Scooter supplier learns that ignoring CMA warning letters can be hazardous to your immunity

The CMA's decision was issued in connection with its on-going investigation into potential infringements of competition law in relation to the supply of mobility scooters online.  This is the third time the UK competition authorities have investigated the sector. 

In its current investigation, the CMA has found that TGA entered into agreements with three of its online retailers preventing those retailers from advertising prices online or from advertising below specified prices online.  The CMA has found that these agreements are likely to infringe the Chapter 1 prohibition against anti-competitive agreements. 

Whilst TGA would ordinarily benefit from immunity from financial penalty pursuant to section 39(3) of the Competition Act 1998, which provides immunity from fines to infringing undertakings whose combined turnover does not exceed £20 million, the CMA has, for the first time at such an early stage of its investigation, decided to withdraw this benefit for TGA. 

This appears to be because the agreements entered into by TGA were made despite:

• TGA receiving a warning letter from the CMA's predecessor, the Office of Fair Trading ("OFT"), in March 2013 explaining the unlawfulness of such behaviour; and 
• two previous infringement decisions against other mobility scooter suppliers for similar behaviour following the 2013 warning letter.  

TGA is now at risk of being fined up to 10% of its worldwide turnover for any future attempts to restrict retailers from advertising prices online (the loss of immunity does not apply to TGA's past conduct).

Previous investigations into the mobility scooter sector include the OFT's market study in 2011 which called for suppliers to increase price transparency for customers.  Following that, in August 2013, the OFT found that supplier Roma Medical Aids Limited, along with a number of its online retailers, had infringed the Chapter 1 prohibition by imposing restrictions on online sales.  Then in March 2014, the OFT found Pride Mobility Products Limited and eight of its retailers had breached the same prohibition by agreeing to restrictions on advertising discounts online. 

The CMA's decision is intended to be a clear warning to businesses of all sizes to take competition law seriously. It also emphasises the view of the CMA (and other competition authorities) that the internet is an important distribution channel for customers and that restrictions on retailers' ability to advertise prices online prevent customers from finding the best deals.

Co-author: Antionia Bussey, Associate