When the old Office of Fair Trading was reinvented as the Competition & Markets Authority (CMA) some thought there would be little change in the new regulator’s attitude to competition law enforcement. However it is now quite clear that the new body is taking a far tougher stance on price-fixing.
Two recent cases focus on a form of vertical price fixing called resale price maintenance (“RPM”). RPM is a system whereby the manufacturer of goods (or the provider of services) stipulates the minimum price at which a distributor can resell the goods (or services). The harm to consumers is obviously that the distributor cannot discount on certain products. This practice has come under increasing focus recently as so many goods are resold over the internet.
The CMA fined fridge supplier ITW Limited £2,298,820 for RPM on 24 May 2016.
They also fined bathroom fittings supplier Ultra Finishing Limited £786,668 on 10 May 2016.
We blogged previously on the statement of objections issued by the CMA in these cases in February. Both cases related to restrictions on the resale of goods online. Companies will now need to tread very carefully ensuring they do no more than simply recommend resale prices to their distributors. If the ultimate control of downstream pricing is a serious need for some companies, they will need to go down the route of having agency agreements, although that brings in turn the prospect of compensation on termination of agency arrangements.
The CMA has been clear that minimum recommended prices accompanied by threats of delayed supply or other sanctions will amount to unlawful RPM.
The CMA has also issued a Statement of Objections to suppliers of galvanised steel tanks. This appears to relate to the less than full disclosure to the CMA at the time of their initial investigation into this sector.
Hence it has never been more important for companies to update their compliance programmes to ensure no price fixing provisions have slipped their way into their current commercial arrangements.