The Competition Authority for the first time used a new power to get court backing for an agreement reached between itself and a company.
On 18 December 2012, the Competition Authority applied to the High Court for an order under section 14B of the Competition Act 2002 relating to an agreement between itself and Double Bay Enterprises Limited, trading as Brazil Body Sportswear. Brazil Body Sportswear distributes the FitFlop brand of footwear in Ireland.
This was the first application made by the Competition Authority for an order under section 14B of the 2002 Act (which was inserted into the 2002 Act by section 5 of the Competition (Amendment) Act 2012). This section applies to agreements made between the Competition Authority and an undertaking, following an investigation, where the undertaking agrees to do (or refrain from doing) a number of things in return for the authority not prosecuting it.
With regard to the agreement between the Competition Authority and Double Bay Enterprises, the Authority had formed the view that the company had infringed competition law by maintaining the resale price of its products and placing restrictions on passive sales.
Under the terms of the agreement, Double Bay Enterprises Ltd specifically undertook:
- Not to enter into or enforce agreements with retailers which set minimum or fixed resale prices for its products,
- Not to engage in practices that set minimum or fixed resale prices for the products, although it could recommend the selling price to retailers,
- Not to restrict the ability of retailers to set the selling price, and
- Not to restrict retailers’ freedom to supply the product to any customer, regardless of where they are, if they order it.
The agreement provided that in return for Double Bay Enterprises complying with its terms, the Competition Authority would not bring proceedings against the company. The order was granted by the High Court and took effect on 2 February 2013.
Commenting on the case, Gerald FitzGerald, director of the Competition Authority’s Monopolies Division, said: “This is another win for consumers. Resale price maintenance is seriously anti-competitive. It involves suppliers trying to prevent competition between retailers, meaning consumers lose out. We decided to close this investigation because Brazil Body Sportswear agreed to change its terms and conditions with immediate effect. Section 14B reinforces the commitments and makes the consequences of breaking them much more serious. It is a very useful new tool in the authority’s enforcement armoury.”