First TVs, now tortillas: U.S. companies set minimum prices to halt discounting

NEW YORK, Nov 17 (Reuters) – Makers of everything from toys to tortillas are setting minimum prices on their products to maintain profits and reduce price cuts as retailers such as Walmart Inc (WMT.N) and Amazon.com Inc (AMZN.O) ) try to take sales from each other online.

As a result, consumers have less money for everyday purchases at a time when prices are about 8 percent, and as retailers look to ship hundreds of billions of dollars of stock market. READ MORE

For years, manufacturers set the lowest prices that retailers could advertise on some big-ticket items like TVs. They want to stop buyers who pick up an item on the showroom floor, then go online to find another seller has it advertised at a lower price, and buy it there.

Now, as consumers grapple with the bad habit of buying home essentials online, companies like Colgate-Palmolive Co ( CL.N ) have used what’s known as a minimum advertising price policy on available products. as cheap as its Optic White Pro. Toothpaste on Amazon, says someone familiar with the matter.

The Pro Series toothpaste, which is currently being advertised for as little as $9.96 on Amazon, is a high-end product where Colgate wants to protect its profits despite rising prices. read more As a result, consumers have struggled to find lower advertising prices anywhere else.

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Toymaker Hasbro Inc ( HAS.O ) wants retailers to keep the price of any ad above its specified level from $6.99 to $33.99 on Monopoly, Twister, Chutes & Ladders and 21 other games and toys children, except during holiday shopping, according to the company. The memo was seen by Reuters.

Reuters graphic

Online shopping for consumer goods, along with Amazon’s cut-throat competition with Walmart Inc ( WMT.N ), has prompted many consumer goods makers to lower prices on cheaper products, which body for e-commerce said.

Mr. Tortilla, which makes gourmet tortillas sold online through Walmart and Amazon, decided to set a minimum price as it expands sales, aiming to maintain prices across retailers. e-commerce, said Ron Alcazar, the company’s chief operating officer.

“We’re seeing brands being adopted (these areas) that haven’t been, like food and beverage,” said Jack Gale, account director at PriceSpider. , who has seen 120% annual growth in the number of brands using his products. which helps to force these prices down since 2018.

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Shopping carts are seen at a department store as price gouging affects shoppers in Manhattan, New York City, U.S., June 10, 2022. REUTERS/Andrew Kelly

NO LAW IN YURP

Although legal in the United States, these laws are illegal in many countries, including across Europe in many cases.

A contract stating the selling price between the seller and the manufacturer is also illegal in some states including California and Maryland.

Amazon’s share of these lower prices comes from its commitment to offering products at lower or lower prices than competitors such as Walmart. This forces brands that sell large quantities of goods on Amazon to set, and then enforce, minimum prices. Otherwise, they face diminishing returns.

Sellers on Amazon and sellers on its platform can be penalized by negative postings on Amazon.com, among other actions, if the company find lower prices on other products, e-commerce experts say.

“We are not responsible for creating them or advancing adoption,” an Amazon spokesperson said when asked about the minimum ad price policy. “Like any store, we reserve the right not to display uncompetitive prices compared to other retailers. We always keep our prices low.”

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A California lawsuit filed against Amazon claims that suppliers must comply with the rules set by Amazon that lead brands to accept and enforce the minimum advertising price law.

U.S. Rep. David Cicilline, who is working on proposed antitrust laws to lower prices, said, “Amazon often uses its monopoly power to coerce retailers and suppliers, restricting them offering cheaper prices than elsewhere.”

Amazon said in response that it does not prevent sellers from offering lower prices elsewhere.

A 2007 U.S. Supreme Court decision that allowed “within cause” agreements on retail prices between retailers and suppliers helped lay the groundwork for the expansion of the policy. these prices.

Statement by Jessica DiNapoli; Editing by Vanessa O’Connell and Chris Sanders

Our principles: Thomson Reuters Trust Principles.

Jessica DiNapoli

Thomson Reuters

The New York-based reporter covers US consumer products from paper towels to packaged foods, the companies that make them and how they react to the economy. It has previously been reported to the board of directors in troubled companies.

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