An online retailer specialising in kitchen appliances has been slapped with a $17,500 fine for engaging in resale price maintenance.
The Australian Competition and Consumer Commission initiated legal proceedings against OmniBlend Australia last year, after the watchdog suspected the retailer of telling one of its competitors it could not sell its blenders below a certain price.
In a judgment handed down by the Federal Court this week, Omniblend was fined for aiding, abetting, counselling and procuring overseas suppler Taiwan Star International, to engage in resale price maintenance.
OmniBlend’s director Neal Bowhay has promised to undergo compliance training to ensure the business does not engage in anti-competitive behaviour in the future.
OmniBlend Australia will also contribute to the ACCC’s legal costs.
Craig Subocz, senior associate at Russell Kennedy, told SmartCompany the competition regulator takes resale price maintenance very seriously.
“It’s a practice or an arrangement where the seller of products tells the purchaser they can only sell those products at a certain price,” Subocz says.
“If I sell you products and I say to you, you can’t discount them below a certain price, that would be resale price maintenance. It’s discouraging competition.
“The whole Competition and Consumer Act is to encourage competition between vendors, products and services – so if there’s any mechanism through which competition is discouraged the courts will look at that very harshly.”
Subocz says small businesses who suspect their suppliers are engaging in resale price maintenance should contact the competition watchdog.
“If there’s any readers that see that practice used against them where suppliers are saying you can’t retail below a certain price, the first port of call is to get in touch with the ACCC,” he says.
“As we can see from this case the ACC takes these sorts of cases very seriously.”
ACCC commissioner Sarah Court said there is no place for resale price maintenance in the Australian economy.
“The prohibition of resale price maintenance is an important one, as this conduct can affect consumers by increasing prices, reducing consumer choice and distorting the competitive process,” Court said.
“The ACCC took this action because it was concerned that this conduct may have caused harm to OmniBlend’s competitor, consumers and the market generally. The freedom to set prices, including offering discounts, allows businesses to compete for customers and is at the heart of a functioning market economy.”
In a statement, a spokesperson for OmniBlend Australia said the business “unreservedly regrets” its involvement in resale price maintenance.
“We cooperated with the ACCC on the one remaining charge and have been fined $17,500, the sum that Justice Beach deemed the appropriate penalty,” the OmniBlend spokesperson said.
“Now and in the future we are concerned to ensure our compliance with the Australian Consumer Law is watertight, and we welcome the introduction of compliance programs to this effect.”
*This article was updated at 4.30pm on 25 August to include a response from OmniBlend
Broede Carmody is a former senior SmartCompany reporter. Before this, he was a co-editor of RMIT University’s student magazine Catalyst.
