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Sports Shops Cartel busted in St Anton am Arlberg

 Poster: A snowHead
Poster: A snowHead
Four sports shops in St Anton have been busted for running a Price fixing Cartel from at least 2002

An anonymous tip off triggered the investigation

They have been fined a total of €420000


There is now further investigations ongoing in other Ski areas in The Tirol

http://www.tt.com/wirtschaft/standorttirol/10080502-91/preisabsprachen-sportl%C3%A4den-in-st.-anton-hart-bestraft.csp

http://tirol.orf.at/news/stories/2713543/
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Quote:

An anonymous tip off triggered the investigation

Laughing gosh, that must have been an enormous surprise and shock to everyone. Who'd have guessed it?
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I just assumed the higher prices I had to pay for hire skis was because like everything in St Anton, they were just better than anywhere else
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@peanuthead, Laughing
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There's been a lot of discussion on Snowheads about the Arlberg cartels.
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Ischgl must be in trouble as well, can confirm ski hire cartels are in operation there too!
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Clearly this isn't the case in St Anton. But is price fixing so bad if the price is fixed at something that is reasonable for the customer? I understand the need for competition. But if shops are just trying to look after each other and share the trade between them to keep each other in business...

I know this might seem unusual for most of us, but I could imagine that in some small Austrian villages you could have mates who each own shops (and probably farm in the summer) who just want to look after each other.
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@hammerite, I agree, however when visiting other smaller less prestigious Austrian resorts where you might expect this to be the case the prices are often in excess of half the price of St Anton and Ischgl et al.

I would expect this attracts a large number of people in search of good value for money. Plus when you think of the mark up they put on the skis at some resorts its scandalous.

Skis sold to shop at trade price = 200 euro (300sets = 60000)
St Anton shop 1x week rental = 130 euro

Multiply that by approx 15 weeks = 1950 euro
Multiply that by 300 sets of skis = 585000 euro!!!!

Plus goggles, boots, gloves, helmets = a lot of dough!
Obviously there are overheads too but that is still gonna be a crazy amount of income. They are just estimates BTW.
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Quote:

But if shops are just trying to look after each other and share the trade between them to keep each other in business...


that's what a cartel is, isn't it?
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pam w wrote:
Quote:

But if shops are just trying to look after each other and share the trade between them to keep each other in business...


that's what a cartel is, isn't it?


Well yes. But what I was implying in the whole of my original post was:

- Those in St Anton are doing this, but are keeping prices artificially high - there's no competition. It's exploiting the customers.

But is a cartel/price fixing/matching such a bad thing if those involved keep prices at a reasonable level for the customer? They are just avoiding undercutting each other/a price war and ensuring that each shop remains in business (obviously this ignores the other reasons for choosing a hire shop - location, service, condition of skis).

Like AthersT I've been to a few resorts in Austria where pricing is very similar if not identical between virtually all shops in resort. But the price to hire is substantially lower than it would be in St Anton. I know when pricing up holidays and making a comparison St A has been struck off due to the cost of hiring (I have my own skis now though so I might make a visit Smile )
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@stanton, Buy decent skis on Ebay......... £200, use them one week and sell for £180, ......... don't use a calculator.
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Take your own., simples.........I agree ........I use two of the shops regularly and really like them, and buy plenty for them in their sales.....great shops, excellent range of products and brilliant deals. If someone wants to hire gear and expects a cheap deal in St anton, or any international resort they're being a bit naive IMO.
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This isn't a very Snowheads like thread. No-one has blamed the French or ESF yet.
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 You know it makes sense.
You know it makes sense.
@Markymark29, +1

While cheaper prices can be a welcome outcome from breaking up a cartel, that is not guaranteed. Further, I would hate to see a race to the bottom, meaning fewer shops and/or smaller range of equipment for sale.
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emwmarine wrote:
This isn't a very Snowheads like thread. No-one has blamed the French or ESF yet.


French aren't blameless - remember entry of Ski Republic into the market. Fortunately Decathlon are also in many resorts now to shake things up.


Re St Anton , they have been taking the wee wee for years - fine is just a drop in the ocean no wonder they didn't appeal. Harder to force them to compete mind.
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Beer next.
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AthersT wrote:
@hammerite, I agree, however when visiting other smaller less prestigious Austrian resorts where you might expect this to be the case the prices are often in excess of half the price of St Anton and Ischgl et al.

