An update on the CMA investigation from our industry lawyers, Birketts

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As many members will have seen from the national press last week, and from MIAnews on Monday 29th June (see here), the Competition and Markets Authority (“CMA”) posted news on its website last Monday that it has levied fines on 2 suppliers for unlawful resale price maintenance, after having previously fined 2 other suppliers for £3.7m and £4.5m for the same unlawful conduct. Total fines for the musical instrument sector as a result of the CMA’s recent investigation into it, currently stand at £13.7m. 

In addition, the CMA has brought its first ever enforcement action against a retailer for resale price maintenance. The retailer admitted to colluding with a supplier over online pricing, and agreed to pay a fine of over £250,000, whereas the supplier received immunity from any fine, as a result of it bringing the arrangement to the CMA’s attention.

Furthermore, the CMA has sent an open letter to all retailers and manufacturers in the sector, and around 70 “warning letters”. To give a sense of the CMA’s perception of the prevalence of the issue in the sector, the most warning letters that have been sent by the CMA across all sectors in any of the previous five years was 85 in 2015, and last year they sent just 25 warning letters.

There are some common themes which the CMA’s investigation and findings have brought to light:

  1. the existence of unlawful resale price maintenance in the sector over a sustained period of time;
  2. the risk of increased fines where senior management are found to have known that their conduct was unlawful, and/or advisory or warning letters from the CMA have been ignored; and
  3. the immunity from fine benefits of being the first to report anti-competitive behaviour to the CMA.

These recent fines, together with the open letter and warning letters, highlight that now, more than ever before, businesses at all levels of the supply chain in this sector need to review their policies and practices, to ensure they are not infringing any aspects of competition law, including resale price maintenance.

We would recommend that the first source of guidance and advice to help businesses, would be the CMA itself. Amongst a range of other guidance that can be found on its website, the following are particularly relevant at the moment:

Competing fairly in business: short guide

www.gov.uk/government/publications/competing-fairly-in-business-at-a-glance-guide-to-competition-law

Resale price maintenance: advice for retailers

www.gov.uk/government/publications/resale-price-maintenance-advice-for-retailers

Price fixing: guidance for online sellers

www.gov.uk/government/publications/price-fixing-guidance-for-online-sellers

How to comply with competition law

www.gov.uk/government/publications/competing-fairly-in-business-at-a-glance-guide-to-competition-law/competing-fairly-in-business

How to respond to a warning or advisory letter from the CMA

www.gov.uk/guidance/warning-and-advisory-letters-essential-information-for-businesses

If, after having reviewed the available guidance, you have any concerns that your conduct, or any agreements that you are a party to, may infringe competition law, then we would be pleased to discuss your concerns with you, and review such conduct or agreements.

Similarly, if you have received a warning letter from the CMA, and would like advice and assistance with assessing your business’s compliance with competition law, and what steps you can take to reduce the risk of breaching competition law in the future, then we would also be happy to assist.

As an MIA member, you will receive a free initial phone consultation, and beyond that, a 10% discount on our fees.

For further information, please get in touch with the MIA’s usual contact at Birketts:

Rafael Ruiz

Partner

Tel: 01245 211238

rafael-ruiz@birketts.co.uk

www.birketts.co.uk