Recently it was milk, and now its beer! It appears that the country's two giant supermarket chains were about to start a price war on beer by selling cases for less than the wholesale cost. This seems to me be a variation of the old "loss leader" practice where a retailer deliberately makes a loss on a product in the expectation the great deal will attract customers and once in the retailer's store, the customer is likely to spend more on other goods.
In the case of the looming beer price war, it seems it's might be no more. Foster's has refused to supply these supermarket giants. While cheap price beer is a tasty prospect, I guess Foster's sees such gross discounting as likely to cheapen its brand image.
But hang on. Under our trade practices laws, a supplier can't withhold or threaten to withhold supplying goods if the retailer refuses to sell at a particular price. This is an offence known as resale price maintenance.
But there's more. In certain limited cases, this practice is actually allowed. Just after the provisions prohibiting resale price maintenance in the Competition and Consumer Act (previously, the Trade Practices Act) it provides certain exceptions in cases where "…goods obtained... from the supplier at less than their cost…"
And that's the catch!
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