Legal or Illegal you be the Judge

[Anonymous]

Is it legal to agree with the mat owner down the street that you will both raise your prices to a given level?

[Jim]

I am sure you have heard of "Price Fixing" . This is it on a smaller scale.

Although it is illegal, and I assume that you know it because you asked the question... I have to admit I did do it at one time.

If you need to find me I'll be the one rotting in hell for my sins....

[Gary C]

I think it is illegal too, but I wonder if it has to be large scale or not to be illegal. Like if just 2 places do it verses everyone in the county. Good question. I will error on the side of caution and not do it. Here is a twist what if you own most or all the mats in town and you set them at the same price is that price fixing?
I own 2 of the 3 on my side of town and they are priced the same and as usual I was talking to myself one day after I bought the second one and decided to raise prices. Am I just crazy , smart businesman or law breaker? :)

Gary

[Gary C]

For those of you that voted legal can you tell us why you think so.

Gary

[Anonymous]

Gary, if you own all the mats you can do whatever you want with the pricing - as it is your business. If you go way out of line then some other person will likely open a business and charge lower prices to get some of that business. If you conspire with him to match the prices of all the other mats (which are yours) then you are restraining trade.

[mike]

Well,

I guess I voted legal to play devil's advocate.

I'm in Canada, where everything is legal (except making a profit)
Excuse me while I fire up another joint.....aaaahhhhh

Seriously, I don't believe agreeing on a raise is illegal unless it can be proved to be unfair, that is if you control a substantial portion of the market ot it places undue hardship on competition.
In any case, it would be impossible to prove.

I can't remember any cases where small (under 6 feet) retail merchants have been charged.

[Anonymous]

The whole real estate and retail market is based on that....

I speak to other apartment bldg owners and strip center owners almost every day about rental rates.

In fact in the shopping center world there is actually a huge trade organization, the ICSC, comprised of just about 50,000 members. They even, (the ULI) publish books of current rental rates for centers so other center owners know what they should or could get.

I have never heard any of my lawyers or accountants say that I could not discuss or adjust my prices based on my conversations with my competition.

Price fixing ???

maximizing income based on the market ???

Staying competitive ???

It all sounds and is really the same thing

[Anonymous]

Originally posted by Gary C
I think it is illegal too, but I wonder if it has to be large scale or not to be illegal. Like if just 2 places do it verses everyone in the county. Good question. I will error on the side of caution and not do it. Here is a twist what if you own most or all the mats in town and you set them at the same price is that price fixing?
I own 2 of the 3 on my side of town and they are priced the same and as usual I was talking to myself one day after I bought the second one and decided to raise prices. Am I just crazy , smart businesman or law breaker? :)Gary

McDonald's doesn't set the price for a burger nationwide ???

Burger king doesn't set their price based on McDonald's ???

Ya think Mr. Exxon ever talks to Mr. Texaco.....
ever heard of opec...... they have offices in the states...

How about unions... isn't that price fixing in reverse...

Come on folks its called capitalism....


thanks alot folks...... now my head hurts...... I need a Tylenol...... funny it's about the same price whether I buy it at CVS or Eckerd

[MN5563]

Thank you Sean,

I couldn't have said it better. It all has to do with INTENT. If two companies, whatever they are conspire together to price a competitor out of business, by selling below cost, selling an inferior grade product, or anything else, intended to drive the competitor out of business then this could be price fixing. If it were as some say, then any trade association could be considered to be price fixing. Have any of you gotten together with other laundry owners, such as at a CLA meeting. I bet prices have come up. Is your group guilty of price fixing?

[Jim]

Sean,

It's also called being competative...althought McDonalds and Burger King may not talk to each other they do watch each others prices just like you and I do with our competition....
If you are priced to high you will lose biz to your competition, you know that without me telling you!!

Yes it is still illegal but the chances of getting caught are nil...


Mike...
no short jokes... us short people frown on that..

