The Competition and Markets Authority (CMA) has published an ‘open letter’ to suppliers and dealers about resale price maintenance (RPM), reminding them of the consequences of failing to comply with competition law.
The letter, which was issued yesterday, comes a year after Foster Refrigerator was fined £2.3m for imposing a ‘minimum advertised price’ (MAP) policy that restricted the price at which dealers could advertise its commercial refrigeration products online.
The CMA referenced the Foster case in its latest correspondence although the decision to publish the open letter – which is aimed at suppliers and retailers of all products, not just catering equipment – appears to have been motivated by the conclusion of a major investigation into the lighting industry.
This week the CMA fined a supplier of domestic light fittings £2.7m for illegally imposing a minimum price on online sellers, which then had to retail goods at, or above, this price.
Ann Pope, CMA senior director, said: “This decision should act as a warning to companies that resale price maintenance is illegal and that warning letters issued by the CMA are to be taken seriously and not to be ignored.
“The digital economy is booming and with so many businesses operating online it is vital that fair competition is maintained across all sectors. The CMA wants to ensure consumers get a fair price and a good deal. That can only happen when retailers are free to set their own prices.”
In its letter, the CMA provided links to various resources that suppliers and dealers can use to ensure they are operating within the confines of the law.
There can be serious consequences for businesses that break competition law, including fines of up to 10% of a business’s worldwide turnover.
In Foster’s case last year, it was found to have restricted the price at which retailers could advertise its equipment online.
According to the CMA, it enforced this MAP policy by threatening to charge dealers higher cost prices for products, or stopping supply altogether, if they advertised below the minimum price.
One email uncovered by the CMA during its investigation into Foster last year read: “Whilst researching online pricing I can see a number of products which are listed below the minimum advertised price…unfortunately by not adhering to the policy and attached minimum advertised pricing we shall no longer be able to process any order received at standard discount terms.”
The full copy of the open letter that the CMA published this week can be read HERE.