Leader (6 August): PC pricing practices will all come out in the wash

A Monopolies & Mergers Commission (MMC) report is set to have a profound effect on the prices of household electrical goods, shaking up the business practices of retailers and manufacturers and affecting how they deal with consumers.

The report (see story, Page 2) fell only slightly short of suggesting that there was a cartel operating in the high street and accusing retailers of hiking prices higher than they should be. There were also suggestions that retailers find it hard to get supplies, and that innovation in retailing is discouraged because retailers do not adhere to publishing the correct price.

What a shame that the report did not cover PCs and related hardware. Surely the business practices used to sell domestic appliances such as TVs, videos and washing machines are similar to those used to sell PCs?

According to the MMC, there were reports that if retailers sold products #50 below the recommended retail price (RRP), then the supplier would get a little bit upset and refuse to give the high street operator any more products. Hence the need for the MMC to make a tough but correct proposal to get rid of RRPs. But the MMC would need to take a different tack on computers because simply getting rid of RRPs will not necessarily lead to lower prices. Cheaper manufacturing costs and lower cost components mean there is already a general move to make technology as inexpensive as possible.

What the MMC needs to investigate is the fact that some high street outfits are able to buy PCs at much better prices than others, giving them a clear competitive advantage. There also needs to be process put in place that will enable fair distribution of product to all retailers in the UK. Currently, there is a race to see who can get the latest products on their shelves first, as initial supply is always restricted. While there has to be some advantage in being Mr Big on the high street, it cannot be at the expense of other players.

Some in the retail channel would argue that prices for PCs are competitive enough as the typical shelf life of a PC is only expected to last three months. But why are the prices always the same?

There may not be the same degree of wheeler dealing in PCs as there was in washing machines, but an investigation by the MMC would ensure that we have a squeaky clean retail channel for PCs and peripherals as well.