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Lighting supplier fined 2.7m for setting minimum online prices

CMA image

A lighting supplier has been fined for requiring retailers to use a minimum price when selling their products online.

The National Lighting Company (NLC) supplies light fittings to a range of retailers who then sell them on. After a detailed investigation, the Competition and Markets Authority (CMA) found it 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 today 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 also today 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.”

Last year, the CMA imposed a number of fines on companies, including a fine of £826,000 for bathroom fittings supplier Ultra Finishing, £2.29m fine for commercial fridge supplier ITW – which owns Foster Refrigerator – and a £2.8m fine for two furniture parts makers, namely Thomas Armstrong (Timber) Ltd and Hoffman Thornwood Ltd, for “illegal cartel activity”.

Source: Insight DIY Team

Interested in hearing more news on CMA activity and retail price maintenance cases? Sign up for our weekly Insight DIY newsletter here.

21 June 2017

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