The ACCC proposes to revoke a resale price maintenance notification lodged by paint spraying equipment distributor, Graco Australia, which wants to set a minimum advertised price for its range of airless and air assisted paint sprayers.
Under Australian competition law, it is illegal for a business to attempt to set a minimum resale price for their products or services. However, businesses that wish to do so can apply to the ACCC for legal protection.
The ACCC’s draft decision is to revoke Graco’s proposal on the basis that the likely detriments will outweigh any public benefits that could come from setting minimum advertised prices for these products.
“In a highly concentrated market, Graco’s proposal to set minimum advertised prices on paint spraying equipment is likely to result in consumers paying higher prices,” ACCC Deputy Chair Mick Keogh said.
“Graco’s minimum advertised price proposal relates only to advertised prices, so painting contractors and ‘DIY’ consumers could technically still negotiate lower prices directly with retailers. But preventing retailers from advertising discounts would limit consumers’ ability to identify retailers with the best deal.”
“In general, consumers are best served by businesses being able to set and advertise product prices based on their own strategies and assessments of market conditions,” Mr Keogh said.
“Any restriction on businesses’ freedom to do so impedes their ability to compete, including through an advertised differentiated price offering, to attract customers.”
The ACCC is concerned that stipulating a minimum advertised price for retailers will generally result in significant public detriment by limiting the ability or incentive for retailers to compete on price, resulting in higher prices for consumers.
“We will move to revoke RPM notifications in these circumstances or when we believe the resale price maintenance is increasing the risk of coordinated conduct between manufacturers, leading to increased prices and reducing choices available to consumers.” Mr Keogh said.
Graco Australia lodged the notification with the ACCC on 21 March 2023 and agreed to not commence any retail price maintenance conduct until after the ACCC had assessed the notification.
Graco Australia and any interested parties can comment on the draft notice before the ACCC makes a final decision. Submissions are due by 22 September 2023.
Further information, including the resale price maintenance notification and details about how to make a submission are available on the ACCC’s Public Register at Graco Australia notification.
Background
Graco Australia is a wholly owned subsidiary of Graco Inc, which is a US-based global manufacturer of pumps and fluid handling solutions and products, including paint spraying equipment. While Graco Australia imports other pumps and fluid handling equipment, this notification only relates to its paint sprayers.
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.
The ACCC may revoke a retail price maintenance notification where it is satisfied that the likely benefit to the public from the conduct will not outweigh the likely detriment.
Protection for the conduct begins 14 calendar days after a retail price maintenance notification has been lodged unless the ACCC issues a draft notice objecting to the notification within those 14 days.
Before issuing a revocation notice, the ACCC must issue a draft notice setting out its reasons for proposing to revoke the notification.
Correction: This MR was amended on 31 August to clarify that RPM is covered by Australian competition law and not the Australian Consumer Law.