It’s safe to say that the Competition and Markets Authority’s (CMA) announcement at the end of January that it would be pursuing a price fixing charge against Foster Refrigerator sent shockwaves through the catering equipment industry.
The investigation that the CMA thought would only take 3-4 months from August 2014 spiralled into an 18-month long scrutiny of the catering equipment sector, and the relationships between distributors and manufacturers.
While the timetable was pushed further and further back, the sense of unease as to which companies were under the microscope and what pricing procedures are and are not allowed was widespread.
However, even with CMA’s initial findings accusing Foster of introducing a minimum advertised price (MAP) for internet sales (which is said to have effectively limited the ability of retailers of their products to make online sales below a specified price level), the turmoil is not over yet.
This is because the CMA has refused to rule out seeking any further price fixing prosecutions and so these allegations could still be levelled at any other companies in this sector.
Speaking exclusively to Catering Insight, Simon Belgard, CMA’s senior media relations officer stated: “The investigations into Foster and Ultra [a bathroom fittings supplier also under examination] were prioritised due to the strength of evidence against each company.”
For its part, Foster said that it had noted the CMA’s provisional conclusions and is co-operating with the government body. The refrigeration manufacturer now has until the end of May to make its case and defend itself.
Debate raged in the industry as to whether MAPs should be allowed, with some traditional dealers supporting them, saying they were the only way to ensure good customer service and being undercut by distributors slicing their margins.
However, others backed a more free market approach, with one suggestion being that all dealers offer equipment at ‘internet’ prices, and separate out the cost of extra customer service, including kitchen design and outfitting.
Whatever the rights or wrongs of MAPs, in such a complex and fragmented sector, with many routes and channels to market, the whole issue is a complete minefield.
One dealer I recently spoke to said that this situation can result in “people making decisions that are biased for the wrong commercial reasons”.
It will be very interesting to see which companies feel they have got a transparent approach and who feel that they can sleep well at night.
If manufacturers and dealers have got nothing to hide then surely they will have nothing to worry about. Catering Insight will continue to keep a watching brief on the CMA case for the industry.