The UK’s Competition and Markets Authority (CMA) has issued the music equipment suppliers Roland and Korg with a charge sheet alleging ‘re-sale price maintenance’ by both companies in the UK – meaning they required retailers to sell their products at or above a minimum price.
The CMA’s investigation alleges that software developments have made it easier for suppliers to monitor online prices – both Roland and Korg subscribe to third party services that monitor the price at which their products are being sold. These digital tools make it easier for suppliers to adopt a so-called ‘Big Brother’ approach to identify lower retail prices and put pressure on retailers to bump them up. The CMA alleges that the use of sophisticated ‘all-seeing’ software also has the effect of scaring retailers into complying with suppliers pricing rules in the first place – further undermining retail competition.
The CMA’s investigation follows on the heels of its 2019 investigation into Casio – where the CMA fined Casio £3.7 million for engaging in re-sale price maintenance. Casio’s behaviour was again exacerbated by its use of online price monitoring software to ensure that retailers were complying with its pricing policy – and scaring off retailers from departing from that policy (even though they are legally free to do so). And the European Commission has also recently investigated suppliers for similar behaviour – in 2018, it fined Asus, Denon & Marantz, Philips and Pioneer a total of €111 million for re-sale price maintenance – again in circumstances where sophisticated monitoring tools allowed the suppliers to track retail prices more effectively and put pressure on retailers reducing their prices.
All this suggests that regulators remain keenly interested in investigating the effects of new and rapid digital developments, such as pricing software and sophisticated online monitoring tools, on competition. As these tools increase in sophistication and popularity, it can be expected that regulators will keep a close eye on their use and effect. Companies therefore need to be careful how they use these tools – while they can have clear benefits and are not anti-competitive per se, they can also increase the risk of competition law breaches if they are used as part anti-competitive strategies.
The CMA has provisionally found that 2 suppliers of musical instruments broke competition law by restricting online discounting for their products