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Thomann prices... a different story


SICbass
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I ran across this story a couple of days ago. It seems the state of Bavaria are charging several firms (including Thomann) over price-fixing.

 

In the interests of transparency, I am a frequent Thomann customer and enjoy their service, so I have no bias one way or another. I just found this interesting.

 

"Germany’s Federal Cartel Office has fined three music brands and two dealers a total of €21m for price-fixing. They are Yamaha, Roland, Fender, Thomann and Music Store.

The companies were accused of “systematically” restricting price competition, colluding to set minimum prices on goods in 13 instances between April 2014 and December 2018, said the Cartel Office. This is in accordance with the EU’s competition rules which protects consumers against practices such as price fixing.

 

A statement explained that when the retailers undercut minimum sales prices, staff at Yamaha, Roland and Fender would “on several occasions contact Thomann and Music Store and ask these retailers to adjust their sales prices, which they also did in many cases.”

 

The whole article can be found here...

 

https://www.musictech.net/news/industry/yamaha-roland-fender-thomann-music-store-fined-total-of-e21m-for-price-fixing/

 
Edited by SICbass
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36 minutes ago, Mykesbass said:

Ironically it is supposed to help competition.

Nothing ironic about it. The law says prices can't be fixed, that is all. The manufacturers sell to distributors who sell to merchants who sell to consumers. Each layer under law is free to take whatever margin they need. The end.

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I've not been in music retail for quite a few years now,  but at the time the independents were putting huge pressure on the likes of Fender abd Yamaha to try and even the playing field so they could compete.  Often we'd see instruments priced pretty much at what we could get them at trade price for. 

 

It's a tricky  one as the consumer both wins and loses through lower pricing but reduced options from where to buy (which is ultimately what happens when independents can't compete any longer). 

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1 hour ago, Downunderwonder said:

Nothing ironic about it. The law says prices can't be fixed, that is all. The manufacturers sell to distributors who sell to merchants who sell to consumers. Each layer under law is free to take whatever margin they need. The end.

 

The irony is that the laws were brought in to create competition. Everyone (retail) slashed margins to get market share and slowly but surely, the smaller players started to tumble, all the way up to the situation we have now with a handful of behemoths slugging it out. When there is a final winner they will be able to set their price as high as they damned well please, thereby killing off all competition.

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Just had a quick look at GAK's figures on Companies House. Now, I'm not the greatest at reading balance sheets, and I know an awful lot of (legal) tweaking is allowed, but they basically made the same profit in 2015 on £10m less turnover as they did in 2020.  Like @TheGreek's local shop, this is not sustainable.

Edited by Mykesbass
Removing ambiguity
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3 minutes ago, Dad3353 said:

 

Just curious, but why would this not be sustainable..? :scratch_one-s_head:

If their turnover has to keep increasing at this rate to keep the same amount (not percentage) of profit, that profit margin will become so small that it will only take the smallest of problems to wipe all the profit out. It also shows my point about the deepest pockets forcing out the smaller players.

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17 minutes ago, Mykesbass said:

If their turnover has to keep increasing at this rate to keep the same amount (not percentage) of profit, that profit margin will become so small that it will only take the smallest of problems to wipe all the profit out. It also shows my point about the deepest pockets forcing out the smaller players.

 

Ah, I think I understand the confusion. You mean that the turnover for 2015 was 10m less than that of 2020, yet profit was the same. I read the dates as opposite (it's ambiguous...). OK, thanks; I agree.

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3 minutes ago, Dad3353 said:

 

Ah, I think I understand the confusion. You mean that the turnover for 2015 was 10m less than that of 2020, yet profit was the same. I read the dates as opposite (it's ambiguous...). OK, thanks; I agree.

Thanks - hopefully fixed now.

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2 hours ago, Mykesbass said:

Just had a quick look at GAK's figures on Companies House. Now, I'm not the greatest at reading balance sheets, and I know an awful lot of (legal) tweaking is allowed, but they basically made the same profit in 2015 on £10m less turnover as they did in 2020.  Like @TheGreek's local shop, this is not sustainable.

 

Maybe they had some fixed capital costs (or other one off expense) in 2020 that they didn't have in 2015. I wouldn't read too much into it

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