[co-author: Nicola Conway]
The UK Competition and Markets Authority (“CMA”) continues to focus its attention on resale price maintenance particularly where it relates to minimum advertised prices (MAP) on on-line sites. The CMA has a history of targeting this type of behaviour .
Minimum advertised prices are generally permitted under US Antitrust law. This case highlights how careful companies, particularly US companies, have to be in relation to their distribution strategies in Europe.
On 28 January 2016, issued Statements of Objections (“SOs”) to bathroom fittings manufacturer ‘Ultra Finishing Limited’ and commercial refrigeration products supplier ‘Foster Refrigerator’, alleging that the two companies had, between 2012 and 2014, engaged in resale price maintenance in contravention of the Chapter I prohibition of the Competition Act 1998 and Article 101 of the Treaty on the Functioning of the European Union (“TFEU”).
Investigations into the suspected vertical price restraints in place between suppliers and resellers were opened by the CMA back in August 2014. The SOs now raise concerns that the two companies have been restricting competition in the online bathroom fittings and commercial catering equipment sectors by requiring distributors to adhere to minimum online resale prices and thereby introducing “a price floor”.
Whilst the law generally entitles suppliers to impose maximum or recommended resale prices, fixed or minimum resale prices are prohibited on the grounds that they dampen competition among rival retailers who must be free to determine their online sales prices in order to compete to attract customers who are using the internet to shop around for the best deals.
The CMA’s findings of anti-competitive behaviour are provisional and a final decision as to whether competition law has been infringed will be reached after the parties have had the opportunity to respond to the CMA’s case.
