# Anti-competitive behaviour by Miele? "Miele won't let us discount"



## ang1170 (19 Jul 2008)

I'd like to get some opinions on this (hopefully informed ones!):

At the moment, I'm looking to purchase some kitchen appliances (ovens, diswasher, washing machine etc.) and would like to get mostly Miele items.

The poblem is that there doesn't seem to be any possibility of getting any sort of discount (they add up to over €10k) from anyone. Now, nobody has a right to a discount. However, in talking to various retailers, I've been told a few times "Miele won't let us discount". 

This seems to me that Miele are setting a retail selling price in the market, and somehow enforcing it (by some form of agreement? pressure?).

My question is whether this is legal or not, according to the 2002 Competition Act?

Second question: is it worth asking the Competition Authority?

Any opinions?


----------



## mercman (19 Jul 2008)

No, you would be wasting your time and embarrassing yourself in the process. Miele manufacture a quality product and they feel that the higher price one pays is justified. Ask anyone who has a Miele product and they will tell you -- pure hassle free appliances. Now in saying that it really is up to the consumer if they wish to pay more now and save on trouble or buy other products and pay for repairs and time wasting breakdowns.

Saying that there must be some retailer who will price a packae for 10k.


----------



## Sue Ellen (20 Jul 2008)

Have a vague recollection of seeing an ad in a newspaper recently about discount on Miele product but can't for the life of me remember the exact details.  I think it was run by Miele themselves and I recall saying to myself that this was most unusual because I had read on AAM that they don't do discounts.

Might be worth your while to give them a ring and check it out with them in case there is anything on offer.


----------



## miselemeas (20 Jul 2008)

Have you compared their prices in N Ireland?


----------



## ang1170 (20 Jul 2008)

mercman said:


> No, you would be wasting your time and embarrassing yourself in the process. Miele manufacture a quality product and they feel that the higher price one pays is justified. Ask anyone who has a Miele product and they will tell you -- pure hassle free appliances. Now in saying that it really is up to the consumer if they wish to pay more now and save on trouble or buy other products and pay for repairs and time wasting breakdowns..


 
You're missing the point, which has nothing to do with the products themselves: I'm completely sold on Miele products. It's to do with where to buy them and how much to pay for them.

The point is that (with certain exceptions) agreements that attempt to fix selling prices are illegal. An obvious example of this would be a collection of retailers coming together and agreeing not to discount: there are I believe investigations underway at the moment into car dealers doing this.

My question is whether this is whether an agreement between a manufacturer and/or distributor and retailers falls into the same category?

It's a consumer/competition legal question: nothing to do with the merits or otherwise of the products themselves.



mercman said:


> Saying that there must be some retailer who will price a package for 10k.


 
No, there isn't (unless someone can point me towards one). Hence the suspicion of anti-competitive behaviour.


----------



## ang1170 (20 Jul 2008)

miselemeas said:


> Have you compared their prices in N Ireland?


 
Funny you should say that: my next course of action!


----------



## ang1170 (20 Jul 2008)

sueellen said:


> Have a vague recollection of seeing an ad in a newspaper recently about discount on Miele product but can't for the life of me remember the exact details. I think it was run by Miele themselves and I recall saying to myself that this was most unusual because I had read on AAM that they don't do discounts.


 
If anything, this just confirms the suspicion that the manufacturer has absolute control over the retail price of their goods. These promotions are indeed run by Miele, who set the scope and level of the discounts for the promotion.


----------



## jpd (20 Jul 2008)

Surely they have the right to set their prices as they see fit. If you as a buyer, do not think it is worth it, then don't buy their product but purchase a substitute. 

If enough people are of this opinion and follw this option, they will have to reduce their prices or go out of business.

If you are alone in your opinion, then perhaps you need to revise your buying price up to their selling price.

It is only anti-competitive if they collude with other producers of similar goods to ensure higher prices across the market as a whole.


----------



## Brendan Burgess (20 Jul 2008)

Check with the National Consumer Agency and the Competition Authority. 

If you have grounds for complaint, then you should complain even if the Competition Authority do nothing. 

You can also contact Paul Cullen, the consumer correspondent of The Irish Times who might be interested in it.

Brendan


----------



## Complainer (20 Jul 2008)

It's an interesting one. You could try to get hard evidence of the manufacturer's policy. Try and get the supplier to mention this in an email, or in a recorded conversation with a senior staff member (most mobile phones have a voice recorder now). 

