Canon's MAP Prices: Are They Ethical

[bmpress]

In response to your recent discussion of Canon's MAP prices, we need to ask ourselves whether or not this practice is ethical. Although certainly legal, MAP pricing is unethical because it is designed to trick the uneducated into paying a higher price than those in-on the ruse. Corporations today totally fail the ethics test IMO as can be seen by looking how the credit card companies set up all sorts of traps to extract extra fees from hidden and confusing language. And Big Pharma pays-off generic manufacturers to withhold their products for a few more years so the patented product can remain on the market with no competition at high pricing. The list goes on and on. Just yesterday the NYT reported on a car rental company that extracts damage-waiver fees from customers through trickery. America has become open season on consumers by predatory businesses. I no longer feel that America is a great country. We are the targets of big business and they fire with AK-47s.

[Bob Atkins]

GoPro has the following statement on its website:

To protect the investment of our high-quality dealers and GoPro’s brand reputation, we have unilaterally adopted a MINIMUM ADVERTISED PRICE POLICY (“MAP Policy”). GoPro established this MAP Policy due to the fact that reseller advertising and sales practices that promote GoPro products primarily on the basis of price could be detrimental to resellers’ service and support efforts and GoPro’s competitive position. Such activities can be harmful to GoPro’s brand, reputation and competitiveness, and allow some resellers to take advantage of the service and support efforts of others. GoPro believes that these practices are unfair and thus discourages such efforts.

Another argument goes along these lines:

A photographer goes into her local camera store to look at lenses. The store has a wide selection of lenses, a friendly and knowledgeable staff (...maybe...), and keeps all the lenses she is interested in in stock. The photographer looks at a selection of lenses and decides what she wants. After noting the price, when she has a minute away from the salesperson, she scans the barcode using a price finder app on her smartphone and purchases the lens from an online discounter at a lower price.

So I guess you can see an argument for MAP, at least if you are a manufacturer or a small full service retailer.

The Sony MAP not only prohibits advertising a lower price but also and wording such as "add to cart to see price" or "email for price" or any other hint or indication that a lower price is available. It doesn't prevent a retailer from actually charging that lower price once an item is ordered. That would not be legal. The Sony MAP also prohibits advertising of discount "bundling", so you can't advertise that you are giving away a free lens with a MAP item for the MAP price The item must appear alone in any advertisement.

So is it ethical? I guess it's a grey area. It's a bit of a "don't ask, don't tell" policy. In other words we all know it's going on but it's a subject best not discussed. Is it deceptive? Maybe. Can it be justified? Possibly. It's not a 100% black and white situation. MAP probably helps the manufacturer maintain a number of outlets that provide sales and service, but if the consumer is unaware of it then it's somewhat deceptive.

I guess some of the blame for MAPS and deceptive practices by businesses can go to the consumer who buys goods and services based on the lowest possible price, not best value. If you want it dirt cheap and you're going to go with whoever will sell whatever you want for the absolute rock bottom price, then the companies involved have to do something to stay in business. It's not exactly a desirable or ethical way of doing business, but at least it's a way to stay in business - though it does provide ways for unethical companies to "fleece" consumers, especially in the case of banks and credit card companies.

[klindup]

Living in the UK I always believed that you paid lower prices than we did but I guess we have one advantage in that I can go online and check prices that are available to me online or by visiting the store in person to make my purchase.  Some of our photographic magazines carry ads that say call for price, but I assumed that was because prices varied month by month.  We used to have something called Retail Price Maintenance which meant that a retailer could not charge a price less than that set by the distributor.  However that was killed of quite a few years ago.  My policy has always been to support a local store, if nothing else I want some after sales service.  We also see ads on the net that say goods are cheap and in stock, delivery 7-10 days, which means they are being shipped from the far East where prices are even cheaper and there is no local guarantee.

Seems to me that paying a good but fair price is the best way.  The retailer makes a reasonable profit and we the consumers get good service.  That said the spread of cheap prices on the net has seen a national chain of photographic shops in the UK close down.  That is a shame because their branches were staffed by people who were photographers and could give good advice.

Ken

[Bob Atkins]

Another difference in UK prices is that they include VAT (at some exorbitant rate), while US prices online, in magazines and in stores are all before tax prices. While currently there are loopholes with interstate transactions which mean the merchant doesn't have to collect the tax, it looks like that won't last a whole lot longer. Of course having every state (and some cities) charge different rates of tax (and some states not charging any tax at all) makes things somewhat complex.

Retail Price maintenance was illegal here in the US too, but there was a 2008 Supreme Court Decision which makes that something of a grey area now. They concluded that vertical price restraints (such as Minimum Advertised Pricing) are not per se unlawful but, rather, must be judged under the "rule of reason." Just to further complicate things, some individual states have laws against RPM. Legally, it's a mess. It's not illegal per se to try to enforce RPM, but it's not per se legal either. Each case stands on its own merits which may depend on which states are involved and the exact mechanism by which RPM is applied.

I'm not aware of any major camera companies that attempt to strictly enforce a minimum selling price on their products, though many (probably most) do have MAP policies that they enforce to a greater or lesser extent.

In theory manufacturers could probably require authorized retailers not to sell any grey market products either, though most haven't commonly done that.

