Sony gives Clinton a chance to act on price fixing

Discount Store News, Dec 6, 1993 by Ken Rankin

Clinton administration antitrusters have been talking a good game about cracking down on price-fixing activities in the marketplace. But are they ready to back up that talk with action?

We may find out soon, thanks to hard-nosed tactics by Sony aimed at discouraging retailers from promoting the company's video products at discount prices.

These practices were brought to the attention of the Justice Department antitrusters by Washington's Consumers' Checkbook -- the publishers of Bargains, a shopping guide to the deepest discount prices at retail stores in the D.C. area.

The guide solicits price quotes from stores on specific appliances, tools, automotive items and other products, and prints the lowest-priced local sources for specific brands and models.

Sony, however, "has informed retailers that it does not want them quoting prices on video equipment in Bargains," and is threatening to punish those who do, officials at Consumer Checkbook charged.

One retailer reported that a representative from Sony warned that if he participated in the Bargains survey, his supply of Sony products would "have a way of not showing up" during the holidays, the publishers said.

Another said Sony had told him that anyone who participated in Bargains would no longer be a Sony dealer, while still another said the manufacturer had already cut off his co-op ad money for disclosing discount prices.

Manufacturers like Sony tend to defend their efforts to curb aggressive discount price advertising as necessary to protect full-service dealers from no-service, "free-riding" discounters.

But according to Consumers' Checkbook, that argument falls apart because most of the discount retailers that provide price quotes on Sony products for Bargains have "good or excellent records of service."

Indeed, customer satisfaction surveys indicate that several of the low-price retailers listed in Bargains received higher ratings from consumers than did Sony's own factory service centers.

A more plausible explanation from manufacturer efforts to discourage discount price disclosure is that these suppliers are "responding to pressure from large retailers that don't want their profits threatened by discounters," publishers said.

Indeed, these manufacturer efforts "to weaken price competition fit the interests of large retailers that spend millions on advertising and don't like having their prices beaten and their price claims discredited," they said.

"These retailers presumably like least of all having to honor their 'meet any price' guarantee when faced with a low price printed in Bargains."

Some of the Washington-area discounters who were allegedly threatened by Sony are complaining openly about the manufacturer's anticompetitive practices, and Consumers' Checkbook had already alerted Justice Department antitrust officials to the situation.

The next move is up to the Clinton administration--and retailers as well as manufacturers will be watching for it.