Foster Refrigerator insists it is “co-operating fully” with the Competition and Markets Authority (CMA) after being accused of preventing dealers from selling its products below a certain level online.
The refrigeration manufacturer, which is owned by US giant ITW, is the first supplier to be publicly named in connection with a government investigation into competition practices in the commercial foodservice equipment sector that began in August 2014.
The CMA claims that Foster is guilty of “resale price maintenance” and “infringements of competition law” for its alleged use of minimum advertised prices (MAPs) on products sold through the internet.
The use of MAPs effectively limits the ability of dealers to sell its equipment online below a specified price level, the CMA said.
At this stage the CMA’s findings are only provisional, so it could be several months before a ruling is made on whether Foster has broken competition laws.
In a response to the CMA’s Statement of Objection, the manufacturer said: “Foster has noted the provisional conclusions of the Competition and Markets Authority outlined in its press release [yesterday] morning. Foster is committed to complying with relevant competition law and is co-operating fully with the Competition and Markets Authority.”
The statement added: “Whilst the investigation is ongoing Foster will make no further comment at this time.”
Based on the case timetable available on its website, the CMA expects “written and oral representations” to be submitted by Foster between February and May 2016.
It says it will “carefully consider” the response that it receives before concluding whether the law has been infringed.
The CMA has not indicated whether any other catering equipment suppliers will face allegations similar to Foster.
Although the case still remains open, CMA officials have commented publicly on the impact of MAP practices on the market place.
CMA director, Ann Pope, said that while online sales were providing intense price competition for traditional channels, suppliers that were tempted to respond by introducing practices such as minimum advertised prices were restricting competition.
“Retailers should be free to set their own sales prices online,” she said. “This drives competition among rival retailers because they compete to attract consumers who are using the internet to shop around for the best deals.”