Skateboard company stops resale price maintenance

Kwala Skateboards Pty Ltd, a wholesaler of skateboards and skateboard merchandise to a large number of retailers throughout Australia, has given the Australian Competition and Consumer Commission court-enforceable undertakings over Kwala's pricing policy.

In late 2006, the ACCC became aware that Kwala had advised a customer retailer that it would no longer be supplied with products unless the retailer raised the goods' price to at least Kwala's recommended retail price.

The retailer had been selling skateboarding products on some internet auction sites and some goods sold for prices below Kwala's specified prices.

Section 48 of the Trade Practices Act 1974 prohibits a business from inducing or making it known that the supplier will not supply another business unless that business agrees not to sell below the supplier's specified price.

Resale price maintenance prevents traders from competing with each other in respect of prices unfettered by price restraints imposed by suppliers.

After being contacted by the ACCC, Kwala acknowledged that it may have breached the resale price maintenance provisions of the Act. It has cooperated with the investigation.

Kwala will:

• refrain from the conduct and will not induce or otherwise set a minimum price at which retailers can not sell products below
• write to each of its retailers advising them of the ACCC's intervention, and reinforce that the retailers are free to set the pricing levels of the goods they sell without restraint from Kwala
• begin a trade practices law compliance program designed to minimise the risk of Kwala breaching the Act in the future.

"It is imperative that retailers are able to determine their own pricing without interference from their suppliers," ACCC Chairman, Mr Graeme Samuel, said.

A copy of Kwala's undertaking to the ACCC will be available for viewing on the ACCC's website.