Then get in touch with The Competition Authority and see what they say. Mercman is indeed missing the point. It's not a question of the quality or otherwise of the product. If the manufacturer has a policy of preventing discounting, this may well be anti-competitive.



jpd said:


> It is only anti-competitive if they collude with other producers of similar goods to ensure higher prices across the market as a whole.


Not true. If they collude with their distributors to set prices, this is in breach of legislation. Check out details of the Competition Authority case against the Irish Times about setting the retail price of the newspaper - see http://www.irlgov.ie/compauth/pressre.htm


----------



## BOXtheFOX (20 Jul 2008)

I was purchasing a dishwasher recently and had a look at the Miele product. The special offer that was available was a €200 trade in allowance. However this only brought the dishwasher price down to about €700 which was still the top price. I had previously had a Siemens dishwasher that lasted 15 years. I ended up with a Bosch in the end for €570 semi integrated.


----------



## Deirdra (20 Jul 2008)

The 'Miele won't let us discount' policy has been around for at least three years, as I encountered the same thing when buying most appliances through DID. Definitely worth persuing with the relevant bodies - even if it's probably just a waste of your time....


----------



## mercman (20 Jul 2008)

I am unable to see how the 'Miele won't let us discount' is anti-competitive. They manufacture a quality product and they do not want their products classed in the same category as the other products of a lessor quality. I would say the only people suffering from their 'non competitiveness' is Miele themselves. Ask anyone who uses their products.

Those who are ranting are becuase they can't get a discount.

MODS - maybe this should be moved to 'Letting off Steam', rather than making this a serious thread.


----------



## DavyJones (20 Jul 2008)

I would have thought that Miele gets paid X by the retailer and then the retailer charges X plus handling/profit to the customer. Surely there is room for a discount on the retail side. If I was spending 10k I'd haggle like crazy. I assume you talked to the top manager at these stores?


----------



## Complainer (20 Jul 2008)

mercman said:


> I am unable to see how the 'Miele won't let us discount' is anti-competitive. They manufacture a quality product and they do not want their products classed in the same category as the other products of a lessor quality. I would say the only people suffering from their 'non competitiveness' is Miele themselves. Ask anyone who uses their products.
> 
> Those who are ranting are becuase they can't get a discount.


You're still missing the point. Miele are indeed entitled to sell their product at any price they chose. What they are not entitled to do is to set the price at which their distributor (a seperate legal entity) sells the product. To attempt to control the business operations of their distributor in this way is indeed anti-competitive. 

Check out the Irish Times case that I linked to above.


----------



## mercman (20 Jul 2008)

OK so. Let's assume you are correct. I really am unable to see any of their retail agents wishing to sell their products at a loss  -- can you ??

Why aren't BMWs or Mercedes priced at the same level as TOYOTA or MITSUBISHI. After all they are just cars with four wheels, an engine and seats etc. The same product with a different badge.


----------



## Hurling Fan (20 Jul 2008)

We bought a load of applicances about a year ago and decided to include a Miele washing machine (from my research felt Miele were the market leaders in washing machines (they also offered 7 years parts and labour and believe this washing is earning its keep in our house!) but wasn't convinced they were the best in other products.  For example heard/read several times that Bosch make very good dishwashers - so not convinced that one manufacturer can excel at all kitchen applicances but that is only my humble opinion and I know that's not what the OP is asking.)

Anyway, when I was paying for the lot the Manager didn't discount the Miele washing machine as he said that he made Euro40 on it (it cost about Euro1100) and I got the impression that the margins were so small that he couldn't discount it not that Miele would not allow him so maybe thats the reason.


----------



## ajapale (20 Jul 2008)

Its interesting you bring up the issue of cars. I seem to remember that certain car manufacturers / car retailers have been taken to task for "price fixing". (ie not allowing the retailer to discount). If I find the link Illl post it here.

Cork businessman pleads guilty of car price fixing from finfacts.ie


----------



## Complainer (20 Jul 2008)

mercman said:


> OK so. Let's assume you are correct.



Well, you can make the assumption, or you can go read Section 4(1) of the Competition Act, 1991, whichever you like.



mercman said:


> I really am unable to see any of their retail agents wishing to sell their products at a loss -- can you ??



