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CMA issues competition law infringement decision relating to commercial catering sector

The Competition and Markets Authority issued its decision today finding an infringement of Chapter I of the Competition Act 1998 and / or Article 101 of the Treaty on the Functioning of the European Union by ITW Limited (“ITW”), a global manufacturer of specialised industrial equipment and consumables. The infringement relates to the supply of commercial catering equipment, specifically ITW’s Foster Refrigerators between 2012 and 2014.

The decision finds that ITW engaged in in resale price maintenance (“RPM”) in respect of internet sales of its Foster Refrigerator branded products. RPM is vertical price-fixing where a supplier restricts the ability of a retailer to set the prices at which it will resell the supplier’s products, for example by requiring the retailer to sell at a particular price. RPM is illegal because it prevents retailers from offering lower prices and setting their prices independently to attract more customers.

The Foster Refrigerator division of ITW operated a ‘minimum advertised price’ policy and threatened dealers with consequences if they advertised below that minimum price including withdrawal of supply or worsening of terms. The CMA unsurprisingly found that there is a clear link between the advertised price and the resale price when products are purchased online and therefore ITW restricting the price at which its products were advertised prevented online dealers from deciding the resale price of those products.

The decision imposes a fine on ITW of £2,298,820 after discounts for admissions and co-operation within the investigation and the implementation of a competition law compliance programme after the investigation.  It is the latest in a string of recent decisions CMA investigations into online price and discount restrictions (see our article of 18 May 2016 on the CMA’s recent decision in the bathroom fittings sector against Ultra which also related to RPM). Ann Pope, Senior Director of the CMA, said of the CMA’s position in relation to online price restrictions: “we are focused on tackling anti-competitive practices that diminish the many benefits of e-commerce across all sectors.”

If your contracts contain anti-competitive terms they are at risk of leading to fines imposed by competition authorities and damages actions from affected parties. Maitland Walker LLP can advise whether the terms of your contracts are compliant with competition law whether you are a brand owner or reseller. Maitland Walker also has expertise in pursuing and defending complaints and other investigations before competition authorities like the CMA and European Commission and in bringing and defending private competition law damages actions. 

To discuss any competition law issues please contact Julian Maitland-Walker or Sheree-Ann Virgin.