[pete f]

It is legal to make a price anouncement, airlines, car manufactors do it everyday. If you and the guy down the street "fix" a price, you have not controlled a market unless you are the only 2 mats in town. I think you have to create some sort of monopoly price wise before you can be charged with price fixng under current law.

[Anonymous]

I am thinking what a judge would say if some lawyer files a suit about price fixing of 2 mats, and all the question goes about ahving raised and fixed the washers price at a quarter more than it was before, and setting the timers of the dryers 2 minutes less for the same quarter taht before paid for 2 more minutes.
First the one who wants to place a suit has to find a lawyer that will work for a ridiculous amount of money. Second, and supposing he finds the lawyer, what judge has enough time in his court to take care of such a ridiculous thing of 2 guys, mat owners, fixing the prices of their mats, in order to get more clients. He would probably suggest that the other mats in the area join the 2, and that would be the case.
There is no public damage, as long as price fixing in such small scale is done. People can avoid the "price fixers" and go to another cheaper mat in the area.
I think that this agrrement is not worth even the thought of getting into legal issues.

[JBTcajun]

Is that when you wake up in the morning and every gas station on a 5 hr drive went from 1.399 to 1.419.

[Anonymous]

Originally posted by Jim
althought McDonalds and Burger King may not talk to each

Like at a "networking meeting" or on a golf course ???

Business is talking.

In my world they are called "idea exchanges" they are planned scheduled and always somewhere warm in the winter and my company spends tens of thousands of $ getting us to them.

[Gary C]

Sunbright, In our area a lawsuit would not be broght forward by a private person It would be done by the local DA or legal aid on behalf of some poor dude. I looked up pricefixing and it said when two or more conspire to raise prices above a reasonable price. So reading that you would think that as long as you didn't over do it no one would bother you. Not always the case one nutty DA could make life tough. Any way you look at it I set my prices where I want them and the others can follow if they want.

Gary

sean326
I don't think macs and burger king could be charged even if they set prices out in the open I believe there also needs to be some market control and that is not the case with those guys they have a lot of comp. at even higher prices.

[Anonymous]

I'm really quite shocked that so many seem to think this practice is legal. The question of whether you will be caught or prosecuted is a separate issue. I assume you all agree that driving 70mph in a 55mph zone is illegal, but you may not be prosectuted or caught. The same applies to talking about establishing price with a competitor. I have attached some legal excerps and would be glad to e-mail anyone a full copy if they ask.
==============================================


Horizontal restraints of trade -- that is, concerted actions among entities in actual or potential competition with one another -- have traditionally been considered the most serious of antitrust infractions and constitute that category of violations most susceptible to criminal penalties. The reason for such harsh treatment is plain: The antitrust laws postulate a competitive marketplace in which rival firms compete with respect to prices, products, and services. Any arrangement which runs counter to this axiomatic conduct among competitive entities is accordingly suspect.


Price Fixing
Antitrust's capital crime is horizontal price fixing. Agreements among competitors with respect to prices for products or services are illegal per se. The prohibition is all-embracing, whoever may be involved and whatever the circumstances. Not only sellers but buyers as well are within the statute's scope. Both large and small companies in all industries, whether booming or depressed, are covered. Even price agreements intended to provide their participants with the countervailing power to meet larger, more powerful competitors are not permitted. Moreover, the reasonableness of the agreed-upon prices is beside the point. Agreements setting maximum prices in inflationary times and those setting minimum prices during depressions are equally prohibited. In short, price fixing, in any shape or form, is deemed anticompetitive and thus unlawful.

What is price fixing? To start with the obvious, competitors may not agree on the actual prices they will charge or pay for a product or service. But this self-evident example is only the beginning. As the Supreme Court has made explicit, horizontal agreements that affect prices are as unlawful as those that actually set them. Competitors may not agree on a price range within which they will compete, on a common list or book price from which discounts are free to vary, or on the discounts themselves. Terms and conditions of sale which indirectly affect price cannot lawfully be the subject of agreement. Nor can competitors act in concert to limit supply in order to drive prices up. Even agreements on common standards may, if entered into for the purpose of affecting price, be violative of the law.

