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Company fined more than £800,000 for restricting online prices

Posted: 22nd June 2016   In: Corporate Commercial

A company has been fined a total of £826,000 after admitting that it tried to stop retailers from discounting online prices.

Ultra Finishing Ltd supplies bathroom products to a number of online stores. Following an investigation by the Competition and Markets Authority (CMA), it admitted that in the years 2012 to 2014, it engaged in resale price maintenance (RPM) in respect of the internet sales of two of its brands.

RPM is a form of vertical price-fixing where a supplier restricts the ability of a retailer to determine prices. It is illegal because it prevents retailers from offering lower prices to attract more customers.

Ultra issued retailers with so-called ‘recommended’ retail prices for online sales. Despite being described as recommendations, which are lawful, Ultra threatened retailers with penalties for not pricing at or above the ‘recommended’ price. Sanctions included charging them higher prices for products, withdrawing their rights to use Ultra’s images online, or ceasing supply.

Ann Pope, the CMA’s Senior Director responsible for the case, said: “Price competition from online sales is usually intense, given the ease of searching on the internet. Ultra’s practice of setting minimum online prices stopped retailers from offering discounted prices online, reducing competition across online and ‘bricks and mortar’ sales, and denying consumers the benefit of lower prices for Ultra’s bathroom fittings.

“The CMA takes such vertical price-fixing seriously and is focused on tackling anti-competitive practices that diminish the many benefits of e-commerce. We expect businesses involved in similar practices to bring them to an end as soon as possible.”

The CMA says any business found to have infringed the Competition Act 1998 could be fined up to 10% of its annual worldwide group turnover. In calculating financial penalties, the CMA takes into account a number of factors including seriousness of the infringement(s), turnover in the relevant market and any mitigating and/or aggravating factors.

In addition, adjustments may then be made to reflect the specific size and financial position of the business in question.

Please contact Jon Alvarez if you would like more information about the issues raised in this article or any aspect of competition law and business regulation.

Posted by: Jon Alvarez
Corporate Commercial
Luton Office