Dave Cullen, chief executive of bathroom supplier Ultra Finishing, has insisted rival companies are continuing to deliberately restrict the level to which their products can be discounted online, despite warnings from the Competitions and Markets Authority (CMA) that such actions breach competition law.
Speaking exclusively to kbbreview following news that the CMA had fined Ultra £826,000 for the offence, Cullen (pictured) said other bathroom companies were equally culpable and should be “watching their backs” as the investigation continues.
“Those people know who they are and the fine imposed on us will highlight that they need to go back and check if they’re breaching the regulations,” Cullen said. “We weren’t the worst case, there are worse cases out there than what Ultra was doing. The CMA know we’ve now stopped, but they also know lots of other companies who haven’t.
“Some people are doing it deliberately, we weren’t. They’ll look and think they’ve taken legal advice signed off by a lawyer and they’re OK. But it’s those people who need to go back and say, actually does this comply?
“Yes, in hindsight we breached the regulations. But that wasn’t our intent to start with. We had what we thought was the right legal advice at the time but it turned out the CMA weren’t happy with it.”
When asked for proof that competition law was still being deliberately breached elsewhere in the sector, Cullen claimed he had material evidence that some companies were clearly at fault: “I’ve even got copies of brand and image licence distribution agreements and there’s still companies sending it out,” he said. “I’ve got one here from December 2015 which is still breaching those regulations and it’s still going on. So I think we felt victimised in January but happy that we stopped this activity 18 months ago as soon as they told us about it.”
Cullen explained that the reason Ultra had been singled out for a fine was that by focusing on a single company the CMA could speed up its investigation process and make a quicker ruling. It hopes this will act as a significant deterrent to others.
“They’ve streamlined their processes to get to a deterrent as fast as they can and what is clear to them and to us is that this is still going on in our industry and they want it to stop,” he said.
“I think it will see people looking at their own contracts and their own licensing agreements and seeing if they want to be brave and continue or whether it will change the way they do business with e-tailers.”
Cullen said other companies now needed to fully comply with the regulations. ”The CMA have now got all the evidence against the industry,” he said. “I think companies would be silly not to react and do something and try to change it. I don’t think it’s the CMA’s style to now just move on. I think this is their deterrent and they expect people to comply with it. They’ve spent two years collecting evidence and they’ve got a lot more evidence against our industry than just against Ultra.”
Cullen also revealed that Ultra had been “massively tempted” to fight the decision but admitted a subsequent fine could then have been much worse. “The breadth of penalty can be anything up to three times group turnover in the period the infringement happened, which was two-and-a-half years, and that’s obviously very, very scary,” he admitted.
“But there’s always a temptation to fight it because I think there’s a difference between the legality and the morality of it. Morally you’d want to fight it because you’re trying to protect a bunch of retailers who are still not being protected – and they’re still not getting the protection that they need. You’d like to fight it but you’d need a bigger company like Apple to do it. Had we fought it I couldn’t say we’d have won, but I wouldn’t say we’d have lost it either to be fair because there was some strong evidence both ways.”