Competition Authority Clamp Down
27 January 2020
2019 saw a significant increase in the Competition and Markets Authority (CMA) flexing its enforcement muscles, and only a few weeks into the New Year, it appears that 2020 will be no different.
Last week, Fender Europe was fined an eye watering £4.5 million for price fixing. This is the largest ever fine imposed by the UK authority for price fixing (otherwise known as “resale price maintenance”) and was in fact reduced from an original £14.2 million proposed fine, only because the company admitted the offence. In short, the guitar maker was found in breach of competition law for preventing online discounting of its guitars.
During the investigation (which began back in 2018), it was discovered that Fender often pressured retailers to raise prices along with Fender employees attempting to conceal their actions by recording very little in writing. However (in an investigation that serves as a warning on the width of the CMA’s powers), the CMA found emails and texts that proved the illegal actions, by accessing Fender’s IT servers and mobile phones.
Fender is only one of a number of recent examples of CMA’s increased enforcement activity. In August 2019, Casio was fined £3.7 million for price fixing products including pianos and keyboards. Not only did Casio pressure retailers into price fixing, it also encouraged retailers to inform on other retailers that were not adhering to Casio’s policy.
In December 2019, the CMA fined three estate agent companies approximately £600,000 for their involvement in a price fixing cartel, which started back in 2008. The companies set minimum commission rates for the sale of properties in certain locations in Berkshire, England. The cartel undertook activities like exchanging confidential information on pricing and holding meetings to ensure all members enforced the minimum rate agreement.
The message then, particularly as we move into a post Brexit era with a UK regulator keen to make its presence felt, is clear. “Break competition law and you will face serious consequences” [CMA Chief Executive Andrea Coscelli.]