CMA issues new warning on restricting internet resale prices

The Competition and Markets Authority (CMA) has published an ‘open letter’ to retailers and suppliers about resale price maintenance (RPM), reminding them of the consequences of failing to comply with competition law.

The letter, which was issued earlier this week, gives details of different kinds of practices that can amount to illegal (RPM), including the use of ‘minimum advertised price’ or MAP policies.

It also warns suppliers and retailers that they can both face serious consequences for engaging in illegal RPM.

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The CMA referenced a string of recent cases in its correspondence although the decision to publish the open letter – which is aimed at suppliers and retailers of all products, not just mobility equipment – appears to have been prompted by a major investigation into the lighting industry.

This week the CMA fined a supplier of domestic light fittings £2.7m for illegally imposing a minimum price on online sellers, who then had to retail goods at, or above, this price.

The CMA’s warning will no doubt hit home with the mobility aids sector, however.

Three years ago the industry was famously the subject of a major investigation into online pricing that led to it ruling that Pride, Roma and a number of their UK retailers had infringed competition law regarding the sale of mobility scooters.

At the time the CMA made it clear that the internet is a vitally important tool for consumers who wish to compare prices and secure value for money, particularly in the mobility scooters sector where many consumers may have difficulty in visiting a number of stores and where prices can vary dramatically.

A 2011 market study into mobility aids that it carried out revealed that mobility scooters in general can vary in price by over £1,000 for the identical product.

In the open letter published this week, the CMA’s senior director, Ann Pope, said there can be serious consequences for businesses that break competition law, including fines of up to 10% of a business’s worldwide turnover.

“The digital economy is booming and with so many businesses operating online it is vital that fair competition is maintained across all sectors,” she wrote. “The CMA wants to ensure consumers get a fair price and a good deal. That can only happen when retailers are free to set their own prices.”

The full copy of the open letter that the CMA published this week can be read HERE.

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