Online RPM strikes again - further fines for online restrictions

On 29 June 2020, the UK Competition and Markets Authority ("CMA") announced that it had fined two musical instrument makers a total of GBP 5.5 million, in two separate cases, for restricting online discounting of musical instruments.  On the same day, it also announced that it had, for the first time, taken enforcement action against a retailer in a resale price maintenance ("RPM") case.

Roland and Korg, which make electronic drum kits and hi-tech music equipment and synthesizers, have been fined for implementing RPM designed to restrict retailer freedom to set prices online by requiring their musical instruments to be sold at or above a minimum price.  This follow fines recently imposed on two other leading suppliers in the same sector, Casio and Fender. 

The CMA also announced that separately, GAK, a retailer of musical instruments, has also admitted to engaging in RPM with Yamaha and agreed to pay a maximum fine of more than a GBP 250,000 to settle the case. This marks the first time the CMA has taken enforcement action against a retailer in a RPM case. The CMA has issued a provisional decision finding that GAK and Yamaha agreed that GAK would not discount the online price of certain Yamaha instruments below a minimum price. The fine was increased by 15% after it emerged the activity appeared to have continued after GAK received an advisory letter from the CMA, making it aware that there was evidence suggesting it might be engaging in RPM. In contrast, Yamaha was granted total immunity from fines for being the first to bring the conduct to the attention of the CMA.

The CMA has launched its own price monitoring tool aimed at deterring companies from entering into agreements restricting online discounting. The new software allows the CMA to automatically monitor price levels amongst musical instrument retailers. The CMA intends to use this tool to monitor suspicious pricing activity in other sectors in the future to help protect more customers purchasing online.

As a result of these investigations, the CMA has:

• issued an open letter to the industry highlighting the illegal activity it has uncovered and urging compliance with the law; and
• written to almost 70 manufacturers and retailers across the sector, warning them about their conduct and that they need to take swift action to ensure they are complying with the law or potentially risk an investigation and fines.