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OFT Investigates Pricing Restrictions in Sale of Mobility Scooters and Sports Bras




by:
Lisa Navarro
Greenberg Traurig Maher LLP - London Office

 
October 15, 2013

Previously published on October 11, 2013

In September 2013, the Office of Fair Trading ("OFT") issued statements of objection ("SO") in two separate resale price maintenance cases. The first relates to the sale of sports bras, and the second to mobility scooters. Distinct products, sold in different ways, but both have allegedly been the subject of arrangements between suppliers and retailers aimed at artificially managing the prices that consumers pay.

The investigation into price fixing for sports bras was launched in April 2012. It focused on the conduct of DB Apparel UK Limited ("DBA") with regard to its Shock Absorber range of sports bras. Between 2009 and 2011, DBA allegedly entered into nine agreements with three major department store chains covering nationwide sales of multiple products within the Shock Absorber range. The agreements contain provisions which set a fixed or minimum resale price for the products, thereby resulting in prices being higher than they might otherwise have been.

The OFT's decision to issue an SO to Pride Mobility Products Limited ("Pride") and a number of the retailers that sell its mobility scooters follows a market study on the mobility aids sector which concluded in 2011. Pride and its retailers are accused of being party to arrangements which prevented the retailers from advertising online prices at levels below Pride's recommended retail price.

Given that both investigations are only at SO stage, it must be noted that the findings remain provisional and should not give rise to an assumption that infringements of UK and/or EU competition law have occurred. For the cases to have progressed this far, however, there is a strong likelihood that this will be the ultimate conclusion.

In terms of the offences committed, price fixing has long been the seen as the most serious type of anti-competitive conduct that can occur in the context of vertical supply chain relationships. Whilst the sports bra case appears to be a textbook example of resale price maintenance between a supplier and retailer, the nature of the allegation in the mobility scooters case is more complex. The alleged misconduct is not the fixing of actual sales prices, but a limitation on the advertising of discounted prices over the internet. The OFT has suggested that this impedes the ability of customers to obtain value for money, as well as obstructing innovative and efficient retailers from winning new customers.

It will be a while before we know the final outcome of these investigations. In line with the procedural timetables, final decisions should not be expected before spring 2014. The focus, however, on resale price maintenance issues, and the apparent enthusiasm with which these cases have been investigated by the OFT, are clear indicators that there is no room for complacency for anyone trading in the UK, or in Europe, when it comes to entering into agreements and arrangements with entities at other levels of the supply chain. In particular, any restrictions or obligations which dictate to whom parties can sell, where they can sell, or at what price, have to be given serious consideration.

Ultimately, the cost of getting these arrangements wrong will far outweigh any benefits that might flow from having "successfully" managed the resale price.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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