I would expect this attracts a large number of people in search of good value for money. Plus when you think of the mark up they put on the skis at some resorts its scandalous.

Skis sold to shop at trade price = 200 euro (300sets = 60000)
St Anton shop 1x week rental = 130 euro

Multiply that by approx 15 weeks = 1950 euro
Multiply that by 300 sets of skis = 585000 euro!!!!

Plus goggles, boots, gloves, helmets = a lot of dough!
Obviously there are overheads too but that is still gonna be a crazy amount of income. They are just estimates BTW.


You have missed something. At the end they still have skis they can sell off as "slightly used, one careful owner etc" or continue to use for another season.

On the minus side they pay commissions to tour operators. I don't recall hearing of a tour operator bitterly complaining about high prices. Funny that.
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Pruman wrote:


You have missed something. At the end they still have skis they can sell off as "slightly used, one careful owner etc" or continue to use for another season.

On the minus side they pay commissions to tour operators. I don't recall hearing of a tour operator bitterly complaining about high prices. Funny that.


Prices are still high in St Anton even if you go direct to the hire shop where a commission isn't paid.
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As a consumer when you get any service or product one of the first things you look for is value for money and to not be ripped off. Just because it is an internationally famous resort why does that give shop owners the right to charge up to twice what I would if I was to go to Mayrhofen and also work together to artificially hike up prices?

Of course the "normal" people who don't use forums and don't have their own equipment aren't put off because they just pay whatever to go to St Anton, Ischgl etc and they are the ones who allow these high prices to continue by being blissfully ignorant to the fact they are being ripped off.

It would be a great time to buy a shop in St Anton and offer good value products and make a tidy sum by undercutting. However, I think somehow the local cartels, councils might not like that?! Evil or Very Mad
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@Pruman, I know I missed off a few things, also I was being conservative with 300 sets of skis and not adding in boot hire. Just shows how much money there is to be made in the winter season.
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@AthersT, You're talking about huge multi-million € businesses here, they are very well established, long standing companies which have been passed down over many generations, and the families which own them (and also many other tourism related businesses) are well respected locally and are part of the framework of not only the town but the region. I've dealt with these businesses for many years and have never felt ripped off, to the contrary I could list here countless examples of where they have helped me out with safety critical skiing related issues at short notice and not asked for additional monies from me, only in the last few weeks have I had exceptional customer service from them. The staff IME are exceptionally well trained and like I said above if a person chooses to hire ski gear from across the road from the main lifts in one of the top ski resorts in the world then they are likely to get charged a premium, as they would for example if they walked into a car hire shop in central London (Probably cheaper to hire it in Slough and drive in, using your Mayrhofen analogy). You can by the way go to Pettneu 5-6km away and hire less premier skis/ boots at 2/3 of the price, like my friend did for his family 2 years ago and when it all went wrong and needed sorting he got all annoyed he had to travel up and down the valley to sort 3-4 times. He said it wasn't worth the hassle and conceded he'll hire from the one nearest the Galzigbahn next time!
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Very interesting post - thanks for sharing. I think Mark has a good point here, when few families run a resort, and they are already well-off, there is less incentive for them to be as competitive
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@iainm, Not sure I agree that there if they are well-off there is less incentive, however that's their judgement call based on the levels of return they are looking for, but I have to say if my front door was being walked through by 1,000's of people a week all hiring gear at prices I liked then I'd be pretty unlikely to be driving down my prices.

People also know that when they hire from them they are getting quality and great service, that IMO counts for a lot, for me anyway when its my 2-3 weeks away a year on holiday - when the sun's coming out tomorrow, I've had a hard day travelling and I've got 0.5m of fresh powder to go at tomorrow morning I personally wouldn't be running down the valley to save the price of a round of beers.
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@Markymark29, people like yourself and many others on here are in the minority when you get value for money by taking advantage of the extra service/advice that is available in these "premier" ski shops and hire all mountain/off piste/powder skis and equipment.

The average punter that has maybe plumped for St Anton after hearing about the "epic skiing" from a friend, booked with Crystal and picked the "Silver" level skis, whereby he/she hires a set of cheap on-piste Salomon Xcarts (rrp 200 euro) for 130 euro for a week plus 40 euro for boots when if they had gone to Mayrhofen as an example it would be 80 - 90 euro for the same skis and boots. These people are the once a year people who help to make the ski industry so profitable (by being consistently overcharged) and help to make it cheaper for the people who visit multiple times a season/seasonnaires.

