part. > [@](#): > > The Act also bars “loss leader” sales, defined as sales (1) below cost, (2) to induce, promote or encourage the purchase of other merchandise, **and** (3) with the intent to injure competitors or destroy competition. Business and Professions Code 17044. By my reading, a business would have to prove **intent to injur or destroy** them in order to prevail under this rule. ---
**Author:** ![Zakalwe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/zakalwe/32/270_2.png) [@Zakalwe](https://boards.straightdope.com/u/Zakalwe)\ **Post date:** [September 26, 2006, 8:30pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/38 "2006-09-26T20:30:19Z")
[QUOTE=Shayna] I don’t necessarily agree with your interpretation. I’ll highlight the relevant part. By my reading, a business would have to prove **intent to injur or destroy** them in order to prevail under this rule. [/QUOTE] My fault for lazy citing. In that particular case, the author was incorrect in his/her summary of the relevant law. The actual California Code reads: > [@](#): > > 1. “Loss leader” means any article or product sold at less than > cost: > (a) Where the purpose is to induce, promote or encourage the > purchase of other merchandise; **or** > (b) Where the effect is a tendency or capacity to mislead or > deceive purchasers or prospective purchasers; **or** > (c) Where the effect is to divert trade from or otherwise injure > competitors. Emphasis added. > [@](#): > > 1. It is unlawful for any person engaged in business within > this State to sell or use any article or product as a “loss leader” > as defined in Section 17030 of this chapter. [Cite 1](http://caselaw.lp.findlaw.com/cacodes/bpc/17020-17031.html#Scene_1) [Cite 2](http://caselaw.lp.findlaw.com/cacodes/bpc/17040%2D17051.html) ---
**Author:** ![Tristan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tristan/32/18058_2.png) [@Tristan](https://boards.straightdope.com/u/Tristan)\ **Post date:** [September 26, 2006, 8:54pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/39 "2006-09-26T20:54:19Z")
Does anyone else REALLY want to know what the hell our good friend **Cartooniverse** sells? And also, hearty Fuck to the badguys with no scruples, 'cause this is the pit. ---
**Author:** ![Dog80](https://avatars.discourse-cdn.com/v4/letter/d/6bbea6/32.png) [@Dog80](https://boards.straightdope.com/u/Dog80)\ **Post date:** [September 26, 2006, 8:57pm UTC](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994/40 "2006-09-26T20:57:27Z")
[QUOTE=tdn] 😕 Maybe I’m just having a case of the Mondays, but I’m still not getting it. If you can’t make any real profit at the artificially lowered price, then how can Assholes, Inc.? When they break the agreement, they should be as bad off as you’d be. What is their incentive? [/QUOTE] Sometimes Assholes Inc. are real assholes who barely make any profit. They operate exactly like those people who only pay the minimum amount on their credit card. Eventually their deficit reaches astronomical proportions and of course they are unable to pay it off, so they close shop. At the end of the day the volume of sales is irrelevant. What matters is how much money you earned not how many widgets you sold. Retailers some times forget that rule. [Previous page](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994.md?page=1) [Next page](https://boards.straightdope.com/t/fuck-you-you-underpricing-rule-breaking-assholes/373994.md?page=3)