Jaggad Pty Ltd, a manufacturer and wholesaler of Jaggad branded cycling, triathlon and multisport clothing, has provided the Australian Competition and Consumer Commission with court-enforceable undertakings preventing Jaggad from setting minimum resale prices for Jaggad Apparel.
Jaggad, which distributes Jaggad Apparel through selected independent cycling and sports fitness outlets nationally, required 11 of its resellers, identified as Premium dealers, to sell Jaggad Apparel at the recommended retail prices set by Jaggad in its Premium dealer Agreements.
Jaggad's Premium dealers were also required to sell Jaggad Apparel during predetermined sale periods at the sales prices set by Jaggad.
Jaggad acknowledged the ACCC's concerns that the conduct may have amounted to resale price maintenance in contravention of section 48 of the Trade Practices Act 1974.
"Resale price maintenance can occur when a supplier requires resellers to not advertise or sell below a specified price," ACCC Chairman, Mr Graeme Samuel, said today.
"It can also occur where a supplier induces, or attempts to induce, its resellers from discounting their stock or where the supplier withholds, or threatens to withhold, stock when resellers sell or attempt to sell their product at a price lower than the price set by the supplier.
"While there is no prohibition on suppliers setting a maximum price, resellers are generally entitled to sell products at whatever prices they see fit, including discounting below the product's suggested recommended retail price. Companies should, however, be aware of the loss leader exceptions in respect of goods being sold below cost."
The ACCC alleged that Jaggad's specific PDA pricing terms, coupled with Jaggad's right of termination for breach of contract, would be likely for Premium dealers to have understood their PDA to mean they could not sell or advertise Jaggad Apparel at prices less than the prices specified by Jaggad without being in breach of their respective PDAs.
The ACCC noted Jaggad had not taken enforcement action against any of its Premium dealers where they sold Jaggad Apparel below the set price and that Jaggad's other non-Premium dealer resellers were also not subject to the specific pricing terms, therefore remaining unconstrained as to their reselling prices.
As part of the undertakings offered by Jaggad, it has undertaken to:
not enter into an agreement for the supply of Jaggad Apparel or any other goods where one or more terms sets a minimum price below which the goods can not be sold or advertised;
not to otherwise set a minimum price, or make a minimum price known to resellers, below which resellers must not sell or advertise Jaggad Apparel or any other goods;
publish a public disclosure notice in a cycling industry trade magazine entitled Bicycling Trade Magazine which is distributed to all bicycle retailers, wholesalers and manufacturers in Australia;
send letters to its Premium dealers and other Jaggad resellers advising of the ACCC's concerns and reseller's rights to sell stock at any price; and
cause Jaggad's Director and National Sales and Marketing Manager to undertake trade practices law training on Part IV of the Act, including resale price maintenance.
A copy of the Jaggad undertaking will be available soon from the public registers list linked below.
