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GOLF NEWS -
JULY '07
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Supreme Court Ruling Aids Premium Brands
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The
U.S. Supreme Court overturned a 96 year old antitrust
precedent that banned manufacturers and retailers from
agreeing to minimum retail prices. The ruling may have
broad ramifications, especially for premium golf
equipment makers who rely on pricing strategies as one
way to distinguish their golf brands. The 5-4 decision
rendered June 28 goes into effect immediately, giving
manufacturers greater ability to establish retail prices
and restrict discounters' behavior.
Ping
Golf Co. was among the companies that lobbied a "friend
of the court" brief in support of its reversal. The
ruling was a victory for Ping and a host of business
advocates that argued pricing agreements actually help
promote competition. With discounting taken out of the
equation, they say retailers would be spurred to compete
and improve business by providing better service -
ultimately benefiting consumers.
Many
in the business community, however, don't share that
outlook, and the divisiveness of the issue was evident
among the justices as well. In writing the dissenting
opinion, Justice Stephen Breyer said: "The only safe
prediction to make about today's decision is that it
will likely raise the price of goods at retail and that
it will create legal turbulence."
The
change isn't likely to raise prices at large discount
golf
retailers, who often wield influence over golf equipment manufacturers
to set their own prices. It could make it more difficult
for smaller retail shops to lower prices without
permission from manufacturers. The decision also may
limit the ability of online golf retailers to sell goods at
lower prices.
Ping
officials say the ruling also will make it easier for
manufacturers to conduct business with their retail
partners. Bill Gates, Ping's associate general counsel
and director of distribution said, "Now the court has
said you can have an agreement between a manufacturer
and a retailer if there is a good justification or under
'the rule of reason' test. That's a big change. We're
still trying to digest what that means for Ping, but
it's a good thing." Ping instituted its iFit pricing
policy in 2004. Under the old law, the company could
only issue a unilateral pricing policy - a written
company statement that set pricing - without discussing
its intent with retailers and obtaining their acceptance
of it. "We were walking on egg shells every time we
talked to a retailer because it might be misinterpreted
as an agreement," Gates said. It was equally frustrating
for many retailers, especially when Ping adopted a
zero-tolerance stance for violators of its policy. "We
actually live in fear of being shut off," said Leigh
Bader of Joe & Leigh's Discount Golf Pro Shop in South
Easton, Mass., and president of Internet retailer
3balls.com.
The
issue came before the Supreme Court in a case involving
a dispute over the sales price of designer hand bags
made by Leegin Creative Leather Products, makers of the
Brighton brand of women's accessories. The Supreme Court
adopted the ban on resale price agreements between
manufacturers and retailers in 1911, when it found that
the Dr. Miles Medical Co. had violated the Sherman
Antitrust Act. The company had attempted to sell
medicine only to retailers who agreed to resell them at
set prices. The court ruled such agreements benefit only
retailers, not consumers, and declared such agreements
unlawful.
thanks to "Golfweek" magazine
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