The Competition and Markets Authority (CMA) has issued separate statements of objections to the bathroom fittings supplier Ultra Finishing Limited (Ultra), and to the commercial refrigeration products supplier Foster Refrigerator (Foster), which is a division of ITW Ltd.
Each is alleged to have introduced a minimum advertised price for internet sales, which effectively limited the ability of retailers of their products to make online sales below a specified price level. The CMA alleges that both cases were a form of resale price maintenance and infringements of competition law.
The CMA’s findings are provisional and no final conclusion has been reached regarding whether there has been a breach of competition law.
Ann Pope, the CMA Director responsible for these cases, said:
The internet has driven innovation in retail markets. Where ‘traditional’ businesses operating through bricks-and-mortar shops face intense price competition from online sales, suppliers may be tempted to respond by introducing practices, like minimum advertised prices, that restrict such competition.
Retailers should be free to set their own sales prices online. This drives competition among rival retailers because they compete to attract consumers who are using the internet to shop around for the best deals.
The CMA will carefully consider representations from the parties before reaching a final decision on whether the law has been infringed.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For CMA updates, see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on Competition Act 1998 and civil cartels cases.
- The Chapter I prohibition of the Competition Act 1998 covers anti-competitive agreements, concerted practices and decisions by associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition within the UK or a part of it and which may affect trade within the UK or a part of it. Similarly, Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits such anti-competitive agreements, concerted practices and decisions by associations of undertakings which may affect trade between EU member states.
- The CMA has produced a series of animated videos explaining the main principles of competition law and how they affect small businesses.
- Any business found to have infringed the Competition Act 1998 could be fined up to 10% of its annual worldwide group turnover. In calculating financial penalties, the CMA takes into account a number of factors including seriousness of the infringement(s), turnover in the relevant market and any mitigating and/or aggravating factors.
- Each statement of objections is addressed to the following parties respectively, which the CMA provisionally considers were directly involved in the alleged infringements and/or are liable as parent companies of the undertakings directly involved in the alleged infringements.
Ultra Finishing Limited and Ultra Finishing Group Limited: this is in relation to alleged infringements of the Chapter I prohibition and/or Article 101 of the TFEU between 2012 and 2014.
- ITW Limited: this is in relation to alleged infringements of the Chapter I prohibition and/or Article 101 of the TFEU between 2012 and 2014.
- The CMA has not addressed the statements of objections to those retailers with whom Ultra and Foster entered into the alleged infringing agreements. This is because the CMA has applied Rule 5(3) of its Competition Act 1998 Rules, according to which it may address its proposed infringement decision to fewer than all the persons who were party to the relevant agreements.
- A statement of objections gives parties notice of a proposed infringement decision under the Competition Act 1998. It is a provisional decision only and does not necessarily lead to an infringement decision. Parties have the opportunity to make written and oral representations on the matters set out in the statement of objections. Any such representations will be considered by the CMA before any final decision is made.
- The statements of objections will not be published. In accordance with the guidance Competition Act 1998: Guidance on the CMA’s investigation procedures in Competition Act 1998 cases (CMA8), any person who wishes to comment on the CMA’s provisional findings, and who is in a position materially to assist the CMA in testing its factual, legal or economic arguments, may request a non-confidential version of the statement of objections by contacting the CMA no later than 11 February 2016.
- The CMA currently has 12 cases open under the Competition Act 1998.
- Enquiries should be directed to Simon Belgard (email@example.com, 020 3738 6472).