The CMA shines a light on RPM

A fine of £1.5 million has been issued against Dar Lighting Limited (‘Dar’), a UK-based supplier of domestic lighting, for engaging in resale price maintenance (‘RPM’), a form of concerted practice.

RPM occurs when a supplier requires a retailer not to resell its products below a specific price. This prevents resellers from competing and may lead to prices remaining artificially high. It is important to note that recommended resale prices (‘RRP’) are not considered to be anti-competitive unless the supplier uses threats or incentives to impose RPM indirectly.

In recent years, suppliers across multiple industries, who still rely on brick-and-mortar stores, have struggled to compete with purely online retailers who are able to utilise their lower overheads to provide greater discounts on products. Dar attempted to combat this issue by imposing minimum resale prices on their online retail partners. In its Decision, the CMA highlighted evidence that Dar threatened to drop retailers who would not comply with the set prices and found that the company had a prevalent “anti-discount culture”.

Dar continued to engage in this behaviour despite receiving two warning letters from the CMA. As a result, the CMA increased Dar’s fine by 35%. Suppliers attempting to control online discounts should be aware of the risks involved and should explore other ways of managing resale agreements, for example through selective distribution agreements.