On 20 June 2017, the UK Competition and Markets Authority (CMA) fined a light fitting supplier £2.7 million for requiring retailers to use a minimum price when selling their products online (resale price maintenance or RPM).
The supplier set a maximum discount off the recommended resale price (RRP) that resellers were allowed to offer. It used an internet licence agreement (ILA) as a way of enforcing the policy — resellers understood that an unwritten condition of the ILA was agreeing to the pricing restriction.
Whilst it is generally lawful for a supplier to recommend retail prices for resellers, in this case the supplier threatened resellers with penalties for not pricing at or above its specified price. Such threats included suspending resellers’ accounts or revoking the ILA and the ability to use official images online.
Continuing its policy of raising awareness of competition law issues, while announcing this decision the CMA also re-issued its compliance materials concerning RPM. These include an open letter on RPM, a film on RPM and case studies that explain how other businesses have ended up breaking the law.
The same rules on RPM apply EU-wide, and companies trading anywhere in the EU need to be aware of them.