Classeq has revised its recommended minimum internet advertising prices following changes to its price list that came into force on January 1.
Distribution partners received emails earlier this week reminding them to adjust the price of Classeq equipment displayed on their websites to reflect the new 2013 catalogue.
While manufacturers are not allowed to dictate the prices that products are sold at due to strict price fixing laws, they are perfectly entitled to recommend or suggest the price at which a product is advertised online.
Nick Burridge, sales director at Classeq, confirmed the company had written to dealers this week reiterating its policy.
He said Classeq first communicated recommended internet advertising prices to distributors two years ago in an effort to create a more level playing field for partners and address concerns that severe undercutting from some internet sales channels could damage the brand.
“We had a 3% price increase from January 1, so we really just wanted to advise dealers of the new minimum recommended prices,” explained Burridge. “Legally we can’t go to people and say, ‘look, you have got to advertise at that price’. We can only recommend and suggest. And at the end of the day it is down to the dealer, they can sell it for what they want.”
While minimum advertised prices don’t stop resellers from selling products at whatever price they want, suppliers are within their rights to amend a customer’s buying terms and discount structures.
Some manufacturers make it clear to partners that existing trade dealer discounts will only be honoured if products are advertised at the list price plus standard mark-up.
Burridge said: “If it got to the stage where someone wasn’t playing ball and they were cutting the price we could say we are going to change the terms, and legally we can do that, but thankfully we haven’t had to do that with anyone so far.”
Burridge added that Classeq had taken legal advice to ensure its correspondence to partners was above board, but suggested a lack of market uncertainty around the legal ramifications of internet advertised prices has so far prevented more manufacturers from following suit.
That said, the situation does appear to be changing as suppliers look to protect brand values and channel margins from the pressures of low-cost internet sales.
Manufacturers such as Blue Seal, Foster, Hobart Independent and Rational are all understood to have taken steps to put clear internet or minimum advertised pricing guidelines in place over the last 18 months.
One dealer said it was positive to see manufacturers taking the issue seriously as internet companies guilty of advertising products at below-sensible prices were “devaluing” the industry.
“I hope more set out minimum advertised price policies,” said the dealer. “We have caught wind that a couple of the big PLCs are going to be doing it, but that is not set in stone as of yet.”