Federal Court penalises retailer $17 500 for Resale Price Maintenance

20 August 2015

The Federal Court of Australia has ordered Omniblend Australia Pty Ltd (Omniblend), an online retailer of kitchen appliances including Omniblend blenders, to pay a pecuniary penalty of $17 500 for aiding, abetting, counselling and procuring an overseas supplier, Taiwan Star International (TSI), to engage in resale price maintenance.  As a result, TSI sought to induce Omniblend’s competitor not to sell OmniBlend blenders at a price less than the price specified by TSI, and subsequently withheld supply of OmniBlend Blenders to that competitor.

The Court also accepted undertakings from Omniblend and its sole director Mr Neal Bowhay regarding future conduct, and made declarations and orders by consent for compliance training by Omniblend and Mr Bowhay, as well as the payment of a contribution to the ACCC’s costs.

Although Omniblend and Mr Bowhay submitted that the conduct was provoked by the competitor and that they had acted in defence of their commercial interests, Justice Beach noted that, even if this was accepted, it did not excuse their conduct from a legal perspective.

In determining the appropriate penalty, Justice Beach took into account the size and financial position of Omniblend, as well as the likelihood that the conduct had caused some unquantified loss and damage to Omniblend’s competitor or to the market generally.

“The prohibition of resale price maintenance is an important one, as this conduct can affect consumers by increasing prices, reducing consumer choice and distorting the competitive process,” ACCC Commissioner, Sarah Court said.

“The ACCC took this action because it was concerned that this conduct may have caused harm to Omniblend’s competitor, consumers and the market generally.”

“The freedom to set prices, including offering discounts, allows businesses to compete for customers and is at the heart of a functioning market economy,” Ms Court said.

Background                                                                           

The Competition and Consumer Act 2010 (Cth) prohibits resale price maintenance.  It is illegal for suppliers to:

  • put pressure on businesses to charge their recommended retail price or any other set price, for example by threatening to stop supplying to the reseller; and
  • stop resellers from advertising, displaying or selling goods from the supplier below a specified price.

It is also illegal for resellers to ask their suppliers to use recommended price lists to stop competitors from discounting.

Release number: 
MR 151/15
Media enquiries: 
Media team - 1300 138 917

Tags

Audience