[Jim]

Like the law states...it is illegal....


quote:
---------------------------------------------------------------------------
Agreements among competitors with respect to prices for products or services are illegal
---------------------------------------------------------------------------

[Gary C]

Good thread Kirby. Quick responses from alot of people.


Gary

[MyLaundry]

yes, I believe it is illegal based on the wordings of the law. The law specifically describes what ACTS are illegal under price fixing. It does not say what consequences, scale or damage have to be in order to be illegal.

Legal or illegal is one issue. To convict or not is another issue. Two mat owners agree on the vend price is really of a micro scale of price fixing. Nobody will pay any mind on the 2 owners even it is illegal. If DA want to pursue, he or she will have hard time to prove to the judge that the 2 mat owners have made agreement to raise prices.

[Gary C]

None the less they can make your life lousy.
Just the filing of the charges and having to defend your self is enough to not want to get involved.
Gary

[Kitty]

I do believe price fixing is unfair and should not be tolerated in many areas of business, but please tell me the likeliness of the majority of laundromat customers understanding the concept of pricing and the cost of doing business?

[Coinwash]

"Never underestimate you costumers nor sell them short"

[Gary C]

You don't need a majority just one.

Gary

[mike]

Well,

It MAY be illegal,

but, in our business in particular, most stores operate on coin slides (some exceptions noted, Kirby)

These coin slides operate with quarters, so right away, most of us are at $1.50 or $1.75 or $2.00 per topload.

I suspect most in the same market, with the same rent and utility and labor cost will be at the same price. Price fixing ?

[JBTcajun]

What does the customers understanding of the cost of doing business, or concept of price fixing have to do with anything?

I don't have the ST idea how gas is distributed, or priced. What does that have do do with the price on the drive up being 1:37 and the next morning same route home 1:41. My understanding how this many different companies could suddenly change with the same pricing, alter weather is is price fixing or not.

[Kitty]

I was saying that most laundry customers come in, do their laundry and leave. They come back each week. Not too many customers are concerned with pricing between two or three stores.

It is illegal to price fix, but I would guess pretty darned hard to prove that a couple of coin op store owners conducted business this way. Many mat owners match their competitors prices, it would be difficult to prove any conspiracy to price fix in this field.

[Anonymous]

Originally posted by Gary C
sean326
I don't think macs and burger king could be charged even if they set prices out in the open I believe there also needs to be some market control and that is not the case with those guys they have a lot of comp. at even higher prices.

There is a great book out called fast food nation. There is no real market control of beef and potatos....

The fast food chains set the wholesale price of these commodities at a level that will sustain the production chain, IE the farmers, shippers and processors. That way they can maximize their profits. They don't leave much on the table. When I say set I really mean they set the price they tell the ranchers how much they will pay for their beef based on their "the fast food chains" analysis of the cost the producers and processors actually incur.

Imagine if all your customers or 80% of them walked into your mat and told you:

1, We've done a study of your costs and we know that it cost
you $ 0.75 / turn to run that top loader.

2, We feel that based on national average income and the cost to
operate your business etc... you should be able to manage
to make a living for an addition $0.25 / turn profit.

3, Therefore you will set your coin slides to $1.00 or you will lose
80 % of your business.

It's impossible for me to comprehend that after all that the top people at these respective companies don't pick up the phone to
each other and discuss when they should change the price of their products.

[Duane]

I believe the question was:


If two people get together to agree on a set price, is it price fixing.


The answer is yes, it is price fixing.


It is just a yes and no question. The arguments that people do it all the time doesn't make it legal.


Now think of this.. What if you approached your competition and asked him to agree to some set prices so both of you can make a nice profit. Then after you left he contacted the local authorities and informed them of your offer. Of course it is your word against his (the video may only show you talking), but it would make for some bad publicity for your store. How many customers would you lose when they hear you were trying to set prices to screw them?

