ACCC nips resale price maintenance

21 May 1996
Quick action by the Australian Competition and Consumer Commission has ensured a veterinary supplies wholesaler retains access to a new flea-control product and can continue to discount it at will.

In the Federal Court, Melbourne today veterinary supply producer Rhone Merieux Australia Pty Ltd (RMA) accepted that two employees had tried to induce a wholesaler of veterinary products to stop discounting RMA's new flea control product, Frontline.

It was alleged that when the wholesaler refused to stop discounting, his account was terminated and supply was refused.

"The matter was raised with the ACCC on 26 March 1996 and proceedings were instituted on 26 April 1996," ACCC Chairman, Professor Allan Fels, said today. "After becoming aware of the proceedings the Board of Rhone-Poulenc (the parent group of RMA) immediately investigated the matter, reinstated supply to the wholesaler and provided compensation for any financial loss that the wholesaler suffered.

"RMA quickly approached the ACCC, admitted the conduct took place and offered to take steps to undo the damage in the marketplace and to promote industry awareness of trade practices law.

"At the first directions hearing today RMA and the Commission were able to put forward a comprehensive package of measures to resolve the matter, saving the Court and the parties time and channelling energies and monies into a process that should result in broad industry awareness and \compliance.

"By consent of the parties the Federal Court ordered that:

RMA be restrained from engaging in the practice of resale price maintenance and that it write to all its wholesalers advising them that they can discount RMA products; and RMA place corrective advertisements in the relevant veterinary magazines."

In addition to the Court orders, RMA has provided the ACCC with legally enforceable undertakings that RMA will:

introduce an ACCC-approved trade practices compliance program to cover its employees, including the provision of a pocket checklist on trade practices compliance; and write to all veterinary surgeons throughout Australia providing corporate compliance information to them on two separate occasions in the next two years and provide to them a pocket checklist on the Trade Practices Act; and fund an industry awareness program for wholesalers and retail veterinary surgeons regarding trade practices compliance. This program is to include seminars and presentations in major capital cities.

"The Commission regards resale price maintenance breaches as serious," Professor Fels said. "This matter shows that the ACCC will move quickly in relation to breaches of the Act, but is prepared to be flexible in promoting solutions which reflect the particular facts of the matter, the responsiveness of the company complained of, and general and individual compliance with the law.

"The industry awareness program, initiated by RMA, is a positive step which goes beyond the remedies provided by the Act and reflects the company's bona fide intentions to promote broad awareness of the Act.

"At the time it engaged in resale price maintenance, RMA was a newly established company that had not yet instructed its staff on its legal obligations. On becoming aware of the ACCC's action against RMA, the parent group immediately undertook an investigation of the matter, admitted the conduct and acted to promptly undo any damage caused."
Release number: 
MR 073/96