Proposal to set minimum advertised prices for Dewalt power tools rejected

4 June 2020

The ACCC has issued a final notice rejecting a proposal by Stanley Black & Decker to set a minimum advertised price for Dewalt brand power tools, accessories and attachments.

The ACCC has assessed Stanley Black & Decker’s resale price maintenance notification and concluded that any public benefits that resulted from setting minimum advertised prices for the Dewalt products would not outweigh the likely detriments.

Stanley Black & Decker lodged the resale price maintenance notification with the ACCC on 17 October 2019.

On 27 March 2020, the ACCC issued a draft notice proposing to revoke the notification and requested submissions from interested parties. No submissions were received.

“We accept that Stanley Black & Decker’s proposal would have resulted in retailers earning higher margins on Dewalt products, which may have led to some retailers selling a bigger range of these products. This potential increase in consumer choice was a possible public benefit of Stanley Black & Decker’s proposal,” ACCC Commissioner Stephen Ridgeway said.

“However, we do not believe that the proposed conduct would have resulted in a net public benefit overall. Stanley Black & Decker’s proposal to set minimum prices related only to prices displayed in advertisements, so consumers would, in theory, have been able to negotiate for lower prices in store. But consumers would also have a harder time identifying which retailers were prepared to offer the best price.”

“Consumers would also lose bargaining power through being unable to ask one retailer to match another’s advertised price. In all likelihood, consumers would have, overall, ended up paying more for Dewalt branded power tools,” Mr Ridgeway said.

“This may also have led to retailers of other power tool brands increasing their prices, again to the detriment of consumers.”

In 2018, the ACCC did not object to a resale price notification from Tooltechnic for its Festool and Fein brands of power tools.

“In the Tooltechnic matter, we concluded that while the loss of discounting through resale price maintenance was a consumer detriment, this was outweighed by the benefits to consumers,” Mr Ridgeway said.

“Festool and Fein power tools are complex and highly differentiated in terms of their attributes and quality, meaning there was a benefit from Tooltechnic providing pre- and post - sales services to customers.”

“Without resale price maintenance, the provision of these services by Tooltechnic was unlikely to be sustainable due to discounting by on-line retailers. The circumstances are different for Stanley Black & Decker’s notification because Dewalt tools are not highly differentiated,” Mr Ridgeway said.

The ACCC will continue to investigate claims that some other wholesalers in the power tool market may be attempting to set minimum prices for power tools.

“We remind businesses that any attempt to set minimum prices without lodging a notification with the ACCC is a serious breach of the Competition and Consumer Act,” Mr Ridgeway said.

“We are ready to take action if we find evidence that this conduct is occurring.”

Further information about the resale price maintenance notification is available on the ACCC’s public register at Stanley Black & Decker

Background

Resale price maintenance occurs when a supplier of goods or services (for example, a manufacturer or wholesaler) specifies a minimum price below which a reseller must not on-sell, or advertise for sale, those goods or services.

It is illegal for a supplier to attempt to set a minimum price, or a minimum advertised price for their products or services. However, businesses may obtain legal protection for resale price maintenance conduct by lodging a notification with the ACCC.

Once lodged, protection for the notified resale price maintenance conduct begins 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, Stanley Black & Decker agreed to not commence its resale price maintenance conduct until after the ACCC had assessed its notification.

The ACCC may revoke a resale price maintenance 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.

Before issuing a revocation notice, the ACCC must issue a draft notice setting out its reasons for proposing to revoke the notification.

Revocation of the notification takes effect 31 days after the notice is provided to Stanley Black & Decker, on 5 July 2020.

Release number: 
110/20
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