Did you know that it’s illegal for a supplier to set the price at which its products are sold?
Less than one third of the UK businesses are aware that it is illegal for a supplier to set a minimum price at which its products can be sold (Competition and Markets Authority, 2017). In May 2017, the Competition and Markets Authority issued a fine of £2.7m to The National Lighting Company Limited Group for engaging in illegal price fixing.
Resale Price Maintenance (or “RPM” as it is commonly referred to) not only applies to setting a minimum resale price for products. It also extends to suppliers imposing restrictions on the level of discount that resellers can offer to their customers and to suppliers offering financial incentives to resellers to sell products at or above a particular price. Generally speaking, suppliers are entitled to recommend retail prices to their suppliers, but any attempt to restrict the price at which products are sold will constitute vertical price-fixing, which is in breach of EU law.
Rebecca Gardner, Corporate & Commercial Partner at Howat Avraam Solicitors comments: RPM applies to both online sales and to more traditional channels and the penalties for breach of the rules can be severe. The concept of Recommended Retail Prices (“RRP”) is well known to both businesses and consumers, but many suppliers have been caught out in recent years by trying to take this concept one step too far. It is important for businesses to understand what they can and can’t agree with retailers and equally to be able to recognise when the contractual terms that they are being asked to sign up to are unlawful.
Howat Avraam Solicitors provide Commercial, Employment, Corporate and Contract Dispute advice to companies, business owners and individuals. As business owners ourselves, we have a pragmatic in-house approach to resolving issues before they arise by working alongside our clients, often on monthly retainers. We are commercial, practical and entrepreneurial in our approach to legal services.
To discuss any commercial matter on a no obligation basis, please contact Rebecca Gardner on 020 3735 6700 or email Rebecca at Rebecca.Gardner@hasolicitors.co.uk. Alternatively, visit our website at www.howatavraamsolicitors.co.uk.
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