Prices manipulated by TLG

Legoist61

What do you think of the following news item:

[quote]Germany fines LEGO for playing with prices

COPENHAGEN Jan 12

Danish toy maker LEGO has been fined 130,000 euros ($141,000) by German regulators for preventing stores from offering discounts on its popular toys in 2012 and 2013.

Bundeskartellamt, the German regulator, said LEGO kept lists of its toys, prices and retailers and threatened those shops that sought to lower their retail prices.

"In some cases the retailers were threatened with either a reduction in supply, or even with the refusal to supply if they offered articles at retail prices below those set in the lists," Bundeskartellamt said in a statement.

In other cases, discounts on the cost of LEGO products for stores were made conditional on the retailers maintaining the listed resale prices, the regulator said.

LEGO is the world's largest toymaker by sales having recently overtaken U.S. Barbie-maker Mattel and Monopoly-board maker Hasbro.

"We take the non-compliant actions from the specific LEGO employees, as well as the decision of the Bundeskartellamt, very seriously and we have taken steps to prevent such conduct again," LEGO Chief Financial Officer John Goodwin said.

The Bundeskartellamt decision is based on findings from an internal LEGO investigation, initiated by the company based upon information received from the Bundeskartellamt. ($1 = 0.9211 euros) (Reporting by Ole Mikkelsen; editing by Sabina Zawadzki and David Clarke)

[/quote]

Did this only happen in Germany or are the prices in other countries manipulated by TLG as well? And what about the reduction in supply of sets?

In my opinion the fine is relatively low and one can wonder about the authorities in other countries, will they investigate this?

When I look at the US prices and discounts I can only envy that, because we never have discounts on LEGO in the Netherlands in regular toy stores.

MattsWhat

I think that with a fine of that size, Lego were laughing all the way to the bank.

KingDave

It does not give much detail of the scale of it all. It could have been one (probably mid-high level) sales rep in Germany and may have only been a few specific retailers. Without more details it is hard to say if the fine seems fair or not.

Having said that, not what I would expect from TLG and deserving of a fine.

CCC

If they tried it in the UK, it didn't work during 2012-13, at least with the big boys. They were the boom years of discounts (even into 2014 and early 2015).

They might have done it to the smaller independents, as many of them charge RRP and are still trying to sell Galaxy Squad and so on. Although many of them charge RRP for all their stock, over other companies ranges too.

Aleydita

I said at the time the 'no discounts' rule hit the US that this would be against EU law. A relatively small fine but a second and further such fines will increase severely.

BrickDancer

Would this be also illegal for them to do in the US? I'll be the first to sign a petition of some sort if so.

Yodalicious

"LEGO was fined a paltry sum for not allowing retailers to discount certain sets. When asked about the practice and the fine, a LEGO representative did nothing more than laugh, rather loudly. LEGO was said to have already paid the fine, writing "HA...HA...HAHAHAHAHA" in the memo line of the check. The company then went back to printing money...er...building LEGO bricks."

madforLEGO

BrickDancer said:

Would this be also illegal for them to do in the US? I'll be the first to sign a petition of some sort if so.

Im guessing no, because LEGO holds EVERYONE to the standard no discount on 'exclusives' policy, even themselves, in the US.

BrickDancer

^But isn't that what they got penalized for in Germany?

Shib

The difference with what they were doing in Germany was that it was behind closed doors and we don't know the extent, from what I've heard the case in America is very out in the open, so presumably it's legal or they'd already be in trouble over it.

TigerMoth

KingDave said:

It does not give much detail of the scale of it all. It could have been one (probably mid-high level) sales rep in Germany and may have only been a few specific retailers. Without more details it is hard to say if the fine seems fair or not.

It involved "a small number of employees in a restricted part of Germany". A number of them were sacked for going against TLG's own compliance guidelines.

madforLEGO

Shib said:

The difference with what they were doing in Germany was that it was behind closed doors and we don't know the extent, from what I've heard the case in America is very out in the open, so presumably it's legal or they'd already be in trouble over it.

I think the other point is that Big business pretty much runs our Government here in the US. I think companies likely get away with far more here than in other countries.

