Out-Law News 2 min. read

UK and German competition authorities take action against resale price maintenance


Competition authorities in the UK and Germany have taken action to curb resale price maintenance (RPM) by businesses.

RPM is a form of 'vertical' price-fixing involving parties at different levels of the supply chain, as opposed to price-fixing involving direct competitors.

In Germany the Federal Cartel Office (FCO) has announced that it has served fines on a number of retailers in relation to pricing practices relating to the sale of beer produced by AB InBev, sweets and coffee products. The fines issued total €90.5 million. AB InBev, together with one retailer, were not fined "due to their early and extensive cooperation", the FCO said.

In a statement Andreas Mundt, president of the FCO, highlighted the problem the authority had identified in the beer market.

"In the sale of its premium beer brands the brewery concerned agreed with retailers on several occasions to raise shop prices and coordinated the details between them, in particular reference dates and the level of the respective price increase," Mundt said. "The retailers expected that the brewery would ensure that the price increase was simultaneously implemented by competing retailers. The ones suffering from such systematic price maintenance practices are the end consumers."

The UK's Competition and Markets Authority (CMA) has separately sent warning letters to a number of suppliers of bathroom fittings that it believes may have illegally restricted the price retailers can offer their bathrooms for online. The CMA said it expects to issue more warning letters in future and that warned that it could initiate enforcement action against companies that participate in RPM, including retailers.

"Retailers should be aware that they can also be fined for entering into RPM agreements with suppliers," the CMA said. "If a business thinks that it may have been involved in RPM, then it may be able to apply for leniency and receive a reduced fine, or avoid a fine altogether, by reporting it and cooperating with the CMA."

The authority's comments came as it announced that it had decided to reduce the fine it recently served on one bathroom fitting company for engaging in RPM in recognition of recent steps that company had taken to improve its practices. Last month the CMA fined Ultra Finishing Ltd £826,000 for threatening to penalise online retailers for not pricing its products at or above its 'recommended' prices.

"Ultra has now agreed to set up a programme to help ensure compliance with competition law within its business and among its staff," the CMA said. "This includes a clear commitment to competition law compliance by the Ultra Board, including an external statement to that effect, which has been published on Ultra’s website. The company will also roll out tailored compliance training for all employees, and has put in place a detailed procedure to identify, assess and mitigate competition law risks."

"Ultra will review the compliance programme on an annual basis and submit a report on its compliance activities to the CMA each year for the next three years. In recognition of this positive step, and in line with CMA guidance, the CMA has now applied a 5% discount from the original fine, which would have been £1,032,502. Applying the discount for the compliance programme and then the discount for the settlement, the fine will now be £786,668," it said.

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