On 22 January 2020, the Competition and Markets Authority (the "CMA") fined Fender Musical Instruments Europe Limited ("Fender Europe") GBP 4.5 million for engaging in illegal resale price maintenance ("RPM") in relation to the online sale of its guitars.
| what you need to know - key takeways |
|---|
- This is the largest fine imposed by the CMA to date for RPM and follows the CMA's GBP 3.7 million fine against Casio for similar behaviour in August 2019.
- RPM covers behaviour which restricts retailers' or resellers' freedom to set their own prices, meaning price discounts cannot be offered, for example. This can lead to customers missing out on the best deals because, even when they shop around, they find all retailers are selling at similar prices.
- Guidance on avoiding RPM can be found on the CMA's website.
|
Fender Europe admitted engaging in illegal anticompetitive conduct by pursing a policy aimed at restricting UK retailers from discounting their online prices, and requiring its guitars to be sold at or above a minimum price between 2013 and 2018. This meant that the guitars could not be subject to price discounts.
As Fender Europe admitted to the conduct, a 60% discount was given under the CMA's leniency programme, along with a further 20% discount to reflect settlement.
During the course of its investigation, the CMA found:
- evidence that Fender Europe on occasion pressurised retailers to raise their online prices, after being tipped-off that they were not toeing the line; and
- that certain Fender Europe employees deliberately tried to cover up their actions by recording as little as possible in writing. The investigation nevertheless uncovered emails and texts from Fender Europe's IT servers and mobile phones which helped to prove the illegal behaviour.
Moreover, during the CMA's dawn raid inspection of Fender Europe's premises in April 2018, a senior officer failed to disclose several notebooks. This resulted in the CMA imposing an additional GBP 25,000 penalty on Fender Europe.
This case is an example of the CMA's increasing focus on RPM. For example:
- in 2018, the CMA issued 4 advisory letters and 34 warning letters about RPM, designed to alert companies to the illegal nature of this practice and to ensure compliance; and
- since 2016, there have been numerous other fines for RPM online, including in light and bathroom fittings and the Casio case in August 2019.
With thanks to Kate Mullan of Ashurst for her contribution.
