Audio Video News

The Supreme Court adopted a looser standard for price fixing yesterday, ruling that manufacturers may sometimes set minimum prices for products without violating antitrust statutes. Good thing, say manufacturers. Bad thing, say consumer groups.

The now-shattered flat ban on price fixing, a 96-year-old legal precedent, "is a flawed antitrust doctrine that serves the interests of lawyers...more than the interests of consumers," said Justice Anthony Kennedy writing for the 5-4 majority.

"The only safe predictions to make about today's decision are that it will likely raise the price of goods at retail," retorted Justice Stephen Breyer in a minority opinion.

The biggest trade group representing electronics manufacturers lauded the decision. Said Gary Shapiro of the Consumer Electronics Association: "CEA applauds the Supreme Court decision today reversing the per se rule against resale price maintenance. The Supreme Court holding that the 'rule of reason' should apply to the legality of manufacturer pricing decisions, means simply that all the facts will be examined before a finding of illegality--replacing a black and white rule of illegality in every case. Reasonableness has come back to the antitrust laws, and in the consumer electronics industry, where sales training, industry marketing, and after-sales service are highly valued by manufacturers and reputable retailers, it makes perfect sense to consider these factors when evaluating a manufacturer's requirement that threshold prices be maintained."

Unsuccessfully arguing the opposite side before the court was the Consumer Federation of America: "This case is a dagger aimed at the heart of the most consumer-friendly aspects of the Internet. The Internet has shifted power to the consumer in two ways. First, it allows consumers to search for and gather information in a cost-effective, efficient manner. Second, it provides a low-cost means of retailing, making it easy for discounters to offer products to the public. This combination squeezes excess profits and inefficiencies out of product prices. Retail price maintenance is a last ditch effort by big business to short circuit this extremely consumer friendly process. By setting minimum prices, manufacturers can build in excess margins for themselves and for their favored retailers--prices that consumers have no choice but to pay."

What direct impact the decision will have on the pricing of audio/video products remains to be seen. But the plummeting prices of flat-panel TVs have hit the industry hard in the past year.