The Competition and Markets Authority (CMA) has issued a Statement of Objections to Casio Electronics Co. Ltd (Casio) which, as part of its business, supplies digital pianos and keyboards to UK retailers.
The CMA has provisionally decided that Casio implemented a policy designed to restrict retailers' freedom to set their own prices online between 2013 and 2018, requiring them to sell at - or above - a minimum price, and so preventing them from offering price discounts.
This kind of illegal practice, known as resale price maintenance (RPM), means customers miss out on the best possible prices. Customers lose out on cheaper prices online because, even when they shop around, they find all retailers tend to be selling at around the same price.
In recent years, software has also made it easier for both suppliers and retailers to monitor online prices. As a result, suppliers can find out more quickly about lower online prices and can pressurise retailers to stick with the agreed price. The use of this 'all-seeing' software is also likely to reduce further the incentives for retailers to reduce their prices in the first place for fear of being caught and being sanctioned.
The CMA's findings are provisional and no final decision has been made about whether there has been a breach of competition law. We will now carefully consider representations from the company before reaching a final decision.
Ann Pope, CMA Senior Director of Antitrust, said:
Companies that sell online can bring many benefits to people who are looking for more choice, convenience and lower prices.
That's why it's important that online retailers are free to sell at the prices they see fit.
We take allegations of online resale price maintenance seriously because it can lead to higher prices and limit choice for customers.
Digital pianos and keyboards are a significant part of the wider UK musical instruments sector which is estimated at around £440m annually.
For businesses wanting to know more about RPM, the CMA has published guidance to help suppliers and retailers across all sectors, with information about what to do if they are, or may have been, involved in RPM or similar practices. Businesses can also watch the CMA's short film that explains what RPM looks like in practice.
For more information, see the case page.
Notes
- The Chapter I prohibition of the Competition Act 1998 covers anti-competitive agreements, concerted practices and decisions by associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition within the UK or a part of it and which may affect trade within the UK or a part of it. Similarly, Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits such anti-competitive agreements, concerted practices and decisions by associations of undertakings which may affect trade between EU member states.
- The European Commission recently fined four companies for resale price maintenance in July 2018: Philips, Pioneer, Asus, Denon
- The CMA fined three other companies for online resale price maintenance: one in August 2016, in the light fittings sector and 2 in May 2016; one in the bathroom fittings sector and one in the commercial refrigeration sector.
- In 2018 the CMA issued 19 warning and 3 advisory letters about resale price maintenance: alerting companies to the illegal nature of this practice and prompting action to ensure compliance.
- The estimated size of the wider UK musical instruments sector is according to the IBISWorld Industry Report G47.591 Musical Instrument Retailers in the UK, March 2019.
- Any business found to have infringed the Competition Act 1998 can 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 the seriousness of the infringement(s), turnover in the relevant market and any mitigating and aggravating factors.
- The Statement of Objections is addressed to Casio Electronics Co. Ltd which the CMA provisionally considers was directly involved in the alleged infringement and to Casio Computer Co. Ltd as its ultimate parent company.
- The CMA has not addressed the Statement of Objections to any retailer. This is because the CMA has applied Rule 5(3) of its Competition Act 1998 Rules, according to which it may address its proposed infringement decision to fewer than all the persons who were party to the relevant agreement/s.
- The Statements of Objections will not be published. In accordance with the guidance Competition Act 1998: Guidance on the CMA's investigation procedures in Competition Act 1998 cases (CMA8), any person who is in a position materially to assist the CMA in testing its factual, legal or economic arguments may request a non-confidential version of the Statement of Objections by contacting the CMA.
- The CMA has four other ongoing antitrust investigations in the musical instruments and equipment sector: cases 50565-3, 50565-4, 50565-5, 50565-6
- For CMA updates, see gov.uk/cma or follow us on Twitter