[Anonymous]

Originally posted by Duane
I believe the question was:

If two people get together to agree on a set price, is it price fixing.

My point is simply it depends what you call it.

If two business owners get together and discuss "what the market will bear" and decide they can raise prices is that price fixing??

If a thousand business owners get together and form a trade organization to study what the market will bear with the purpose of using the data as a tool to set their prices is that price fixing??

[Anonymous]

The following was e-mailed to me by the executive director of the CLA, and posted on their website as well - it is an explanation by their attorney that I thought would be useful for everyone to see here:

==============================================

A coin laundry owner who meets a competitor in a coffee shop and enters into an agreement to the effect that a ve! nd price shall be fixed or pegged at a certain sum proceeds at his peril. In entering into this agreement, would it be entirely acceptable to speak of the transaction in a loud voice by the cash register, or would you prefer to speak of it in hushed tones in a quiet booth in the back of the restaurant? If you prefer the booth, you are presented with your first clue that you are treading in dangerous waters.

On the federal level, when interstate commerce is involved in restraint of trade activity, the Sherman Act governs. On the state level, when local commerce only is involved, you will nonetheless find similar legislation. In addition, state courts frequently look to federal decisions regarding such matters as precedent.

Some agreements have been "conclusively presumed" to be illegal and are thus violations "per se" of the Sherman Act. Other situations are governed by what has become known as the "rule of reason."

It may be helpful! to cite a few illustrations of situations in which the court! s have h eld price fixing agreements to be illegal per se:

1. An exchange of price information among competitors, especially with respect to future prices, was found unlawful by the U.S. Supreme Court in U.S. v United States Gypsum Co.
2. Agreements establishing maximum prices was found illegal per se in another U.S. Supreme Court case of Albrecht v. Herald Co.
3. Fee schedules among lawyers have also been found to constitute price fixing in Goldfarb v. Virginia State Bar.

I see little difference from a legal standpoint from distributors of coin laundry equipment entering into a price fixing arrangement limited to Santa Monica or Miami, and coin laundry owners fixing vend prices limited to their their portion of Los Angeles or Chicago.

[buddy]

Price fixing is illegal for good reason. I grew up in a country where there is no Antitrust Laws and no fair competition so inflation rate used to be 30-40% per year. All grain wholesale merchants would get together and decide to jackup the prices by 40% one morning. Next sugar and cooking oil would suddenly cost 50% more. Car prices went from 30K to over 100K in three years with no competition only two car make/models, no quality control, no service, no improvements in the design of cars for over 30 years.

Thanks to Global Economy and opening of global markets, now there are 30-40 different car make/models to choose from and competition has held prices steady, improved quality as well as service.

[fishmanz]

Part of the job of a grocery store manager like Stop and Shop is to go and walk around the other stores in town and check their prices at least once a week.

My friend joe can rattle prices off the top of his head from 5 area stores at any time. It is just buissness men talking and doing what they think is right. All markets have their respective threshholds.

[JBTcajun]

I was once in a bargaining commission that was set up legally and charged .01/lb. It set a price that the producer could sell at and If you took a lower price charged you .10/lb this was not considered price fixing.

What is price fixing I do not have a clear understanding.

I do believe that two competitors agreeing on a price might be technically illegal because they did not have a team of lawyers to make it legal. Therefore I would have no trouble discussing what I thought a good price in our market would be.

[TotoMongo]

What is price fixing I do not have a clear understanding.

Therefore I would have no trouble discussing what I thought a good price in our market would be.

JBT, a scenario for you:

You are a widget customer. ABC Widget Co. and Widgets-R-Us, the only two companies that make widgets in your area, discussed with each other what a good price would be to sell widgets to you. Later, you become aware that they have indulged in this practice for many years. Your thoughts?

