The Supreme Court has reached a deadlock vote in a case involving Costco Wholesale’s discounting of name-brand watches.
Here’s the back-story: About 4 years ago, the Supremes made a 5-4 decision that effectively allowed price-fixing by manufacturers. This decision infuriated me at the time. I believe it showed a lack of understanding of capitalism and contempt for the free market.
America historically has left pricing up to retailers. But in a nod to big business, the Supremes opened the door to manufacturers to control what price you should pay for their goods at the store in the 5-4 decision.
Now, the chickens have come home to roost in the Costco case. Costco is appealing a decision that let Omega Watches prevent the warehouse club from selling its watches for $1,299 instead of $2,000.
All the major retailer trade organizations are on Costco’s side on this one. Even competitors like Target have thrown their support behind Costco. Ditto for Amazon and eBay.
Yet the Supreme Court couldn’t reach a decision in the case and turned in a 4-4 verdict. (The ninth Justice had been involved in this particular case before she went to the Supreme Court bench, so she had to withhold her vote this time around.) So what’s next? I think we need Congress to pass legislation to restore free enterprise and outlaw price fixing.
We should be free to buy where we want and pay for the level of service we want — from no service on up — and let the marketplace set the price for those goods. Price fixing should be outlawed once and for all.
But as I’m thinking through this Costco v. Omega case, one thing occurs to me: Why would anybody spend $1,299 for a watch?! My Casio from BJ’s Wholesale does everything for $19.99 — though even that is more than I wanted to spend on a watch!