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CMA fines Casio for Resale Price Maintenance

Posted on 07 August 2019

On 1 August 2019, the CMA announced that it had fined Casio Electronics Co. Limited £3.7m for preventing its distributors from offering online discounts in relation to its digital piano and keyboard manufacturing business. Competition law prohibits suppliers from requiring retailers to sell products at or above a minimum price, a practice known as Resale Price Maintenance (RPM).

As the ultimate parent company of Casio Electronics Co. Limited for the relevant period, Casio Computer Co. Limited is jointly and severally liable for Casio Electronic Co. Limited’s fine. This fine was discounted by 20% under the CMA's settlement regime to reflect the fact that the company admitted to the illegal behaviour and agreed to co-operate with the CMA. The fine is not only the largest ever imposed by the CMA in relation to RPM, but is also indicative of the CMA's increasing enforcement appetite. This decision comes in the context of four ongoing antitrust investigations in the musical instruments and equipment sector.

Casio admitted to breaking competition law and engaging in RPM between 2013 and 2018 by preventing its distributors from offering online discounts on their products. It did this by using software to make it easier to monitor the prices set by retailers, and imposing sanctions on retailers who did not adhere to its pricing policy. RPM is treated as a hard-core restriction of competition by competition regulators. Including RPM in an agreement gives rise to the presumption that the agreement restricts competition and so falls within Article 101(1). This monitoring was reinforced by retailers being encouraged to report competitors who engaged in discounting.

Since 2016, the CMA has fined other companies for online RPM in the light fittings, bathroom fittings and commercial refrigeration sectors. During 2018, the CMA issued 19 warning and three advisory letters about RPM to alert companies to the illegal nature of this practice and prompt action to ensure compliance.

Companies should review their agreements and distribution strategies to ensure they are not engaging in any form of RPM as the risk of enforcement action and fines from the CMA is higher than ever before. Mishcon de Reya's competition law group would be happy to help you with any such review, as well as providing training on competition law compliance and/or assisting with any investigation or queries raised by the CMA.

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