I totally understand that these shops are brilliant at what they do and they are part of the fabric of St Anton but price fixing to make more profit than they otherwise would is not a healthy or fair practice.

I'm 27 and 5 years ago, myself and my friends would want to go to the best places to ski but we were on a tight budget. Saving 40 or 50 euro on ski hire was important as we didn't have much money to begin with. It was frustrating and off putting seeing excessive prices for places such as St Anton and we ended up having to go somewhere cheaper and almost definitely not as good to get better value.

Now I don't mind spending extra by not booking hire online and visiting local family run ski hire shops when it's just for me, but still, if I have to book a group holiday for friends VFM is the first thing people want.
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Quote:

If someone wants to hire gear and expects a cheap deal in St anton, or any international resort they're being a bit naive IMO.

There are plenty of international resorts which rent skis at far lower prices than St Anton. Sure, the locals don't like competition - why would they? And if, for years, they've been able to get away with charging much higher prices than other resorts, you can't blame them for trying. There are very some shady stories about what happened to Ski Republic - who were hardly welcomed with open arms in French resorts but no outsiders even seem to have got as far as setting up a shop to be vandalised in the Arlberg.

Restrictive/anti competitive practices harm consumers and disadvantage newcomers to a market. Most consumers would want to see them challenged.
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@AthersT, There's a lot of points in your message and I don't have time to cover them off right now, all I would say is that if you look at structuring your holiday maybe differently, eg doing a DIY trip rather than booking a tour operator trip who are making a really healthy profit from you, then you and your team will get a much better holiday - travel when you want to travel, quality place to stay, have more money for après/ food and ski gear rental. This is a much bigger subject than just hire from ski shops, nobody more than me likes best value by the way, I've travelled there many times and can recommend many places to stay at 40-45€pppn which would likely tick all your boxes, plus flights (or self drive) and ski hire deals from shops. Its all available on the internet......the way that TUI etc make their money is by bundling up flights/ transfers/ hotels/ meals/ ski and boot hire deals, screwing down the locals and getting the punter the best deal......all I'm saying is there is another way of doing it.
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emwmarine wrote:
This isn't a very Snowheads like thread. No-one has blamed the French or ESF yet.


A Val d'Isere businessman told me that shops there need the permission of the major to run a sale. I nearly fell off my chair.
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Markymark29 wrote:
@iainm, Not sure I agree that there if they are well-off there is less incentive, however that's their judgement call based on the levels of return they are looking for, but I have to say if my front door was being walked through by 1,000's of people a week all hiring gear at prices I liked then I'd be pretty unlikely to be driving down my prices.


You would if those 1,000s started going to the shop over the road that was charging less.
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 You know it makes sense.
You know it makes sense.
[quote="pam w"]
Quote:

no outsiders even seem to have got as far as setting up a shop to be vandalised in the Arlberg.



Good luck finding an affordable building in even a half-reasonable location... Though I'm with you that even if you could you probably wouldn't find anyone willing to rent/sell it to you if you wanted to open a cheap ski rental shop.
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@Markymark29, I know this you are preaching to the converted when it comes to DIY haha. I drove "my team" (lol) to Austria for last NY week for one such holiday!
I just think overpricing when there isn't a need to like this is wrong.

I recently bought my own boots and I'm looking to get my own skis too, so this will be a worry of the past soon.
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I think its bizarre but smacks of something of a mafia type operation. If you own a shop in a resort you would think it would be in your interests to undercut similar operations to increase your market share instead of which the main shops seems to have been running a cartel maintaining similar and high prices so sharing the spoils rather than competing for them. Better to jump on the train or bus and go along the line to somewhere smaller for shopping and ski hire (no not in the direction or Zurs of Lech I dont imagine their prices would be any different/better).
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Quote:
If you own a shop in a resort you would think it would be in your interests to undercut similar operations to increase your market

Alternatively you can protect your margins and have an easy life.

The competition for resort shops effectively comes from outside. If they were vastly overpriced people would do something more inconvenient to them such as buying or hiring elsewhere and bringing their gear with them. A differentiator in resort would be having the gear people want and the service given.

