Festool and Retail Price Maintenance

[woodshavings]

There have been a number of comments regarding the legality of Festool's control of pricing. Australia have a simular issue with Festool, but it appears they have taken some action.

The following link should take you to the ACCC judgement that imposed fines and required Festool to change their practice.

link

As far as I am aware, the UK law is similar to the Australian law - I wonder why it hasn't been pursued.

John

 

[markymark12]

Good to hear, it would be great to hear from someone from a legal background on this one.

They have been getting away with price fixing for far too long, time people took a stand against them.

 

[Anonymous]

If you don't like Festool's prices, don't buy their tools - they are no better than the other top manufacturers such as Dewalt, Metabo, pro grade bosch etc. etc. etc.., so buy those instead

Look at the latest GWW review of plunge saws. Festool was not the best on test, but I believe it was the most expensive.

 

[markymark12]

I don't see why Festool should be allowed to control pricing.

The issue is not choice, but the fact a large company believe they have the right to get away charging what ever they feel.

Why is it the product is that much cheaper in the us, are they fearful of doing the same there?

 

[woodshavings]

Tony, its not a case of not liking their prices, they are breaking the law.
John

 

[markymark12]

Well said

 

[chippy1970]

If you don't like Festool's prices, don't buy their tools - they are no better than the other top manufacturers such as Dewalt, Metabo, pro grade bosch etc. etc. etc.., so buy those instead

Look at the latest GWW review of plunge saws. Festool was not the best on test, but I believe it was the most expensive.

How can you compare Festool to Dewalt unless you are saying Festool tools are rubbish as most of Dewalts tools are.

Metabo are very near to the quality of Festool but not Dewalt no way, I think Fisher Price make better stuff than Dewalt :lol: :lol: :lol:

MARKYMARK,

Everything is cheaper in the US not just Festool so why pick on just Festool why not Dewalt or Bosch. This argument has always been running on many forums. Yes Festool are expensive but then so are BMW's and Porsche's compared to Ford but I dont hear you complaining that they are price fixing.


Go into any electrical shop and you will find that most things are the same price where ever you go near enough so everyone must be "price fixing"

 

[mister henderson]

Personally I see no inherent reason why Festool should not control the prices their products are sold at.

For instance, if they chose to they could sell directly to the end user without going through middle men. If they did this then they would, naturally, be controlling the price their products were sold at.

Part of the reason why Festool, AND MANY OTHER COMPANIES, control their prices like this is to maintain a high level of service to customers at the local level. This is how it works-
A shop retails a particular make of tool. Buyer comes in, is shown the tool, maybe even a demonstration. Buyer likes it, goes away and order it from whichever is the cheapest source he can find on the internet. Tool shop is disgruntled, and stops selling that particular make of tool.

That's what Festool and the others are frightened of. I don't blame them. They don't want to be selling into a market that is dominated by price.

Now we already know that there are many people here who feel they should not be allowed to get away with it, but my point of view is that if someone doesn't like their tools, or thinks they are too expensive, or believes them to be unreliable, or doesn't like the way they do business, well, I guess you've figured out what I think they should do about that.

 

[markymark12]

Part of the reason why Festool, AND MANY OTHER COMPANIES, control their prices like this is to maintain a high level of service to customers at the local level.


Regards A High Level Of Service

I brought a CS70 sawbench, around 2 years ago when i was fitting a lot of kitchens, great machine no complaints, until after a few months, if the saw was being used for long periods, suddenly it would lose power as if the variable speed had been turned down, but with complete lose of torque.

I took it back to the shop, off it goes for the first trip, no saw for 2 weeks, back it comes, nothing wrong they say, a few weeks later same again, of it goes again, back it comes, they say the same again.

Clearly there is something wrong with the machine, either that or myself and others using it, are all going mad.

Festool comments, it is all as it should be, and there is nothing wrong.

Great service that. I am so glad i paid so much for it now with such wonderful backup.

I have been using festool tools for over twenty years, and they are not what they once were.

Regards comparing festool to porsche's and BMW's , i think you need to get out more.

