Resale price maintenance is illegal. It occurs when a supplier prevents, or attempt to prevent, a business such as an independent retailer or distributor from advertising or selling products below a specified minimum price. This includes suppliers agreeing to supply good or services to a business, or offering a discount or other incentive, on the condition that the retailer or distributor sells those goods at or above a certain price.
It is also illegal for suppliers to withhold or threaten to withhold supply to a business to maintain certain prices for goods or services.
There is nothing wrong with using a supplier’s recommended resale price (RRP) list so long as it is just that—recommended. However, it would be illegal for the supplier to put pressure on you to charge the listed prices or any other set price (for example, RRP less 10%). A supplier is allowed to issue recommended prices as long as they make it clear they are just recommendations. Their customers must be free to discount if they choose to.
Resale price maintenance only applies to a minimum price. A supplier may lawfully set a maximum resale price for goods and services.
Example: A jewellery wholesaler issues a list of recommended prices for its products. The business offers a 10% discount to retailers who pay their accounts on time, but the discount isn't available if they sell the jewellery for less than the recommended prices. This is resale price maintenance and is illegal – the potential loss of the discount is likely to induce retailers not to sell the goods below the wholesaler’s recommended prices.
For more information, visit Imposing minimum resale prices.