That said I wouldn't expect the shops to officially collude. Pretty stupid to leave some sort of evidence trail.
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Quote:

A Val d'Isere businessman told me that shops there need the permission of the major to run a sale. I nearly fell off my chair.

the French retail market is (like much else) quite highly regulated. It's true throughout the country that shops can't just have sales any time they feel like it. No sofa shops with "sale must end Monday" (but will start again Friday.......)

Same with Sunday opening. Generally not allowed. Charging people 50p to pee is, however. wink Though having said that, my daughter was bitterly critical of the filthy public loos charging 50p in London, which she visited last week with her 5 year old. At least you usually get toilet paper for your 50p in Val d'Isere.
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Without particularly wanting to defend a cartel, surely property prices and taxs in St Anton are much higher than, sy, Mayrhofen, and wages too I suspect. This must lead to higher rental prices? It's somewhat disingenuous to compare price of skis with rental price, when the cost of skis is probably one of the smallest part of a ski shop's outlay.

Personally, I have a sneaking admiration for the way the Austrian alpine villages operate a closed shop and do quite nicely thank you. The fact that they can spend millions of NY fireworks demonstrates the villages' affluence. Competition within the hotel trade appears to centre around what show off improvement is made to ones hotel each year, since hotel prices seem to rise generally in line with inflation the customer gets a better experience year on year. That seems like a win for the consumer, if the hotels all went crazy competitive on price, standards would fall rather than rise. Just saying.
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Ghost Dog wrote:
That seems like a win for the consumer, if the hotels all went crazy competitive on price, standards would fall rather than rise. Just saying.


Some would fall, some would rise, consumers would get a choice.
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Obviously the cartel members understand market economics - they realize that if they can defeat the market they can take more money from customers.

I'm not sure I believe that anyone doesn't understand how the world works.

In some Canadian places they try the same thing in a way by having multiple differently branded retail outlets all owned "by the resort". It's not a monopoly, but it's not done to encourage competition. Brands themselves are a way to avoid straightforward market comparisons based on costs. Mobile phone companies in the UK have lots of fun with that - it's quite hard to brand something as whose bits carry the end section of your voice traffic. They end up obfuscating their prices to avoid obvious cost comparisons.
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@Markymark29, even when going DIY the prices to hire skis in St Anton is quite a bit more than say Saalbach-Hinterglemm/Skiwelt/Ski Amade/Kitzbuhel (all places we've gone to instead of St Anton when we've been comparing). If I do go on a package deal I usually organise my own ski hire. The cost saving might only be the the same as a round of drinks for an individual, but it can be the cost of a couple of lunches on the mountain for a family.

I've tended not to need too much advice when hiring, turn up with my boots, tell them how much I weigh and how much I've skied, walk out with skis. So service has never been too important. Although it is nice to get a smile and a bit of chat while you're doing the above. Quality of kit is important though, I've found Hervis can be a bit like a ski resorts version of Sports Direct (maybe Hervis aren't quite that bad)!

@pam w, French retail law can't extend to online shops. I forgot to order something from Glisshop over the bank holiday weekend during a 20% flash sale, no fear a week later they now have €45/£32 discount which isn't far off the 20% discount for what I wanted!
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@Ghost Dog, its the fact that on the whole Austria is a place with generally low prices and that the sports shops of St Anton are abusing the resorts pulling power. Consumers will eventually become wise to it, it may take time but eventually there will be a turning point. Shops will start undercutting competitors or the average Joe will seek better value elsewhere.
I imagine the former could start now, with the risk of further fines if the practice continues.
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Sure, property prices are high in St Anton. But they're high in Courchevel 1850 and Val d'Isere, too, where French ski shops (hardly a byword for ruthless cost cutting and competition) can nonetheless offer cheaper prices.
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The Four shops involved are all Locally owned. The extended family's own multiple Hotels,guest houses, Restaurants, farm Land throughout the Arlberg/Stanzertal.

One of the shops involved uses the international "InterSport" brand and I would imagine will take a pretty hard line against that store.

There is some good news (kind of) A couple of seasons ago Hervis Sports managed to break the stangle hold & lease a store ( some accomplishment as cartel family members sit on the City Council ) giving the local stroes a run for their money.

http://www.hervisrent.at/en/filiale/ski/st-anton-am-arlberg/
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