The Competition and Markets Authority (CMA) has fined a
bathroom supplier £826,000 for restricting the prices at
which online retailers could resell its bathroom products.
The supplier, Ultra Finishing Limited ("Ultra"), supplied its bathroom products to various online retailers for resale. Ultra had issued the retailers with 'recommended retail prices' for these products, but these were not genuine recommendations. Rather, retailers were threatened with sanctions (including loss of supply) if they did not price at or above the 'recommended' price.
Ultra was essentially setting a minimum price for online sales, the ultimate effect of which was to discourage the retailers from offering discounts and reduce competition in sales of these products.
During the course of the investigation, Ultra admitted that it had engaged in resale price maintenance (a form of vertical price fixing) in respect of online sales in the period 2012 to 2014. It agreed a settlement with the CMA which saw Ultra's fine reduced by 20% – the fine should have been over £1 million! The formal infringement decision against Ultra will be issued by the CMA shortly.
The fine imposed on Ultra makes a very clear statement – restricting resale prices in this way constitutes price fixing and is a serious breach of the Competition Act 1998. Whilst manufacturers and suppliers may make genuine pricing recommendations, retailers and other such resellers must be free to determine the actual resale price of the goods.
The CMA has indicated that, in this case, it is not proposing to impose penalties on the retailers involved. This, however, should not be viewed as 'the norm'. There have been numerous cases to date (at both UK and EU level) where the retailers involved have been penalised for their involvement in the resale price maintenance arrangement.
The CMA has also confirmed that it has received complaints of similar conduct by other bathroom suppliers in the UK. So if you are a supplier or retailer of bathroom fittings, be warned – there may be further investigations and fines to follow.
We have extensive experience of advising and training clients on competition law compliance. We also work with clients in various sectors to ensure that their distribution and supply arrangements comply with the UK and EU competition rules.
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