The Competition and Markets Authority (“CMA”) has fined ITW Ltd, a supplier of commercial refrigeration equipment, over £2 million and Ultra Finishing Ltd, a bathroom fittings manufacturer, over £780,000 for restricting retailers’ ability to determine their own sale price (known as resale price maintenance (“RPM”)):
- Foster Refrigerator, a division of ITW Ltd, restricted retailers from advertising below a set minimum price and threatened retailers with sanctions for a failure to comply (for example, charging higher cost prices or ceasing to supply).
- Ultra Finishing Ltd required retailers to price at or above certain recommended prices as set out in online trading guidelines, and threatened them with sanctions for a failure to comply (for example, charging higher cost prices, withdrawing the right to use the suppliers’ images online or ceasing to supply).
RPM is illegal because it restricts retailers from offering lower prices and setting prices independently. It is considered to be a particularly significant issue in light of the increase in e-commerce, as restrictions on discounting internet sales may amount to illegal RPM.
The CMA has published guidance as well as a short video to help businesses to better understand RPM and it has also sent warning letters to a number of companies that it suspects may be operating similar policies. It is possible that the CMA may commence further enforcement action in relation to RPM.