Italiatech Australia Pty Ltd (Italiatech) and TMO Sports Pty Ltd (TMO), two importers and wholesale distributors of bicycle parts and accessories to retailers Australia wide, have provided court-enforceable undertakings to the Australian Competition and Consumer Commission admitting that they had engaged in conduct that amounted to, or was likely to amount to, resale price maintenance.
Resale price maintenance occurs when a supplier specifies the minimum resale price of its products further down the supply chain.
Italiatech’s conduct related to the retail prices of certain bicycle helmets and bicycle saddles which Italiatech supplied to Australian retailers, while in the case of TMO, it was the retail price of bicycle parts and accessories, including Time branded bicycle frames which TMO supplied to Australian retailers.
Following an investigation, the ACCC considered that:
- Italiatech had engaged in resale price maintenance by inducing or attempting to induce three Australian retailers who sold its helmets and/or saddles not to sell those products below the recommended resale price (RRP), and
- TMO had engaged in resale price maintenance by inducing or attempting to induce three Australian retailers not to sell bicycle parts and accessories below the price specified by TMO.
“It is important that retailers have the freedom to set their own prices, including offering discounts, when they are faced with strong competitive pressures,” ACCC Chairman Rod Sims said.
“Restrictions on vigorous price competition can adversely affect locally based online retailers that are otherwise well placed to compete directly on price with international online retailers. They can also inhibit ‘bricks and mortar’ retailers from competing with a combination of personal service and lower prices."
“In this case, restricting discounted resale prices of bicycle parts and accessories sold by Australian retailers was likely to have prevented them from competing effectively with international online retailers,” Mr Sims said.
Italiatech and TMO have both undertaken to:
- not engage in resale price maintenance for a period of five years,
- write to their retailer customers informing them of the undertaking and their freedom to determine resale prices,
- implement and maintain training programs for current and future staff, and
- include statements with list pricing informing customers that references to resale prices are only recommendations and that there is no obligation to comply with the recommendation.
The undertakings are available on the public register.
This enforcement action by the ACCC follows a broader investigation into anti-competitive conduct in the bicycle industry. The ACCC investigation was prompted by complaints from businesses and consumers. During the course of the investigation, the ACCC became concerned about potential resale price maintenance conduct and, in particular, its effect on online sales.