Bathroom retailers have been drawn into the ongoing investigation by the Competitions and Mergers Authority (CMA) into suspected breaches of competition law in the bathroom fittings sector.
The CMA has warned dealers they face heavy fines if they enter into retail price maintenance agreements (RPM) with suppliers.
The news comes in the wake of the CMA’s decision to fine distributor Ultra Finishing £826,000 after it admitted trying to stop retailers discounting online prices.
The fine has since been reduced by 5% to £786,668 after Ultra agreed to set up a programme to help ensure compliance with competition law within its business and among its staff.
This includes “a clear commitment to competition law compliance” by the Ultra Board, including an external statement to that effect, which has been published on Ultra’s website. The company will also roll out tailored compliance training for all employees, and has put in place a detailed procedure to identify, assess and mitigate competition law risks. Ultra will review the compliance programme on an annual basis and submit a report on its compliance activities to the CMA each year for the next three years.
“Although the CMA has decided in this case to impose a fine only on the supplier, retailers should be aware that they can also be fined for entering into RPM agreements with suppliers,” a CMA statement read. “If a business thinks that it may have been involved in RPM, then it may be able to apply for leniency and receive a reduced fine, or avoid a fine altogether, by reporting it and cooperating with the CMA.”
In a separate move, the CMA has also revealed that it has now sent warning letters to a number of other suppliers of bathroom fittings that it suspects have engaged in similar practices in relation to internet sales. It also confirmed it expects to issue more warning letters in the future and that it will “initiate further enforcement proceedings against companies that participate in RPM”.
“Ultra’s infringement of competition law was by way of engaging, in the years 2012 to 2014, in resale price maintenance (RPM) in respect of the internet sales of its Hudson Reed and Ultra branded products,” the statement concluded. “RPM constitutes vertical price-fixing where a supplier restricts the ability of a retailer to set the prices at which it will resell the supplier’s products, for example by requiring the retailer to sell at a particular price or only above a minimum price. RPM is illegal because it prevents retailers from offering lower prices and setting their prices independently to attract more customers.”