Proposal to set minimum advertised prices on power tools raises concerns

27 March 2020

The ACCC plans to revoke a resale price maintenance notification lodged by power tool distributor Stanley Black & Decker, which wanted to set a minimum advertised price for Dewalt brand power tools, accessories and attachments.

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

In a draft notice issued today, the ACCC proposes to revoke Stanley Black & Decker’s notification, because any public benefits from setting minimum advertised prices for the products would not outweigh the likely detriments.

“We accept that Stanley Black & Decker’s proposal would result in retailers receiving a higher margin for Dewalt products and therefore retailers may decide to sell a wider range of these products. This would increase consumer choice and is likely to result in a public benefit,” ACCC Commissioner Stephen Ridgeway said.

“However, after considering Stanley Black & Decker’s proposal, we do not believe that the proposed conduct would result in a net public benefit.”

“We note that Stanley Black & Decker’s proposal relates only to advertised prices, so consumers would, in theory, still be able to seek to negotiate prices directly with retailers. But preventing retailers from advertising deep discounts would limit consumers’ ability to easily identify retailers with the best deal.”

“Consumers would also lose the opportunity to ask retailers to match another retailer’s lower advertised price. Consumers, are as a result, likely to end up paying more for Dewalt branded power tools,” Mr Ridgeway said.

“We are also concerned that this may create an opportunity for retailers of other brands of power tools to also increase prices.”

“Information obtained during our consultation suggests that some wholesalers in the power tool market may be attempting to set minimum prices for power tools. We would be very concerned if this is occurring as setting minimum prices, or setting minimum advertised prices for products without lodging a notification, is a breach of the Competition and Consumer Act, and we will consider taking action if the information is correct,” Mr Ridgeway said.

Stanley Black & Decker and interested parties can comment on the draft notice before the ACCC makes a final decision. Submissions are due by 24 April 2020.

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 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 onsell, 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 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.

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

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