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Ping's online sales ban upheld by competition tribunal

Ping cannot impose an outright ban on the online sale of its golf clubs by retailers, the UK's Competition Appeal Tribunal (CAT) has confirmed.11 Sep 2018

The ruling upholds a decision last year by the Competition and Markets Authority (CMA) which found Ping in breach of competition laws, although the fine the CMA imposed on Ping for that breach has been revised downwards.

According to the CAT judgment, Ping is permitted to place certain conditions on the sale of its clubs over the internet, but it cannot ban online sales outright.

Ping had argued that it was justified in preventing retailers from selling online because its products are designed to be custom fit to customers in-store. While the CMA agreed that this was a "genuine commercial aim", it previously determined that the company could have achieved this through less restrictive means.

As a result, the CMA found Ping's online sales ban was not justified and was in breach of UK competition laws that place a general prohibition on agreements between businesses that have as their object or effect the prevention, restriction or distortion of competition. It fined the company £1.45 million in August 2017.

Ping appealed that decision to the CAT. However, the Tribunal has now broadly upheld the CMA's findings.

"The potential impact of the ban on consumers and retailers is real and material," the CAT said. "It significantly restricts consumers from accessing Ping golf club retailers outside their local area and from comparing prices and it significantly reduces the ability of, and incentives for, retailers to compete for business using the internet."

While the CAT determined that the CMA's finding of liability was justified, it found the regulator had erred in the way it carried out a "proportionality analysis" in reaching its decision.

It said the CMA had "erred in treating director involvement as an aggravating factor on the specific facts of this case" and consequently reduced Ping's fine by £200,000.

"This decision is consistent with the strict approach taken to restrictions on internet sales by competition authorities across the EU," said competition law expert Angelique Bret of Pinsent Masons, the law firm behind Out-Law.com. "The circumstances in which suppliers can legitimately impose internet sales restrictions on independent distributors are limited, particularly where the products are not regarded as 'luxury' brands."

"The CJEU's decision in the recent Coty case opened the door, to a certain extent, to the restriction of sales of luxury products on third party marketplaces. Complete bans on internet sales continue to be regarded as a serious infringement of the competition rules, for which as this case shows, the CMA is prepared to impose significant fines. However, there are arguments to be made in relation to customised products and, at this stage, we do not know whether Ping will appeal the CAT decision," she said.

In a statement, the CMA described it as a "landmark case".

Ann Pope, senior director for antitrust enforcement, said: "Today’s judgment sends a clear message to companies that try to stop customers shopping online for their products – they could be breaking the law. This matters because it removes a barrier to customers shopping around for more affordable goods. The internet is an increasingly important sales channel and retailers’ ability to sell online, and reach as wide a customer base as possible, should not be unduly restricted by manufacturers."