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Thursday, September 24, 2009

Lawsuit Claims Guitar Center And NAMM Fixed Prices

According to a post on Hypebot, a nationwide class-action lawsuit has been filed against Guitar Center and the National Association of Music Merchants (NAMM) claiming the two conspired to fix retail pricing on guitars, allowing the music retail giant and other major retailers to reap higher profits and squash competition at the expense of consumers.

The suit filed earlier this week by the firm of Hagens Berman Sobol Shapiro claims that retailers met at NAMM in 2001 and voiced concerns that gross margins would erode from the then-current 27 to 32%. According to the suit, the NAMM meetings played an instrumental role in creating agreements between Guitar Center, other leading retailers and product manufacturers to impose 'resale price maintenance' agreements designed to raise and maintain retail prices and according to the complaint, the cabal's actions were successful with 2008 margins holding steady at 30%".

Although Guitar Center is truly the 800 pound gorilla of the musical instrument business and would probably love to fix prices where ever possible, I find it hard to believe that this actually happened. It's true that they fixed prices in their stores and longer have the wild "sell at any cost" policy of old, but there's no love lost between GC and it's competitors and suppliers, so any type of collusion seems remote. Still, all the facts haven't come out yet, so it will be interesting to discover more info as it becomes available.

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