It's probably true in the US that most people don't have access to a "friendly, helpful, knowledgeable" local retail store. If you can buy a camera locally it's likely to be from Walmart or Best Buy or some other megastore where the assistants know next to nothing about what they are selling. Typically all you get from a local camera store (if you can find one) is a higher price. If you live in New York of course then you have B&H and Adorama to visit, but most people don't live in New York. I'm only 25 miles away, but it would cost me $25 and about 4 hours of travel time to get into NYC and visit B&H. If I bought anything there and took it with me they'd have to add on 8.875% sales tax. My alternative is to sit at home and order off the web. No travel cost, no travel time and they don't add sales tax if it's mailed to me. If I don't like it or it doesn't work I can send it back within 30 days and get a full refund. Guess which method I choose!

[klindup]

There was, maybe still is, another bit of protectionism that related to telescope eyepieces and maybe camera lenses.  Dealers who sold the major brands would supply not UK buyers from the US (the UK prices are higher even before our 20% sales tax).  So if someone from the UK walked into a store and presented a UK credit card they were told that the dealer could not supply them and they must purchase in their home country.

Distances in the US are so much greater than in the UK.  I am not sure how many independent dealers there are within a 25 mile radius of where I live, probably quite a few.  I don't know how much longer that will last though.  So many people go into the store for advice and then look for the cheapest price from an Internet supplier.
Ken

[KeithB]

"I no longer feel that America is a great country. We are the targets of big business and they fire with AK-47s."

What makes you feel that it is worse now than in the past?

[Bob Atkins]

I think the internet has made competition fiercer than it used to be. In one way it's good for consumers in that it tends to lower prices, but in another way it's bad because some retailers have to squeeze every last cent out of a sale by whatever means they can just to stay in business. I don't know what the situation is in the UK right now, but in the US there are a lot of "scam" dealers who will advertise a very low price just to draw you in, then either add on all sorts of unjustified charges, ludicrously expensive "accessories" like batteries and straps which come with the item anyway or attempt to switch you to a different product with a higher profit.

Of course the scam dealers have always been there and there are a lot of "electronics" storefronts in NYC who will be delighted to rip you off in person should you be foolish enough to walk into one. It's just that the internet gives them a bigger market to fleece.

The "good guys" like Adorama, B&H and Amazon don't do that, but there are plenty of small internet vendors (mostly operating out of garages and basements in Brooklyn) who will.

I've never heard of anyone ever being refused a sale in the US for not being a US resident or for trying to pay with a valid UK based credit card. It's possible that warranty coverage might be affected under some circumstances, but that would be rare.

[KeithB]

Just because it came up today, Bosley and hair Club are in trouble for non-competive practices:
http://consumerist.com/2013/04/08/bosley-agrees-to-stop-sharing-sensitive-business-info-with-hair-club-and-others/

It ain't just cameras!

[klindup]

I have read about the rip-off merchants you suffer from in the US but I have not heard of it happening in the UK.  The only iffy sites we have are the ones that offer low prices on imports from the far east.  If you are prepared to take a risk on warranties you can get large discounts but if you have a problem you may have to ship it back to Hong Kong or wherever it came from.  The problem is that not all sites tell you that the item is coming from overseas.  We do have to pay higher prices over here though.  Typically we pay in pounds what you pay in dollars.

All things considered I will stay with my local dealer (30 minutes drive away) who will give me good advice, is a photographer himself, carries a great stock of used items and is reasonably competetive.
Ken

[Bob Atkins]

I'd be amazed if Canon and Nikon were sharing plans and products in order to maintain prices and reduce price competition, though I guess anything is possible.

I've always found it a little strange that very often Adorama, B&H and Amazon have exactly the same discount price on an item down to the past penny. Sometimes they differ by 4 cents ($xx.99 vs $xx.95). I suppose it's not actually the companies getting together in secret meetings to agree on prices, since at times prices do differ, but I can't help but feel there must be some sort of unofficial agreement not to drive the price down by each one offering a slightly lower price than the last in an ever decreasing spiral until one of them goes broke!

In the US I presume that many "grey market" items are in fact imports from other parts of the world (probably Asia), but they are stocked and sold by reputable dealers. B&H and Adorama carry grey market items ("parallel imports"), though as far as I know Amazon don't.  US prices are low enough (especially with grey market items), that direct importing from the far east is rarely cheaper than buying the same item from New York. Even if you could save a few dollars, it wouldn't be worth the effort 99% of the time. I've heard that there are a few specialty items that people buy that way, but not regular Canon and Nikon stuff.

The only photo related items that I buy directly from China are lenscaps and adapters. I buy quite a few low cost electronic components that way though (LED displays, transistors, IC, sockets etc.). So far so good.

[bmpress]

Judging from all the comments, the issue has struck a nerve. Anyone who has ever been to BH knows that they are a wonderful place to browse, learn and do business with. They are the best, and I wonder if they would actually endorse the MAP system because it reflects poorly upon their reputation when using the shopping cart ruse. The culprit here might very well be Canon. They may claim that MAP helps the dealers provide service, when in fact close examination of that statement proves to be false. The facts are clear in that BH is using the shopping cart ruse to get out of the MAP restrictions and remain an authorized Canon dealership. Moreover, the overriding idea is to allow Canon to raise prices and margins for their bottom line.