FE Sports allegedly engaged in resale price maintenance

The ACCC has instituted proceedings in the Federal Court against B & K Holdings (QLD) Pty Ltd, trading as FE Sports, alleging that it engaged in resale price maintenance for the wholesale supply of cycling and sporting products in Australia.

It is alleged that between February 2017 and June 2019, FE Sports provided 328 dealer agreements to existing or prospective dealers containing terms that prohibited the dealer from advertising or promoting the products of certain brands on the dealer’s website for less than the recommended retail price (RRP) set by FE Sports.

The agreements were for the supply of bicycle accessory and sporting brands Wahoo, Pirelli, 100%, 3T and Stages.

It is also alleged that FE Sports subsequently entered into 242 agreements with dealers containing a recommended retail price term.

For example, over 200 dealer agreements for 3T, 100% and Stages products contained a clause that stated “The Dealer is permitted to advertise and promote [Brand] products through its internet home page provided that no reference is made to a price other than RRP. Under no circumstances is a [Brand] product to be advertised for sale by the Dealer at a discount”.

FE Sports specified the applicable RRP for each product on its website, to which dealers had access, and also maintained a master price list of RRPs, which it provided to dealers on request.

“We allege FE Sports made it known that dealers were not to advertise products at a discount to the recommended retail price,” ACCC Commissioner Sarah Court said.

“Resale price maintenance is anti-competitive conduct which limits the ability of retailers to compete on price and ultimately can mean consumers pay more for products, because the retailers are stopped from discounting.”

Prior to this alleged conduct, the ACCC had warned FE Sports on three occasions that resale price maintenance is illegal.

“FE Sports was well and truly put on notice by the ACCC that resale price maintenance is illegal, and it has had ample opportunity to ensure it complied with the law,” Ms Court said.

“All businesses are reminded that it is illegal to dictate minimum prices to retailers, who are entitled to advertise and sell products at discounted prices.”

The ACCC is seeking declarations, injunctions, pecuniary penalties, an order for corrective notices, a compliance program, and costs.

Background:

FE Sports is a Brisbane-based wholesale distributor of cycling and sporting products to hundreds of dealers in Australia, many of which are small businesses such as local and family-owned bike shops.

Note:

Resale price maintenance is the illegal practice where a supplier prevents, or attempts to prevent, independent retailers for advertising or selling products below a specified price.

Resale price maintenance occurs when manufacturers or suppliers:

  • make it known they will not supply unless a distributor or retailer agrees to advertise or sell at a price not less than a specified minimum price
  • induce or attempt to induce the retailer not to advertise or sell below a specified minimum price
  • withhold supply of goods or services because the distributor or retailer has advertised or sold at a price below a specified minimum price.

Resale price maintenance is strictly prohibited by the Competition and Consumer Act and is not subject to a substantially lessening competition test. More information about resale price maintenance can be found at Imposing minimum resale prices.

Companies may lodge a notification of Resale Price Maintenance conduct which will be permitted if the likely public benefit from the resale price maintenance conduct outweighs the likely public detriment from the conduct.

The attached document below contains the ACCC’s initiating court documents in relation to this matter. We will not be uploading further documents in the event these initial documents are subsequently amended.

Concise Statement

/Public Release. The material in this public release comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length. View in full here.