In an open letter from Ann Pope (Senior Director, Antitrust), the CMA has reminded retailers and suppliers of its enforcement action in two cases where illegal RPM policies were shown to exist. The CMA imposed substantial fines on suppliers in the bathroom fittings and commercial catering equipment sectors. The CMA found that the suppliers had illegally specified the minimum prices that the retailers could advertise for sales of the suppliers’ products over the Internet.
The CMA states that it has published its open letter in the hope that suppliers and retailers understand the practices that are regarded as RPM, and what to do if they are or may have been involved in RPM or similar practices.
Details of the cases studies, in which fines totalling well over £2 million were imposed, are here. The CMA has also issued a short guide for retailers, which is as follows:
What is resale price maintenance (RPM)?
RPM is where a supplier and a retailer agree that the retailer will not resell the supplier’s products below a specified price.
Recommended resale prices (RRP) to retailers are not RPM if the retailer can still resell at a price it wants and there are no threats or financial incentives for sticking to a RRP.
Why should you be careful if you are a retailer involved in an RPM agreement?
You may worry that if you do not co-operate with a supplier’s price-setting policies, they will stop doing business with you.
However, RPM agreements are usually unlawful because they prevent you from offering lower prices and setting your prices independently to attract more customers.
If you have been involved in RPM with your supplier, you may both be found to be breaking competition law.
Things to bear in mind
RPM can be indirect. You may still be involved in an unlawful RPM agreement where a supplier:
· imposes restrictions on how far you can discount its product
· prevents or limits your ability to advertise lower prices online (so-called ‘minimum advertised price policies’)
· has linked a resale price for the product to what other retailers are selling it for
Where the product is sold does not matter either. RPM can apply equally to sales online as it does to sales in shops.
Don’ts for retailers
Don’t agree with your suppliers to fixed or minimum retail prices.
Don’t exercise pressure on the supplier and other retailers to adhere to recommended resale prices.
