The Competition and Markets Authority (CMA) has found The National Lighting Company (NLC) imposed a minimum price on online sellers, who then had to retail goods at, or above, this price. This kind of illegal practice, known as resale price maintenance (RPM), means customers miss out on the best possible prices and cannot shop around for a better deal on that supplier’s products.
NLC, which tried to avoid detection by not committing agreements to writing, has been fined £2.7 million for breaking competition law. The fine covers violations in relation to its Endon and Saxby brands and includes an extra penalty because the company ignored an earlier warning letter from the CMA. A warning letter may be sent when the CMA has reasonable grounds to suspect anti-competitive behaviour. It is not a formal allegation but must be taken seriously and requires a considered response.
The CMA has sent a number of warning letters to other suppliers in the light fittings sector where there are reasonable grounds to suspect they may also be engaging in RPM. To help stamp out resale price maintenance, the CMA has re-issued its advice to help businesses stay on the right side of the law. This includes an open letter on RPM, a film on RPM and case studies that explain how other businesses have ended up breaking the law.
Ann Pope, CMA senior director, Antitrust, said, “This decision should act as a warning to companies that resale price maintenance is illegal and that warning letters issued by the CMA are to be taken seriously and not to be ignored. The digital economy is booming and with so many businesses operating online it is vital that fair competition is maintained across all sectors. 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.”