CCPC puts spotlight on anti-competitive pricing practice
June 30, 2021
The Competition and Consumer Protection Commission (CCPC) has launched a campaign to alert Irish retailers of a harmful anticompetitive pricing practice, called resale price maintenance. Along with publishing guidance to help businesses recognise this practice, the CCPC is encouraging retailers to contact them if they have encountered suppliers who have tried to impose a minimum price that they can charge for their products or services.
Speaking today Brian McHugh, Commission Member said,
“Competition law requires businesses to act independently and not co-ordinate with each other when they are setting their prices. Co-ordinating prices is a serious breach of the law and it is important that all businesses are aware that practices such as resale price maintenance are harmful and may be illegal.”
Resale price maintenance is an agreement between a supplier and a reseller, usually a retailer, which requires goods or services to be sold at or above, a price or margin specified by the supplier. Retailers may be concerned that, if they do not agree to maintaining the prices dictated to them, their supplier may stop doing business with them. However, they should remember that this type of agreement could be illegal. Retailers should refuse to agree to it and contact the CCPC so that it can be assessed. If a business has information about other businesses in their industry that may be engaged in resale price maintenance arrangements, they are asked to report them to the CCPC.
Speaking about the harm caused by the practice, Mr McHugh continued,
“Resale price maintenance is damaging to businesses as it limits retailers’ freedom to compete on price. As a result consumers are denied the opportunity to buy products at lower prices. Suppliers must not take any action that interferes with a retailer’s ability to set their own price. Any attempt to do so is likely to be illegal. I strongly encourage any retailer who has been approached or entered into an agreement of this nature, voluntarily or otherwise, to contact the CCPC.”
The CCPC has recently concluded an investigation into resale price maintenance involving four furniture retailers located in Ireland. The CCPC opened an investigation into UK based wholesaler, Coach House because of concerns that they had engaged in resale price maintenance in Ireland. The investigation examined the manner in which Coach House implemented and enforced its then ‘suggested selling price’ as a minimum resale price for the resale of its household furniture products. ‘Suggested selling prices’ or recommended resale prices are not unlawful in themselves. However, where a supplier seeks to ensure a retailer adheres to a certain resale price this can amount to an illegal resale price maintenance agreement. Coach House denied breaching competition law but nonetheless entered into an agreement with the CCPC in which it agreed not to impose or agree any terms and conditions that place obligations on resellers to adhere to Coach House’s suggested, minimum or fixed resale prices for household furniture products. Coach House also agreed not to restrict resellers from independently deciding the resale price of household furniture products. On 29 June 2021, the High Court made the commitments an order of court, binding for seven years.
Mr McHugh said,
“This case is a timely reminder that businesses must allow distributors of their products the freedom to determine their own prices. Ultimately, it is the consumer who benefits from such freedom in the market. Recommended or suggested prices should be exactly just that – recommended or suggested. Manufacturers, wholesalers and retailers, including those based overseas, need to be aware that it is likely to be illegal to require independent retailers to sell goods or services at minimum or set prices.”
Suppliers and retailers should review their practices around pricing and discounting policies to ensure that they do not risk entering into illegal agreements. The CCPC’s website provides information to help businesses comply with competition and consumer protection law – including a specific booklet about resale price maintenance.
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