Who mentioned selling at a loss? The question is whether Miele have the right to prevent retailers selling at a reduced margin? Let's say there is an online retailer out there who doesn't have the staff and premises costs of a traditional retailer - are you suggesting that Miele have to right to prevent him passing on these reduced costs to the customer?

Or let's say there is a retailer who sets up a premises in a cheap, industrial estate instead of a high-street location. Do they have the right to charge a reduced price?



mercman said:


> Why aren't BMWs or Mercedes priced at the same level as TOYOTA or MITSUBISHI. After all they are just cars with four wheels, an engine and seats etc. The same product with a different badge.



This is nothing to do with this case. If you wanted a motoring comparison, the question would be whether the Mercedes importer has the right ensure that both Ballsbridge Motors and Brady's in Castleknock sell the same car at the same price.


----------



## ang1170 (20 Jul 2008)

mercman said:


> Why aren't BMWs or Mercedes priced at the same level as TOYOTA or MITSUBISHI. After all they are just cars with four wheels, an engine and seats etc. The same product with a different badge.


 
Can we keep this thread on-topic please, which is nothing to do with the quality of Miele appliances, whether they're value for money, or better or worse than other competitive products?

The topic is whether Miele are engaged in anti-competitive practices by fixing the retail price if their goods in the market, and thus preventing their distribution network from competing with eachother. The problem is lack of competition between Miele retailers, not between Miele and Bosch (or anyone else): the general appliance market is extremely competitive.


----------



## ang1170 (20 Jul 2008)

Hurling Fan said:


> Anyway, when I was paying for the lot the Manager didn't discount the Miele washing machine as he said that he made Euro40 on it (it cost about Euro1100) and I got the impression that the margins were so small that he couldn't discount it not that Miele would not allow him so maybe thats the reason.


 
I doubt this is the full story of what's going on: a 3.6% margin on a product like that isn't really credible, as it would be unlikely to cover enough of their costs to make dealing with them worthwhile. Having said that, I don't know anything about that particular business.

If it's true, maybe they get a bonus every six months, based on targets? maybe even the target is one unit? There are plenty of ways one could think of to circumvent (or break?) the law here.


----------



## John Rambo (20 Jul 2008)

ang1170 said:


> I doubt this is the full story of what's going on: a 3.6% margin on a product like that isn't really credible, as it would be unlikely to cover enough of their costs to make dealing with them worthwhile. Having said that, I don't know anything about that particular business.
> 
> If it's true, maybe they get a bonus every six months, based on targets? maybe even the target is one unit? There are plenty of ways one could think of to circumvent (or break?) the law here.


 
It is entirely credible...there are many products which retailers make hardly any money on. Sometimes items are sold at a loss and the profit comes in a rebate from the manufacturer. Examples would include Ping golf clubs, Sony televisions, Mercedes cars etc. Strong brands in other words. Try getting a discount on a MINI and you'll encounter the same type of thing. It is entirely illegal for manufacurers to influence retail prices...in practice what happens is any retailer who messes around with prices is not supplied with product. A call to place an order will be met with a 'sorry, we've none of these in stock' from the supplier. That's the reality.


----------



## mcaul (23 Jul 2008)

ang1170 said:


> I doubt this is the full story of what's going on: a 3.6% margin on a product like that isn't really credible, as it would be unlikely to cover enough of their costs to make dealing with them worthwhile. Having said that, I don't know anything about that particular business.
> 
> If it's true, maybe they get a bonus every six months, based on targets? maybe even the target is one unit? There are plenty of ways one could think of to circumvent (or break?) the law here.


 
Yep - that's the way its done.

A basic margin of probably 8%-10%, payment discounts, range discounts, quantity discounts would bring it up to about 25% margin.

Retailer can show you their trade price list which will show just the 8% - 10% margin and you'd almost be offering more to them.

Same system applies to cars.


----------



## Caveat (23 Jul 2008)

I think the low margin/not passing on discount is very possible. The wording of "not allowed...." by the retailer maybe should really be read as:
"our trading terms with _Miele_ will not allow us to..."

We have been in this position before ourselves - some very good customers of ours had been disappointed not to receive discount on quantity orders of high value items from a certain manufacturer we represented.


----------



## MrMan (23 Jul 2008)

It is also the case that a lot of retailers have to order in miele appliances because they don't keep them in stock and discounts are generally not given on special orders. 
Prefer Siemens myself.