BrickDancer

I didn't realize it was an open thing in the US, never heard of an official statement or letter for the discount ban when it came down. Just a mysterious coordination of no sales across the board, with B&N seeming to be the last one to join. All seems like collusion to me, which is why I'm so anxious for a way to voice my opposition other than just protesting their B&M stores.

And no doubt on Big Business power in the States @madforLEGO. But luckily we have some power to shine light on dubious practices and try to push for change. These are the opportunities we need to blow it up and bring it out for public discussion. Because it's the publicity that is the most worrisome for companies like TLG.

Yodalicious

I'd imagine they aren't the only one. For instance, iPads rarely go on sale here. Even at the Targets of the world. If there is a discount on a current generation one, it's usually in the form of "buy an iPad and get a Target giftcard" as opposed to just 10% off of iPads.

mathew

Yodalicious said:

I'd imagine they aren't the only one. For instance, iPads rarely go on sale here. Even at the Targets of the world. If there is a discount on a current generation one, it's usually in the form of "buy an iPad and get a Target giftcard" as opposed to just 10% off of iPads.

If you're talking about the US then iPads go on sale all the time.  Granted not as cheap as Android tablets but you definitely don't want to pay retail unless it's a new release.

Yodalicious

Then I'm looking in the wrong place. The only place I've ever seen a current gen on sale is the few percent discount that is typical of most stuff at Sam's Club. For instance, all the iPad Air 2s and Mini 4s at Target, Best Buy and Walmart are standard price. A few weeks ago, they were on "sale" at Target, but that was their usual "buy and iPad, get a gift card" deal they have once a month it seems.

I have to buy them for work frequently for giveaways and always wait for one of those promos. Granted, regardless, I'm not paying for them, so I only look at the bigger retailers and don't shop around too much.

Toc13

Companies, such as Apple, that do not allow their things to be discounted are generally doing it for reasons of brand image. By not having it on sale, they are saying 'Our product is still highly desirable, we have no need to cheapen it & make it easy to get hold of'.
Several other companies are coming round to it for other reasons. They have found that having sales on their products just trains people to wait for sales & does little to increase the total amount of units sold.

nychromastone

Oakley is also on the list of companies with this practice and for that reason. A manager at a retail store wishing to remain anonymous told me that brand image was a priority for them.

kiki180703

Yodalicious said:

Then I'm looking in the wrong place. The only place I've ever seen a current gen on sale is the few percent discount that is typical of most stuff at Sam's Club. For instance, all the iPad Air 2s and Mini 4s at Target, Best Buy and Walmart are standard price. A few weeks ago, they were on "sale" at Target, but that was their usual "buy and iPad, get a gift card" deal they have once a month it seems.

I have to buy them for work frequently for giveaways and always wait for one of those promos. Granted, regardless, I'm not paying for them, so I only look at the bigger retailers and don't shop around too much.

I already got a reduced iPad (15%) at Target when they closed in Canada. Also, two (or three) years ago, Apple still did their Black Friday sale, but not anymore :(

KingAlanI

Not surprised that's illegal, being a variety of anticompetitive behavior.
'Bundesamt' means Federal Office, and 'kartell' makes sense. (German often uses a k for words that have a hard c in English)
US list prices are lower to begin with, but further discounts seem rare, a quirk of a particular store's inventory.

NeilJam

madforLEGO said:

Shib said:

The difference with what they were doing in Germany was that it was behind closed doors and we don't know the extent, from what I've heard the case in America is very out in the open, so presumably it's legal or they'd already be in trouble over it.

I think the other point is that Big business pretty much runs our Government here in the US. I think companies likely get away with far more here than in other countries.

Just because it is common knowledge amongst a segment of the population does not mean it is OK. Price-fixing is illegal in the US and TLGs policies on discounts are basically a round-about way of price-fixing. Maybe it is exploiting a loophole by not setting a specific price. I have read that Playmobil has similar policies and have cut off supply for stores that discounted their products too much.

Many members of our government are against any type of regulations for businesses and dare not enforce these laws at the risk of being anti-business. If a company does get prosecuted the penalty would be minimal. When Nintendo got caught fixing prices for the NES during the 80s their punishment was to send out $5 coupons for games, which was basically advertising to benefit themselves.