Can't sell below cost?

[sgrizzle]

In reference to restored2x's message over here: http://tulsanow.org/forum/topic.asp?TOPIC_ID=7988

What is the exact nature of the "can't sell below cost" law that oklahoma has. Most states were getting the HD-DVD player for $97 and Oklahoma wal-marts were charging $185.

[MichaelC]

I bet you're talking about Antitrust Law.  Don't know the specifics laws, or where you'd find them.

http://en.wikipedia.org/wiki/Antitrust

quote:Competition law, known in the United States as antitrust law, has three main elements:

   * It may prohibit agreements or practices that restrict free trading and competition between business entities. This includes in particular the repression of cartels.
   * It may ban abusive behaviour by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal and many others.
   * It may supervise the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to "remedies" such as an obligation to divest part of the merged business or to offer licences or access to facilities to enable other businesses to continue competing.

[sgrizzle]

Supposedly this only effect Oklahoma and 4-5 other states, so it's some sort of state anti-trust law.

[MichaelC]

I haven't found Okie antitrust law, but I have found reference in Okie law to US antitrust law.

Gotta type in the word "antitrust" in the search box:

http://oklegal.onenet.net/oklegal-cgi/isearch

quote:1. "Antitrust investigation" and "investigation" mean any inquiry
  conducted by the Attorney General for the purpose of ascertaining
  whether any person is or has been engaged in or is actively preparing
  to engage in activities which may constitute an antitrust violation;
 
  2. "Antitrust violation" means any act or omission in violation of any
  of the prohibitions contained in this act or in violation of any of
  the antitrust laws set forth in 15 U.S.C., Section 12(a);

My guess is that it's fluid.  It might take a suit or two to flesh that out, but again, if there's no type of competition, Wal-Mart wouldn't necessarily have a reason to drop a price.    It's difficult to say whether or not law has anything to do with the price difference.

[cannon_fodder]

Generally "no below cost" provisions fall under the guide of anti-trust regulation, specifically anti-dumping regulation.  The general idea being no one can cheaply sell items in a given market that are deemed undesirable elsewhere (ie. Japan can not sell the new WII in Tokyo and dump the older generation int he US for less than the cost of manufacture).  The theory behind this idea are varied (slows down out market development, reduces competition, assumes must be inferior products), but are generally disregarded now.

Another theory is predatory pricing... no one can sell for less than cost because the state assumes they are doing so to drive competition out of business (Wal-Mart can take losses for a year to drive Mom and pop Mart out of business).  When competition lessons the state again assumes that they will be able to raise prices to whatever they want with impunity.   This theory fails to account for new entrants into the market.  Mom and Pop Mart would simply reenter the market when Wal-Mart raised their prices and their business was again profitable.

I'm not sure what Oklahoma's law specifically is based on and am too lazy to take the time looking up the H.B. findings of fact and support to see what they were thinking. I'm confident it serves no useful purpose - so there is my 1 minute essay on the topic.

[inteller]

well, I know for a fact Circuit city broke that law last year then when they sold me a TV for half of the regular price.  No way in hell do they have a 50% markup.

this same stupid law applies to gas too, thats why we can never have any price wars around here.

[sgrizzle]

quote:Originally posted by inteller

well, I know for a fact Circuit city broke that law last year then when they sold me a TV for half of the regular price.  No way in hell do they have a 50% markup.

this same stupid law applies to gas too, thats why we can never have any price wars around here.

I know they seem to be able to go around it for several reasons, but I don't think they can have an advertised regular price below cost. They sold myself and few others an hd-dvd price for half of cost this morning.

[inteller]

quote:Originally posted by sgrizzle

quote:Originally posted by inteller

well, I know for a fact Circuit city broke that law last year then when they sold me a TV for half of the regular price.  No way in hell do they have a 50% markup.

this same stupid law applies to gas too, thats why we can never have any price wars around here.

good choice, HD-DVD is the way to go.  I was blown away when I got one for my 360.

I know they seem to be able to go around it for several reasons, but I don't think they can have an advertised regular price below cost. They sold myself and few others an hd-dvd price for half of cost this morning.

[sgrizzle]

quote:Originally posted by inteller

quote:Originally posted by sgrizzle

quote:Originally posted by inteller

well, I know for a fact Circuit city broke that law last year then when they sold me a TV for half of the regular price.  No way in hell do they have a 50% markup.

this same stupid law applies to gas too, thats why we can never have any price wars around here.

good choice, HD-DVD is the way to go.  I was blown away when I got one for my 360.

I know they seem to be able to go around it for several reasons, but I don't think they can have an advertised regular price below cost. They sold myself and few others an hd-dvd price for half of cost this morning.

I like blu-ray better capacity and technology wise, but you can't find bluray for $100.