 

[xraymtb]

First of all, can I say that I do not own any Festool products however I would be happy to consider them if:

A) They were within the budget I had set for that tool purchase

and

B) They were higher or similar quality and performed the job equally or better than the competition

It is my understanding that under UK law, a manufacturer is not allowed to set conditions on retailers that would disadvantage them in relation to other retailers (i.e. sell to online retailers for less than they sell to high street retailers OR allow one retailer to set a lower price and impose conditions on another retailer if they also set that price).

It is also illegal to, 'directly or indirectly fix purchase or selling prices or any other trading conditions.' This includes limiting a buyer’s (as in a retailer's) ability to determine its resale price.

The relevant law can be found in the Competition Act 1998 (supported by Article 81 of the EC Treaty). I believe the penalties can extend up to a fine amounting to 10% of that companies turnover.

However without having any knowledge of Festool's selling practices or policies it is impossible for any of us to say that Festool is acting illegally. Similarly, it is not possible to say that retailers are not agreeing to adhere to published prices themselves, knowing that the tools do sell at the high prices resulting in a better profit margin for the seller.

With regards to comparing the UK and US markets, there are no laws that I am aware of that extend to govern prices in both markets (this is different from comparing two EU countries). Whilst it may not appear 'fair' to pay more because we live in the UK, there is no legal basis upon which to complain.

With regards to the comments made by chippy1970 regarding other companies, it is difficult to determine when a company is 'price fixing' and when prices are simply set at the point of free market equilibrium, governed by supply and demand. Normally prices do not deviate from this point unless supply changes, demand changes, or external forces change this price (i.e. a sale, stock clearance etc.) The fact companies charge the same for a product does not alone suggest that illegal price fixing is taking place.

In summary, the fact that Festool charge more for their products than DeWalt (as an example) is not illegal (even if both products are identical). If they are fixing the retail price so that retailers cannot sell them for less (or more, should they choose), then those actions are illegal (to my knowledge) and Festool could be subject to penalties.

 

[woodshavings]

clip
In summary, the fact that Festool charge more for their products than DeWalt (as an example) is not illegal (even if both products are identical). If they are fixing the retail price so that retailers cannot sell them for less (or more, should they choose), then those actions are illegal (to my knowledge) and Festool could be subject to penalties.

It's the retail price fixing that I think is illegal. If you read the determination of the Australian Competition and Consummer Commission (ACCC) linked in my first post, they found that Tooltechnic
Systems (Aust) Pty Ltd (Tooltechnic) were guilty of resale price maintenance in the supply of Festool power tools around Australia.

I think the RPM law in Oz is very simular to the law in the UK. The ACCC choose to act - the Office of Fair Trading have this responsibility in the UK but so far have not acted.

 

[mister henderson]

Part of the reason why Festool, AND MANY OTHER COMPANIES, control their prices like this is to maintain a high level of service to customers at the local level.


Regards A High Level Of Service

I brought a CS70 sawbench, around 2 years ago when i was fitting a lot of kitchens, great machine no complaints, until after a few months, if the saw was being used for long periods, suddenly it would lose power as if the variable speed had been turned down, but with complete lose of torque.

I took it back to the shop, off it goes for the first trip, no saw for 2 weeks, back it comes, nothing wrong they say, a few weeks later same again, of it goes again, back it comes, they say the same again.

Clearly there is something wrong with the machine, either that or myself and others using it, are all going mad.

Festool comments, it is all as it should be, and there is nothing wrong.

Great service that. I am so glad i paid so much for it now with such wonderful backup.

I have been using festool tools for over twenty years, and they are not what they once were.

Regards comparing festool to porsche's and BMW's , i think you need to get out more.

Naturally I am sad to hear that you have had both bad tools and bad service from Festool. I wonder though, if you are allowing your own personal bad experiences to colour your attitude to a brand that many others have found to be all that they wanted it to be.

There is no company in the world, I am quite sure, that can boast that they do not have a single disgruntled customer. I know I might be coming across as as a Festool shareholder here, but I am not. I just think that it is good to have someone put their point of view for them as they are not here to defend themselves.

