Oakley: investigation into price-fixing of sunglasses
Office of Fair Trading (OFT) closed Competition Act 1998 case.
Complaint against: Oakley (UK) Limited
Issue: Allegation that Oakley (UK) Limited had entered into agreements with its retailers to fix the retail price of Oakley sunglasses
Relevant provision: Chapter I Competition Act 1998
Case closure summary
In August 2003, the OFT opened a formal investigation into Oakley (UK) Limited (Oakley) and its retailers. In November 2005 the OFT made a provisional finding through the issue of a Statement of Objections that Oakley and Houser of Fraser (HoF) had entered into a price fixing agreement in contravention of the Chapter I prohibition.
The OFT has decided to close its investigation under Chapter I of the Competition Act 1998 ('the Act') into Oakley's conduct with regard to the supply of Oakley sunglasses to HoF as the case no longer falls within the OFT's administrative priorities.
In allocating its limited resources, the OFT must target its resources where they can have greatest effect. The reasons for our decision to close the present investigation are as follows:
The alleged infringement was terminated by HoF following the OFT's investigation and only related to a small number of sales of Oakley sunglasses. This indicates that the likely direct consumer benefit arising from further intervention by the OFT is therefore extremely limited.
Since the OFT's investigation began, Oakley has adopted extensive compliance measures to ensure that all its dealers understand that they are free to set their own retail prices and has instituted extensive internal compliance measures for its sales staff to ensure that they understand the requirements of the Act. It has offered commitments to reinforce the seriousness with which it regards compliance with the Act.
HoF has assured the OFT that it takes compliance with the Act seriously and has taken steps to improve compliance amongst its own sales staff including guidance to its managers regarding discussions with suppliers over retail prices.
Initial price surveys that were carried out when the investigation began indicated that there was a culture of not discounting below recommended retail prices, with a significant number of dealers stating that Oakley did not allow them to do so. However, a further, albeit limited, price survey conducted in the summer of 2006 did not provide sufficient evidence that an RPM culture continued to persist amongst Oakley retailers. Whilst many prices were still at or around RRP, there was greater variation than previously. Importantly, comments from retailers about not being allowed by Oakley to discount were far less prevalent.
The above indicates that the likely consumer detriment through deterrence resulting from continued investigation (and ultimately any infringement decision) is far more limited than was the position previously and relative to other current cases.
In order to progress the case to an infringement decision to a sufficient standard and defend such a decision, would require the investment of significant further OFT resource, in terms of staff time and costs.
In light of this and the OFT's other case and project commitments, the OFT has therefore decided that at this stage it would not be a good use of its resources to pursue this case any further and has concluded that it should focus its resources on other prioritised areas currently under investigation.
Case reference: CE/2471/03