----------



## HighFlier (23 Jul 2008)

If Miele were selling the products directly themselves then they can charge as they see fit.

However even though Miele do sell themselves from their own showrooms they also sell through indepent electrical sales outlets.

The question then becomes as follows; Is the sales outlet acting as an agent for Miele on a fee basis or is he buying wholesale , marking up the price and selling on retail. If its the former then Miele can set the price. If it's the latter its illegal to set prices across a range of independent outlets.

Why not ask the dealer if he is selling as a retailer or as an agent. i.e. does he take ownership of the goods from Miele at any point.


----------



## Askar (23 Jul 2008)

Miele is prohibited under competition legislation from setting the retail price of its products. It can 'recommend' a retail price, but that is as far as it goes. To try and set a retail price is known as 'retail price maintenance' or rpm. 

No harm in informing the Competition Authority. They are not busy on enforcement side of things at the mo AFAIK - most of their actions such as oil distributors and car dealers date back 8 years. However, don't make complaint with high expectations.


----------



## HighFlier (23 Jul 2008)

You can set the retail price if you are a retailer.Miele can and do retail their own products.

What you cannot do as a supplier is to instruct an *independent* retailer what price to sell at. 

You can instruct an "agent" to maintain a retail price.


----------



## ang1170 (26 Jul 2008)

HighFlier said:


> You can set the retail price if you are a retailer.Miele can and do retail their own products.
> 
> What you cannot do as a supplier is to instruct an *independent* retailer what price to sell at.
> 
> You can instruct an "agent" to maintain a retail price.


 
I'm pretty sure that's what's going on here. To me, this sounds like a deliberate circumvention of the law. Just by calling a retailer an "agent" they can set the retail price.  I don't believe their agents are such in anything but name: they retail other manufacturer's appliances as normal retailers, so what's the difference? What other reason would there be for appointing "agents" as opposed to normal retail outlets?

My suspicion is that this could well be illegal, as it's an agreement between independent entities that has the effect of fixing retail prices, but enforcement is not strong enough to prevent it.


----------



## citizen22 (28 Jul 2008)

hi

miele now sell direct in ireland , they are selling directly to you, the retailer is on comission, and yes you are right they do not discount, you will be dealing with a company called miele ireland limited.miele deliver to you not the shop.

most miele stuff is good, some product is not good.


----------



## ang1170 (29 Jul 2008)

citizen22 said:


> most miele stuff is good, some product is not good.


 
Can you expand on that?


----------



## citizen22 (29 Jul 2008)

ang1170 said:


> Can we keep this thread on-topic please, which is nothing to do with the quality of Miele appliances, whether they're value for money, or better or worse than other competitive products?
> 
> The topic is whether Miele are engaged in anti-competitive practices by fixing the retail price if their goods in the market, and thus preventing their distribution network from competing with eachother. The problem is lack of competition between Miele retailers, not between Miele and Bosch (or anyone else): the general appliance market is extremely competitive.


 

There is no compition between miele retailers, because miele ireland limited are now the retailer. They will sell direct to you, the retailers have signed up, all payments go to miele ireland limited who give comission to any approved selling agent, they get more comission if they have a miele show room. This is a fact. Competion is not allowed by miele, the only compition is between the variouc miele companies ie each country has a miele limited company.

The way it is set up is unique. Miele ireland limited are also the distributors. product is delivered by miele ireland limied and not the retailer.

so it is a matter for lawyers to trash out.


----------



## citizen22 (29 Jul 2008)

acuually you are correct, they use the word agent and not retailer, i did not relaise the difference/importance of the word agent untill it was highlighted here


----------



## ang1170 (29 Jul 2008)

citizen22 said:


> The way it is set up is unique. Miele ireland limited are also the distributors. product is delivered by miele ireland limied and not the retailer.
> 
> It still smells of a circumvention of the law to me. Company X is a retailer of kitchen appliances, selling stuff from Smeg, Bosch, Zanussi, whoever. They have a retail unit in a retail area with showrooms showing all this stuff. They also display (and appear to sell) Miele products. However, for the Miele equipment they are an "agent". On all products other than Miele, they are free to compete with other retailers, holding sales, discounting for multiple purchases, whatever.
> 
> ...


----------