If I had to go to a desert island, which happened to have 240v mains, I would take Festool tools. Sure, I might be disappointed, but I think the chances would be in my favour.

I don't remember making a comparison with BMW and Porsche, though it's possibel that I did. Anyway, whilst never having owned either marque myself, I can assure you that they both have their share of disgruntled customers- so a comparison with Festool would seem entirely reasonable

 

[andycktm]

I haven't got any Festool gear myself ,as its only an hobby.
But If you pay twice as much as the nearest competitor,your gona defend them,
or you gona complain if you don't get 100% service.
But at the end of the day if your good at what you do,
you don't always need "the best" tools.

 

[Slim]

There was a thread on this recently in which Jake made the situation perfectly clear.

https://www.ukworkshop.co.uk/forums/viewtopic.php?t=23745.

I find it amazing when people defend illegal business practices. As if large companies only have to keep within the law when it affects them.

However without having any knowledge of Festool's selling practices or policies it is impossible for any of us to say that Festool is acting illegally. Similarly, it is not possible to say that retailers are not agreeing to adhere to published prices themselves, knowing that the tools do sell at the high prices resulting in a better profit margin for the seller.

Absolutely right Mike, but isn't that what the OFT is there for?

 

[andycktm]

OFT = muppets , no power, worthless.Their doing an investigation into
supermarkets price fixing.Takes 2 year's! i can tell them now in 2 sec's.
OFT worthless.

 

[mister henderson]

I find it amazing when people defend illegal business practices. As if large companies only have to keep within the law when it affects them.

The fact that something is illegal doesn't actually make it wrong in a moral sense.

For instance, is it wrong for a kitchen fitter to take away the old kitchen and take it to the dump? Of course it isn't wrong, but it is illegal if he doesn't have a waste carriers licence.

So don't be amazed. There are very few people indeed who don't break laws ever.

Another point- Festool maintaining their retail price doesn't directly benefit them, it benefits their stockists. Anyone who has ever run a business will know just how expensive that is, and it's getting worse all the time.

 

[tnimble]

I think the RPM law in Oz is very simular to the law in the UK. The ACCC choose to act - the Office of Fair Trading have this responsibility in the UK but so far have not acted.

The RPM has acted because sufficient complaint has been filed. If the OFT does not receive complaint about a product, retailer or manufacturers nothing will be done. Or do you expect the officers of the OFT to start buying every imaginable product of every manufacturers to actively search out for each and every kind pf illegal trading? They certainly need more offisers and raise taxes to do that.

 

[Jake]

Another point- Festool maintaining their retail price doesn't directly benefit them, it benefits their stockists. Anyone who has ever run a business will know just how expensive that is, and it's getting worse all the time.

That's not true - why would they do it? Altruism?

It stops successful retailers who succeed in selling in volume from exerting price pressure on the manufacturer.

That is why it is unlawful and illegal - because it stiffs the consumer and keeps profits artificially high.

 

[xraymtb]

As a few have pointed out, any action would require the OFT to act based upon complaints received from members of the public. Personally, if I think that the Festool is over priced in comparison to the Makita/Bosch/DeWalt then I don't buy it. If I don't buy it, neither Festool nor the retailer make any money from me. From my position, I feel no need to complain to the OFT after this as it has not disadvantaged me in any way.

If Makita want to let a retailer sell me a tool for £100 less than the RRP, and Festool don't, then Makita will profit from my hobby and Festool won't. In that case, they lose out - not the competition.

It stops successful retailers who succeed in selling in volume from exerting price pressure on the manufacturer

Whilst this is true, I'm not convinced anyone sells enough Festool to exert pressure on them. And unless Festool make the decision to reduce their prices I can't see them ever becoming as big a seller as other brands.

 

[Jake]

Ah well, I do buy Festool tools, sometimes, because most of them are great tools (and in my view worth a premium over most other brands), but it galls that some of the money I pay may be due to price fixing, rather than the market price. That'sjust wrong.

And I've never had any better service from a Festool dealer (or Festool themselves) than with any other major top-end brand.