Mixed Up – ACCC investigates KitchenAid supplier
Peter McInnes Pty Ltd (an importer and wholesaler of kitchenware products in Australia), has provided court-enforceable undertakings to the Australian Competition and Consumer Commission (ACCC) following its investigation of allegations that Peter McInnes Pty Ltd had engaged in conduct that constituted or was likely to constitute resale price maintenance in breach of the Competition and Consumer Act 2010 (Cth) (CCA). Peter McInnes Pty Ltd distributes kitchenware to speciality stores and major department stores in Australia and is the exclusive distributor of very popular KitchenAid stand mixers.
Although under the CCA suppliers are entitled to provide a recommended retail price, on this occasion Peter McInnes went further. In particular, the ACCC’s investigation revealed the following examples of conduct of Peter McInnes which potentially breached resale price maintenance provisions the CCA:
- after reducing the recommended retail price of the mixers, Peter McInnes provided a rebate only to those retailers who had priced the mixers at the previously higher recommended retail price in order to compensate them for loss of margin;
- Peter McInnes criticised retailers’ promotions where they advertised the discounted price of the mixers; and
- Peter McInnes threatened to lower its contribution to retailers’ ‘gift with purchase’ promotions if the retailer did not price the mixers at the recommended retail price in the promotion.
Resale price maintenance is prohibited under section 48 of the CCA. It involves a supplier of goods or services, specifying a minimum price at which those goods or services must be resupplied. Broadly, the supplier may do this by:
- Making it known that the goods will not be supplied unless the person agrees not to sell the goods below the supplier’s specified price;
- Inducing or attempting to induce the person not to sell the goods at less than the price specified by the supplier;
- Entering or offering to enter into an agreement for supply of goods where one of the terms is that the person will not sell below the supplier’s specified price;
- Using a statement as to price in relation to the goods that is likely to be understood by the person as the price below which the goods are not to be sold; or
- Withholding supply of goods because the person has not agreed to sell the goods at the specified price.
This is a good example of going beyond a mere ‘recommendation of price’, which in itself is not prohibited, to following it up with conduct that crosses the line into resale price maintenance.
Peter McInnes Pty Ltd had acknowledged that its conduct constitutes or is likely to constitute a breach of section 48 of the CCA and has undertaken to:
- refrain from engaging in resale price maintenance for two years;
- make all of its retailers of KitchenAid stand mixer aware that they are able to set their own minimum prices on the products supplied to them by Peter McInnes (by providing a letter in a form set out in the undertaking);
- direct its employees that they should not express any hostility or criticism to their customers about discounting below the recommended retail price; and
- implement and maintain a compliance program.