Bathroom supplier Ultra Finishing Limited, which has its offices in Gibbet Street, Halifax, has agreed to pay a fine of £826,000 after admitting trying to stop retailers from discounting online prices.
The penalty includes a 20% settlement discount to reflect the resource savings generated by Ultra’s admissions and agreement to co-operate with the Competition and Markets Authority’s (CMA) investigation.
The CMA issued a statement of objections against Ultra in January 2016. The business has admitted that, in the years 2012 to 2014, it engaged in resale price maintenance (RPM) in respect of the internet sales of its Hudson Reed and Ultra branded products.
RPM is a form of vertical price-fixing where a supplier restricts the ability for a retailer to determine the prices at which it will resell the supplier’s products, for example by requiring the retailer to sell at a particular price or only above a minimum price.
RPM is illegal because it prevents retailers from offering lower prices and setting their prices independently to attract more customers.
The firm issued to retailers so-called ‘recommended’ retail prices for online sales. Despite being described as recommendations, which are lawful, the company threatened retailers with penalties for not pricing at or above the ‘recommended’ price, including charging them higher prices for products, withdrawing their rights to use Ultra’s images online, or ceasing supply.
This limited the retailers’ ability to offer discounts to potential buyers.
Ann Pope, the CMA’s Senior Director responsible for the case, said: “Price competition from online sales is usually intense, given the ease of searching on the internet. Ultra’s practice of setting minimum online prices stopped retailers from offering discounted prices online, reducing competition across online and ‘bricks and mortar’ sales, and denying consumers the benefit of lower prices for Ultra’s bathroom fittings.
“The CMA takes such vertical price-fixing seriously and is focused on tackling anti-competitive practices that diminish the many benefits of e-commerce.”
The CMA has received complaints of potentially similar conduct by other suppliers of bathroom fittings in the UK. No decision has yet been taken on possible future investigations but we expect businesses involved in similar practices to bring them to an end as soon as possible.