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Comment by protomyth | Hacker News Reader

It is basically the same type of law that kept studios from owning movie theaters. Separating producers from local sales was a big thing. We can say it is a crap law but there were some very real worries and reasons that lead to it in many industries. Expect if the law is overturned that all the manufactures will replace local dealers with their own showrooms. This isn't about stopping innovation, it's about accumulated history.

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Maybe I'm too naive to see why manufactures having their own showrooms would be such a problem?

Why does having a Walmart raise such ire in small towns? These types of companies expatriate dollars from local economies. I think that's the reason for the original laws.

They have have advantages over non-manufacturer dealerships. For instance, parts would be internal and thus they may get them for just material cost which would allow for either lower service costs or higher margins both of which aren't available at non-manufacture dealerships. You could apply the same scenario to fully finished new cars as well.

Imagine that Ford only allows maintenance at company owned stores, because they don't sell replacement parts to dealers, then they charge $500 for a fan belt, etc.

Except that if I knew that was their way of business I would simply avoid buying their products.

Isn't this a case where the free market actually would account for that scenario? It's not like they have a car monopoly.

agreed. i'm just describing the ostensible reason for the law...

Then no one will buy a Ford.

People would probably wise up and buy toyota, nissan, gm, etc. There is more than one car maker.

That, of course, implies a world with no collusion.

Could they not already sell their fan belt to dealers for 500$ if they wanted to?

They don't make their own fan belts. The dealer would simply switch to another brand. They are standardized, after all.

Image that the Ford dealership was the only dealership within an hour's drive of your house (not an uncommon situation when these laws were enacted).

Wait, how is this different from any consumer device that has a warranty?

edit: e.g. let's say my apple laptop breaks, even if I could fix it or get it fixed by a third party for cheap, I have to take it to the apple store to not risk losing my warranty completely.

Well, many states have laws specifically for that: a car manufacturer's warranty cannot be cancelled just because the owner or someone the owner paid worked on the car.

The manufacturer's warranty can only be voided if the manufacturer can prove that the warranty claim arose directly due to the owner (or someone they paid). So if the owner changes their own oil and the rear bumper falls off? Warranty.

That's exactly what Nikon does.

As a modern example: look at luxotica for an example of a monopoly. They own large shares of the manufacturing and retail for eyeglasses, and they charge exorbitant prices.

They own Oakley, Ray-Ban, LensCrafters, Pearle Vision and Sunglass Hut. They also operate Sears Optical and Target Optical.

They also produce eyewear under license for names such as Coach, Anne Klein, Bulgari, Prada, Polo, Versace, Ralph Lauren, and Tiffany.

http://online.wsj.com/article/SB1000142405274870451890457536...

Making manufacturers divest of retail operations is a way to break up their monopoly.

...And brands like BonLook and Warby Parker are disrupting the old industry right now.

My wife and friends (24-27 years old) have been getting their glasses at $100 a pop, no strings attached, from these companies for a few years.

Below that in the price spectrum, there's Zenni Optical. I bought a $20 pair of glasses from them over a year ago & they've been very good to me. They aren't quite as stylish as Warby Parker, but they are still pretty nice.

The movie studio/theater breakup was an anti-trust case.

http://en.wikipedia.org/wiki/United_States_v._Paramount_Pict....

btw, there is a bug the hn code... add a period at the end of the url to see the link

Yep, all of these laws have been affected by anti-trust since the Standard Oil case. It is very much a part of these laws being developed.

>Separating producers from local sales was a big thing.

That sounds interesting. I'm curious why.

To expand rapidly (play catchup is the modern term), GM started franchising car sales. No real protections other than the agreements. Then anti-trust laws intruded and it looked like franchising would be illegal (think Standard Oil), but later court cases clarified the difference between the franchise owner and the suppling company. The we go to stopping companies from owning the whole horizontal chain in some industries like theaters and stopping national companies from abusing the local franchisors (like car dealerships).

It is basically the story of stopping evil monopolies combined with need for companies to expand reach quickly in a non-internet world (see Singer sewing machines and GM) dovetailing into more anti-trust laws and then local job protection schemes meshed with laws codifying the 100 year old business model (we are talking stuff that started before automobiles).

Apple doesn't have a problem because they came after. If you think this is screwed up, then don't buy a boat.

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