International Beauty Supplies Pty Ltd - s.87B undertaking

International Beauty Supplies (IBS) carries on the business of importing, distributing, wholesaling and retailing beauty products in Australia.

Yuwah Holdings Pty Ltd (Yuwah) employs all staff involved in the business of IBS and provides administration services to IBS.

IBS supplies goods to 28 distributors across Australia who on-sell IBS goods to professional salons.

In February 2008 IBS:

• entered into Distributor Agreements for the supply of goods on standardised terms, one of the terms of which was that the distributor would not sell the goods at a price less than a price specified by IBS as follows: 

‘Prices 5(3) - The Buyer will sell the Goods at the Suppliers published wholesale price including GST with the recommended retail price for those businesses detailed in item 3(a) who may sell non-professional Goods to consumers.’

• sent a letter to distributors notifying that IBS would not supply goods unless the Distributor Agreement was signed, thereby making it known that IBS would not supply goods to distributors unless they agreed not to sell IBS goods at a price less than a price specified by IBS; and
• provided distributors with price lists and catalogues containing a statement of a price that was likely to be understood by distributors as the price below which IBS goods were not to be sold.

IBS admits that in engaging in the conduct described above, it is likely to have contravened section 48 of the Act.

Upon being made aware of the ACCC’s concerns, IBS and Yuwah have offered an Undertaking to the ACCC pursuant to section 87B of the Act that they will not to engage in similar conduct for a period of three years.

International Beauty Supplies has offered an undertaking that it will:

• write to its distributors advising them of the ACCC’s concerns and that they are free to determine the prices at which they advertise and sell IBS goods;
• vary the Distributor Agreement to delete the ‘Prices’ clause; and
• review its existing Trade Practices Compliance Program.