Wednesday, 6 May 2009

What has it got to do with the price of beer? (updated x3)

Matt Nolan has a great post at TVHE asking Why are they making my beer more expensive? He writes,
Pressure from parliament has led to supermarkets finding a way to collude and increase prices for alcohol sales. That is what I read from this article in the Herald.

Of course it is being framed this way so that it sounds like a winner:
The two big supermarket chains say they have stopped selling alcohol below cost as a “loss leader”, after claims the cheap deals lead to alcohol abuse
What a load of rubbish.
Well said that man!

As Matt points out what the supermarkets are doing is colluding on price. The effectiveness of using alcohol as a loss leader for one firm depends, obviously, on the price charged by the other firm. Under a so-called concern for the "social good" the supermarkets have found a way to collude on the price and thus one firm is able to increase the price without the danger of being undercut by another firm. So the supermarkets are increasing their profits at the expense of the consumer.

But under the Commerce Act collusion is illegal. What are the Commerce Commission going to do about this? If Matt, and the rest of us, want our cheap beer back, then a complaint to the Commerce Commission seems in order.

Update: Brad Taylor writes on Bootleggers and Baptists.

Update 2: Matt Nolan now asks, How dare they compete! A great post.

Update 3: The Inquiring Mind worries that the Sins of minority visited on majority


matt b said...

Ha, just saw the update mentioning bootleggers and baptists which did not show up on my Google reader.

What I was about to say was:

This is a classic example of the bootleggers and baptists phenomenon.

Paul Walker said...

Matt: So you would be right then!