Toto

[TLR]

You guys are talking peanuts compared to actual price fixing monopolies. When the public has to wash with you and your comptetitor as the only option and all the house washers and dryers are forbidden - and all the dry cleaners are closed down - and all the clothes lines are outlawed yada,yada,yada - then someone may have an argument - but as long as there are options - then comspire until your hearts or pocket books are content.

TLR

[Senior Sudsy]

What's a widget?

[Buddy_Amoroso]

What's a widget?

Widgets are those things that business schools produces. If you have a MBA you are a widget expert.

ba

[george]

I would think it would be legal, is it really price fixing when its only 2 stores that had an agreement? This isn't a monopoly.
I'm sure there are other laundrymats that your customers could go to (they may have to go further, and thats there right). If they go elsewhere you would lose biz anyway & would be forced to lower prices anyway.

anyway thats my vote (we must look at the spirit of the law in which it was written)

[kbc747]

It is not illegal to have the same price but what is illegal is to get together and deside what a price should be. For example if store A raises a price and the same next or shortly after Store B matches the price not Illegal. Now if Store A and B get together and discuss and agree on a price and then move to implement it so both stores have the same price, illegal period, but then so is speeding and unless you have someone there to witness this it is next to impossible to prove. Plus having spent some time on the board and seeing the problems and concerns about raising prices I don't think anyone from any law department is going to be looking at us anytime soon.

[The wizard]

I feel nothing is illegal if its is viewable and the public can choose. There are other laundromats in the area I would assume. The gas companies say they base their price on the open market for oil. But they all have different overheads. The place where price fixing gets truely illegal is when its done behind the seens in a contract competitive bidding arrangement when the price is artificially raised solely to increase profit and kick backs. But be carefull and be fair you never know who is watching.

[Monarch]

In the wonderful world of wigets all kinds of things can happen. WWW was the "company" our class ran in business school on an early computer game. (An IBM360, the computer was one of those things that took up a whole room!! About 1/10th computing power that's setting on one corner of my desk)

Any way. As noted, a transparent conversation regard in the nature of the business in the community and how costs are escallating and simple statements that you might have to raise your prices, and the fellow your talking to says he/she might have to as well, is not price fixing. It is a fine line, and can be difficult for anyone to challenge unless you get carriered away. Now if you try to formalize it, and write contracts designating who is going to do what to whom for how much, THEN you might have some legal issues.

Conversley, there is a regulation called the "Roberston-Pattman Act" that pertains to buying. If I get a quote for three or four someones to make a specific widget to my specs, and I get the quotes and then share it with one of the suppliers to get him to reduce his cost. THen I am in violation of the act. Stuff gets tricky, don't it?!! LOL

Norman

[dzender]

This whole idea of "price fixing"... what are you guys smoking?

Let's be honest here and begin calling a spade and a spade. 90% of laundromat owners in the country are interested in coming in twice a week and collecting their quarters ... plain and simple. Nothing more. They are running with 10+ year old equipment and this business gives them something to do. If the place were to burn to the ground tomorrow, they'd collect the insurance check (if insured), and move on to something else.

The remaining 10% of us are progressive business owners that actually care about our business and put the time and investment into it to see it grow and succeed. We keep a clean operation, we're active in the community and with trade groups, update our equipment on a regular schedule, keep accurate control of our expenses and actually care about our customers - while continuing to increase the bottom line.

You can argue about the percentages all you want. The bottom line is this ... smart business people will do what needs to be done to make their operation successful. This whining about "price fixing" over quarters is insane. The notion that the big bad laundry owners are conspiring to get more quarters from customers is just simply insane.

If this is such an issue, show me DOJ rulings againt laundry owners who conspire to deceive their customers. My guess is you can't. If there happen to be a few examples of DOJ rulings, those few vs. the tens of thousands of laundries across the country ain't bad. There are always a few bad apples in every group. But focus on the issue.

If you have the time to start a thread about "price fixing" that undoubtedly does not exist in the coin laundry business, you have way too much free time on your hands. Take that free time a find better ways to market your own business and share your success with everyone else.

