The ACCC has issued a final notice revoking a resale price maintenance (RPM) notification lodged by Meredith Dairy, which would have prevented retailers selling its goat cheese products below a price set by Meredith Dairy.
Meredith Dairy had raised concerns that smaller retailers promoting its products at low prices to compete with major supermarket chains had led to demands from other retailers for lower wholesale prices.
The ACCC considered Meredith Dairy’s position, but decided that the reduction in retail competition resulting from the proposal would not be outweighed by any public benefit.
“In our view, the proposed conduct would have led to consumers paying higher prices for Meredith Dairy’s goat cheeses, and would have limited the ability of delicatessens and other small retailers to compete with big chains,” ACCC Deputy Chair Mick Keogh said.
“In turn, it would have meant less competitive pressure on major supermarket chains to offer low prices.”
The ACCC issued a draft notice proposing to revoke Meredith Dairy’s notification on 1 May 2019, and sought views on this proposal.
Meredith Dairy chose not to make a submission in response.
“We believe that consumers are best served when retailers are free to set their own prices in a competitive market,” Mr Keogh said.
Further information, including a copy of the notice issued by the ACCC, is available on the ACCC’s Public Register at Meredith Dairy Pty Ltd
Background
It is illegal for a supplier to attempt to set a minimum price for their products or services. This practice is known as resale price maintenance (RPM). However, a supplier may recommend that resellers charge an appropriate price for particular goods or services.
A supplier may also withhold the supply of goods when a retailer has sold the goods at below-cost prices for the purpose of attracting customers (loss-leader selling), even where such conduct is not unlawful.
Meredith Dairy did not consider this to be a viable option for it, believing it would be too difficult to establish that loss-leader selling was occurring.
Instead, Meredith Dairy proposed to set a minimum price for its products that would apply to all retailers, without it having to establish that loss-leader selling was occurring.
Businesses may obtain legal protection for RPM conduct by lodging a notification with the ACCC.
Once lodged, protection for the notified RPM conduct begins automatically 14 calendar days after the notification was lodged, unless the ACCC issues a draft notice objecting to the notification within those 14 days.
In this case the ACCC issued a draft notice within 14 days preventing Meredith Dairy from engaging in the notified RPM conduct while the ACCC further considered its application.
As the ACCC’s final decision affirms the draft notice, Meredith Dairy cannot engage in the notified RPM conduct.
The ACCC may revoke an RPM notification where it is satisfied that the likely benefit to the public from the conduct will not outweigh the likely detriment to the public from the conduct.