ComCom warns electronics industry against maintaining resale prices

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The Commerce Commission has concluded an investigation into allegations that makers of consumer TVs engage in resale price maintenance (RPM), which is illegal.

RPM occurs when a supplier of goods imposes, or attempts to impose, a minimum price at which the reseller must resell those goods.

Following the investigation, the Commission issued a warning to Panasonic. The Commission finds that Panasonic likely engaged in MPR by refusing to supply televisions to two retailers, because they offered televisions at a price lower than the price specified by Panasonic, and by supplying televisions to a retailer at less favorable terms than other retailers because this retailer offered televisions at prices lower than the price specified by Panasonic.

“Maintaining resale prices can be detrimental to competition and to consumers because it can cause consumers to pay higher prices for goods than they would if prices were not influenced in this way,” said Commerce Commission Chair Anna Rawlings.

“It is important that all companies operating in the manufacturing and retail sectors understand what they must do to comply with the law which prohibits suppliers from imposing a minimum price for the resale of their goods. “, she says.

The Commission has also sent an open letter to companies operating in the wholesale and retail markets for consumer electronics, reiterating that the RPM is illegal because it prevents retailers from setting their prices independently, so that they can effectively compete to attract more customers.

The open letter refers to the Commission’s recently updated factsheet on RPMs, which provides guidance to manufacturers, suppliers and dealers of all goods.

This guide includes reminders that:

  • Suppliers should not dictate the price at which their products are resold
  • Suppliers must not prevent retailers from offering selling prices below those recommended by the supplier or from setting their selling prices independently
  • Suppliers and retailers should not agree fixed or minimum selling prices
  • Suppliers must not prevent or limit the ability of retailers to advertise lower prices on some sales channels than on others, such as online retailers. Retailers must not ask their suppliers to influence the selling prices of competing retailers, in particular by modifying the wholesale prices they offer to competing retailers.

Four manufacturers (LG, Sony, Panasonic and Samsung) account for around 90% of TV sales in New Zealand, and two large retailers (Harvey Norman, Noel Leeming) account for more than around 60% of retail sales.

Platform services such as PriceSpy and PriceMe and retailers have extensive websites that allow manufacturers, retailers, and consumers to monitor the prices offered on a daily basis.

A warning letter explains the Commission’s view that the behavior in question may have violated the law. This is not a finding of non-compliance, only the courts can decide if there has been a violation of the law.

The purpose of a warning letter is to inform recipients of the Commission’s view that a violation of law has likely occurred, to suggest a change in recipient behavior, and to encourage future compliance. of the law.

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