The bottom line is this... if I need to somehow conspire with my competitors to squeeze an additional quarter out of a customer, I have bigger problems at hand than "price fixing".

[dzender]

Ok I am long winded tonite and this poster has me irked.

Especially since it is by an "Anonymous" poster who proclaims that laundry owners are "limiting trade". Trade of what?

Limiting trade? Give me a break! We're not importing Japanese cars, nor are we sending a guy to the moon. What trade?

This business is the resale of utilities. Nothing more, nothing less. The more and more that laundry owners understand and operate their business practices from this simple notion, the more successful they will be.

You want to talk about price fixing and monopolies, let's look at your local utility providers that continually pass the costs onto their consumers (including you) while posting record breaking profits. Better yet, let's look at your local govermentally run untilities including your local municipality providing water or your local municipality collecting real estate taxes on your building.

The government continually limits the utilities as to what they can and cannot do in business. Whether it be emissions, where and where they cannot drill for gas or oil, etc. Are these companies not expected to make a profit? Is my or your company not expected to make a profit? If you don't expect to make a profit and figure out ways to make it so, you don't belong in business.

We live in a capitalistic society, not some socialistic storm drain that you believe in, Anonymous. I am in business to make money. Plain and simple. If I take a price increase, you bet it is being passed onto the consumer. This is not "price fixing".

Register your screen name on here and let's have a serious debate. This flame throwing under your false agenda shows through.

[kbc747]

All interesting points so lets put it away you can understand! What if all your suppliers, wascomat, adc, sq etc got up tomarrow and decided the 30lb front loader was going to cost $8500. and a double dryer was $15,000. etc. Price fixing? Why, because the amount of money is higher or because it is coming out of your pocket now? That part is now 10 times what it was yesterday, price fixing, not if you buy into some of the crap here. It has nothing to do with profit or the amount of money, Why, because people can price fix to drive a compeditor out of the business as well. It only takes two compeditors to be involed to call it price fixing and it does not matter if there are 30 of the same in the area.

[detlaundry]

Possibly if all members of the CLA and any other laundry owners to agree on one price.

There are always others options, such as going to buy your own washer/dryer, etc, or another laundry in a town nearby. Not sure how two competing mats makes a monopoly even in a small town when other options exist and barring there are no barriers to enter in to that market. If the 2 mats in a small town tripled the price and decided that's what the price would be, I doubt it would take long before another Laundry opened and offered lower prices..... The beauty of capitalism.

Is it price fixing, not sure even in theory because of other options that exist. Either way, this is the smallest part of owning a laundry anyone needs to worry about. Price to maximize your profit and worry about keeping your equipment running and your business clean. I doubt you will see any caselaw on this anytime soon.

[Von Hef]

In my opinion there is only price fixing when there are controls (rules/laws) that inhibit free market price changes. If the suppliers agree to raise price on dryers, then less dryers would be sold, and eventually someone else will enter the market or the suppliers will change there mind. If two laundries agree to set the price in a neighborhood, it is NOT price fixing in my opinion... if the price is wrong the market will determine it to be so by a changing customer base or a change in the competition.

[anonymous]

.... If two laundries agree to set the price in a neighborhood, it is NOT price fixing in my opinion...

That is a nice opinion, and you might get away with it - but don't tell it to the judge as it is patently illegal. Go look up the definition of antitrust.

If you want to test this, post a sign in your store that you have done this with another mat - before long you will receive a visit from a government official with a minimum of a cease and desist order.

[Von Hef]

That is a nice opinion, and you might get away with it - but don't tell it to the judge as it is patently illegal. Go look up the definition of antitrust.

If you want to test this, post a sign in your store that you have done this with another mat - before long you will receive a visit from a government official with a minimum of a cease and desist order.

Legally speaking you may be correct, my thoughts were from a market/economic point of view.... and since this topic is named:
"Legal or Illegal you be the Judge" your answer is more correct.