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 Shapiroclaims 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%".
"Guitars and other fretted instruments comprise a multi-million dollar industry in the United States alone, and one that's heavily influenced by a handful of industry giants like Guitar Center," said Steve Berman, lead attorney and managing partner at Hagens Berman Sobol Shapiro. "We contend that, even with its market domination, the company acted illegally to rig the marketplace to its benefit."
