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

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.
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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.
 
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.
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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.
 
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.
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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.
 
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.
 
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.
 
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.
 
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.
 
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.
 
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.
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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.
 
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 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.
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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.
 
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
 
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.

citizen22 said:
so it is a matter for lawyers to trash out.
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Indeed! However, who's lawyers? I took a look at the Competition Authority, and they don't exactly give confidence any complaint will be dealt with seriously. Basically, they'll acknowledge receipt of it and that's it. No communication from then on, unless they're looking for further information. Oh, and you get told when the case is closed. That's it. Doesn't exactly inspire confidence....
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