While Alex Bohl's guitar gently weeps, his attorneys are aggressively suing Guitar Center and the National Association of Music Merchants (NAMM) over his strings and amps.
On Oct. 20, the Sacramento-based musician initiated a class-action lawsuit in U.S. Southern District Court in San Diego accusing the two organizations of an “anticompetitive scheme” in violation of the Sherman Antitrust Act. The lawsuit targets “minimum advertised pricing” policies, alleging that Carlsbad-based NAMM facilitated the policies by hosting the conferences where they were devised. Bohl complains helped Guitar Center secure its position as the largest retailer of “fretted instrument products in the country.”
It is the second such suit filed in recent weeks in the Southern District; the first was filed Oct. 14 by Cynthia Sepulveda, a Chula Vista woman whom CityBeat could not reach for comment. Both cases follow a Federal Trade Commission (FTC) order this spring that found NAMM guilty of “illegally restraining competition.”
In essence, the policies require musical-instrument retailers to agree to minimum prices in advertising, though the retailers may charge whatever they like once they get customers into their stores.
“I think this suit is symbolic,” Bohl tells CityBeat. “I definitely think that, as a practice, it's reprehensible. They're nickel-and-diming musicians. As a whole, musicians in any city are generally poor people, and [NAMM and Guitar Center] are taking advantage of them.”
In March, the FTC concluded that NAMM encouraged competing retailers to collude on retail prices, profit margins and advertising, which “crossed the line that divides legitimate trade association activities from unfair methods of competition.” As a result, Bohl's attorneys contend that Guitar Center, which is based in Delaware but maintains business offices in Westlake Village, Calif., forced 171 guitar stores out of business in 2008.
NAMM directed CityBeat to a Sept. 24 press release the association issued when other plaintiffs filed suit on the East Coast. NAMM agreed to end the practices and implement a range of remedies as part of the FTC settlement.
“NAMM's agreement with the FTC was for settlement purposes only and it does not constitute an admission that NAMM violated the law,” the release states. “To claim otherwise is untrue, irresponsible and contrary to the consent agreement. These types of legal actions based on misinformation divert industry resources to defending against frivolous lawsuits and away from supporting the making and enjoyment of music. They are a detriment to the music industry, to music makers and to music lovers everywhere.”
No great friend to Guitar Center, a $1.55 billion company that controls 26 percent of the U.S. market, San Diego's Guitar Trader agrees that the lawsuits are baseless.
“The person really has no case,” Guitar Trader manager Jeff Baumgart says. Minimum advertised pricing “is really another word for suggested advertised price. Stores keep everything consistent so you don't get into price wars—with one place charging 99 cents for a guitar—but it doesn't do anything to selling price.”
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