The Competition and Markets Authority (CMA) has fined a bathroom supplier £826,000 for restricting the prices at which online retailers could resell its bathroom products.
The supplier, Ultra Finishing Limited (“Ultra”), supplied its bathroom products to various online retailers for resale. Ultra had issued the retailers with ‘recommended retail prices’ for these products, but these were not genuine recommendations. Rather, retailers were threatened with sanctions (including loss of supply) if they did not price at or above the ‘recommended’ price.
Ultra was essentially setting a minimum price for online sales, the ultimate effect of which was to discourage the retailers from offering discounts and reduce competition in sales of these products.
During the course of the investigation, Ultra admitted that it had engaged in resale price maintenance (a form of vertical price fixing) in respect of online sales in the period 2012 to 2014. It agreed a settlement with the CMA which saw Ultra’s fine reduced by 20% – the fine should have been over £1 million! The formal infringement decision against Ultra will be issued by the CMA shortly.
The fine imposed on Ultra makes a very clear statement – restricting resale prices in this way constitutes price fixing and is a serious breach of the Competition Act 1998. Whilst manufacturers and suppliers may make genuine pricing recommendations, retailers and other such resellers must be free to determine the actual resale price of the goods.
The CMA has indicated that, in this case, it is not proposing to impose penalties on the retailers involved. This, however, should not be viewed as ‘the norm’. There have been numerous cases to date (at both UK and EU level) where the retailers involved have been penalised for their involvement in the resale price maintenance arrangement.
The CMA has also confirmed that it has received complaints of similar conduct by other bathroom suppliers in the UK. So if you are a supplier or retailer of bathroom fittings, be warned – there may be further investigations and fines to follow.
We have extensive experience of advising and training clients on competition law compliance. We also work with clients in various sectors to ensure that their distribution and supply arrangements comply with the UK and EU competition rules.
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John is a Senior Associate in the Intellectual Property, Technology and Commercial Group. He advises on a broad range of commercial matters, including Commercial Contracts, Intellectual Property and Competition Law. He has worked with MacRoberts since qualifying in 2003.
John’s experience in commercial contracts ranges from drafting standard terms and conditions to devising and preparing highly bespoke commercial agreements for clients. He also advises on e-commerce matters.
John advises public and private sector clients on intellectual property matters. He spent over two years on part time secondment to a major Scottish University, his work focussing on the exploitation of the University’s intellectual property and its contractual arrangements.
He also advises on all aspects of competition law including anti-competitive agreements, state aid, abuse of dominance, competition investigations and compliance. He has been involved in numerous competition investigations.
Morton Fraser MacRoberts LLP
MacRoberts LLP, one of the largest independently owned law firms in Scotland, was founded over 150 years ago by the MacRobert family. We are a leading Scottish commercial law firm with full-service offices in Dundee, Edinburgh and Glasgow with a client base that reaches across Scotland and beyond.
