In our area of legal specialisation, we frequently come across businesses who wish to control the prices at which their distributors resell their products. They most often wish to do this with regards to distributors who are selling products online. Many businesses do not realise that this practice is illegal.
In February 2016 the Competition and Markets Authority (CMA), the UK body responsible for enforcement of competition law, made public two investigations against Ultra Finishing Limited (a bathroom supplier) and Foster Refrigerator (commercial refrigerator supplier). Both companies are alleged to have imposed a minimum resale price for online sales of their products which, if proved, will be a breach of competition law.
Given that fines for breaches of competition law can amount to 10% of worldwide turnover and that many commentators believe that the CMA will increase its enforcement activity this year, it is vitally important that businesses understand the scope of what they can and cannot do when it comes to competition law.
Is it happening without your knowledge?
If your business is considering setting resale prices or, indeed, is being required to resell at a particular price, it is vital that you take appropriate advice.
Very often price fixing arrangements occur without the knowledge of the board of directors. Nevertheless, such arrangements remain highly illegal. It is therefore essential that all employees involved in pricing are aware of the law in this area.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
