The Federal Court has ordered wholesale distributor B & K Holdings (QLD) Pty Ltd, trading as FE Sports, to pay a $350,000 penalty after it declared by consent that FE Sports engaged in resale price maintenance in relation to cycling and sporting products.
The Court declared that between February 2017 and June 2019 FE Sports provided 328 agreements to existing or prospective dealers containing terms prohibiting the dealer from advertising or promoting certain brands of products online for less than the recommended retail price (RRP). FE Sports entered into 242 of those agreements with dealers.
The agreements were for supply of bicycle accessories and sporting products by the brands Wahoo, Pirelli, 100%, 3T and Stages. In total, 246 dealers were affected.
“Resale price maintenance is harmful to competition and limits the freedom of retailers to compete on price to maximise sales,” ACCC Commissioner Sarah Court said.
“It also denies consumers the opportunity to buy products at lower prices as the retailers are unable to offer discounts.”
“Despite prior warnings from the ACCC about resale price maintenance conduct, FE Sports engaged in this conduct repeatedly, affecting hundreds of dealers over a period of more than two years,” Ms Court said.
The Court ordered FE Sports to refrain from including terms prohibiting discounting in its contracts with dealers, and to write to affected dealers indicating that they are free to set their own prices. FE Sports was also ordered to implement a compliance program.
“This is an important reminder to manufacturers, wholesalers and distributors, including those based overseas, that it is illegal to require independent retailers to sell goods or services at minimum or set prices,” Ms Court said.
FE Sports admitted liability and made joint submissions to the Federal Court with the ACCC, including on penalty.
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.
The ACCC instituted proceedings against FE Sports for resale price maintenance in October 2020.
Resale price maintenance occurs where a supplier prevents, or attempts to prevent, independent retailers from advertising or selling products below a specified price.
This includes situations where 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 detriment from the conduct.