If you’ve ever wondered just why KitchenAid mixers are so expensive the answer may be in the acknowledgment today by Peter McInnes of concerns it engaged in resale price maintenance.
Peter McInnes is the exclusive distributor in Australia of the cult kitchen products and supplies KitchenAid mixers to a number of retailers throughout Australia, including specialty stores and major department stores.
The distributor has provided court enforceable undertakings to the Australian Competition and Consumer Commission after the claims of resale price maintenance were raised.
The watchdog claims Peter McInnes engaged in resale price maintenance on four occasions between November 2011 and June 2013 by trying to induce retailers to sell KitchenAid mixers at the recommended retail price.
The ACCC claims Peter McInnes used tactics including expressing criticism of two retailers’ promotions where those promotions advertised only the discounted price of the mixers and advising a retailer that the value of Peter McInnes’ contribution to retailers’ “gift with purchase” promotions would be lowered due to retailers not pricing at the RRP when conducting such promotions.
ACCC commissioner Sarah Court said the competitive process relies upon retailers being free to discount their goods and compete with each other on price.
“If a supplier tries to force or induce a retailer to stick to a particular price, it concerns the ACCC as consumers benefit from being able to shop around for the best deal,” she said in a statement.
Peter McInnes provided the ACCC with a court enforceable undertaking that it will refrain from engaging in resale price maintenance for a period of two years, write to all of its KitchenAid stand mixer customers informing them that they are free to set their own minimum prices for products supplied to them by Peter McInnes, issue directions to its employees that they should refrain from expressing to those customers any hostility or criticism about the customers discounting below the recommended retail price and implement and maintain a compliance program.
Melissa Monks, special counsel at law firm King & Wood Mallesons, told SmartCompany resale price maintenance is easy to detect and therefore a relatively easy win for the ACCC.
“Where many businesses (sometimes unwittingly) get caught is that they are keen to maintain their brand or product as a premium brand rather than see this diluted with reduced pricing and therefore attempt to stop discounting,” she says.
“This is likely to have been the motivation of Peter McInnes given the prestige associated with the KitchenAid brand.”
Monks says the resale price maintenance provisions make this conduct illegal with significant penalties for a breach.
“While it is acceptable to recommend prices for resale it needs to be a genuine recommendation without inducement or pressure to sell at that price to ensure a business does not fall foul of these provisions,” she says.
“Peter McInnes went one step further than simply recommending a price but engaged in conduct to attempt to get suppliers to in fact sell at that price and this is what got them into trouble.”
Monks says Peter McInnes has been “fortunate” to get away with only an undertaking in comparison to Jurlique which had to pay a $3.4 million penalty and Mitsubishi Electric which had to pay $2.2 million.
A spokesperson for Peter McInnes said the importer had voluntarily taken steps to ensure ongoing compliance with the law.
“The net of the investigation is the ACCC acknowledged ‘no universal conduct’ by Peter McInnes that constituted resale price maintenance,” the spokesperson said.
“No fines and penalties were imposed on Peter McInnes or any employee of the company.”
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
