Beware the Competition!

July 28th 2016

The Competition and Markets authority (CMA) is the body responsible for enforcement of competition law in the UK. In recent years the CMA has paid particular attention to  anti-competitive  behaviour  in the area of online sales.

In June, the CMA announced that it had issued a formal Statement of Objections to Ping Europe Limited alleging that Ping’s ban on the online sales of golf clubs infringed competition law.

The CMA has also imposed some substantial fines on manufacturers and suppliers who restrict competition through the operation of Resale Price Maintenance (RPM):

  • Ultra Finishing Ltd – a supplier of bathroom fittings – was fined £786,668 for engaging in RPM where it threatened its retailers with various penalties for not adhering to its “recommended” price; and
  • ITW Ltd – a manufacturer and supplier of commercial refrigeration products – was fined £2.2 million for similar  conduct where it operated a minimum advertised price policy

RPM can occur where:

  • the supplier and reseller (whether wholesale or retail) agree that the reseller  will not resell or advertise the supplier’s products below a particular price therefore preventing or restricting any competition
  • resellers are threatened or incentivised to sell at a particular price.

Suppliers and manufacturers should be particularly wary of anything that might jeopardise the independence of resellers to set their own prices.

Online sales bans are likely to include any restrictions a supplier places on resellers’ ability to supply products via the internet. Typically this might be where suppliers simply prevent any online sales. However, in one case a supplier was found to be operating an online sales ban where it prohibited its resellers from putting any price on their websites. This was seen to negate the ability of consumers to use the internet to compare prices, effectively preventing sales online. There are a few circumstances where online sales restrictions may be justifiable but these are very limited and tend to be fact-specific.

This crackdown should serve as a reminder to all companies of the importance of competition law compliance and appropriate training particularly as the CMA has shown a propensity to target SMEs as well as larger companies. Fines of up to 10% of worldwide group turnover may be imposed for breaches of competition law so it is clear that the consequences can be very serious.

For further information please contact Catherine O’Riordan, Associate at Spratt Endicott Solicitors, on co’ or call 01295 204150.*Disclaimer: While everything has been done to ensure the accuracy of the contents of this article, it is a general guide only. It is not comprehensive and does not constitute legal advice. Specific legal advice should be sought in relation to the particular facts of a given situation.*