$190,000 penalties on TEAC, sales manager for resale price maintenance

28 November 2007

The Federal Court of Australia has imposed penalties totalling $190,000 on TEAC Australia Pty Ltd and its National Sales Manager, Mr Warren Allison, for engaging in resale price maintenance.

Justice Kenny in the Melbourne court ordered TEAC to pay $175,000 in pecuniary penalties for breaching the resale price maintenance provisions of the Trade Practices Act 1974 and Mr Allison $15,000 for being knowingly concerned in the conduct.

The Australian Competition and Consumer Commission instituted proceedings against TEAC and Mr Allison in relation to conduct that sought to stop an independent retailer of electronic products from advertising prices below the 'go price' specified by TEAC.

The ACCC and TEAC submitted agreed declarations, penalty figures and other orders for consideration by the court.

Justice Kenny imposed the penalties submitted and ordered the following:

  • declarations that TEAC engaged in resale price maintenance in contravention of section 48 of the Act and that Mr Allison was knowingly concerned in the contravening conduct
  • injunctions restraining the same contravening conduct in future
  • TEAC send a letter to all TEAC's retail customers advising them that they are free to set the price for the products they purchase from TEAC and resell
  • TEAC implement a trade practices compliance program, and
  • a contribution by the Respondents of $10,000 to the ACCC's costs.

Resale price maintenance is prohibited outright under section 48 of the Trade Practices Act 1974, and occurs where suppliers prevent or discourage retailers from advertising or selling their products at lower prices than those specified by the supplier.

Justice Kenny noted: "The respondents have co-operated with the ACCC…acknowledged their liability at the earliest stage…" and "…these are mitigating factors that result in a substantial discount from the penalties that would other wise be appropriate."

ACCC Chairman, Mr Graeme Samuel, said companies and the individuals who act for them must understand that resale price maintenance is prohibited under the Trade Practices Act 1974.

"Suppliers should appreciate that their ability to dictate or unduly influence the prices of customers reselling goods is quite limited. It's not for TEAC or its management to determine the selling price of its customers; that decision is one for the customers having regard to their own considerations, competitiveness and efficiency.

"Resale price maintenance prevents retailers from competing on price and it prevents consumers from getting the best price they can. It is conduct which the ACCC will vigorously pursue."

Release number: 
MR 321/07
ACCC Infocentre: 

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