Foster’s £2.3m fine exposes need for industry-wide compliance, says law expert

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Enforcement action taken against refrigeration supplier Foster over conditions it placed on the online resale price of its products shows the need for all companies to promote competition law compliance within their workforce, a leading law expert has warned.

The UK’s Competition and Markets Authority (CMA) came down hard on Foster and its parent ITW after the company was found to have breached competition rules by employing a ‘minimum advertised price’ policy that restricted the price that its goods could be advertised for online by distributors.

The company threatened to charge its dealers “higher cost prices for Foster products” or to stop supplying the products altogether if the distributors advertised the fridges below the minimum price.

Following news of the £2.3m fine issued to ITW by the CMA, Caroline Janssens, senior practice development lawyer and competition law specialist at Pinsent Masons, said the situation was a strong reminder that businesses need to put in place strategies to make sure they are operating within the boundaries of the law.

“This case shows once again that so-called ‘vertical’ restrictions between suppliers and distributors, particularly those involving vertical price-fixing in relation to online sales, remain a key area of concern for the CMA and remain very high on its radar,” she said.

Ms Janssens added: “This case also emphasises the importance for businesses to invest time and resources in promoting an understanding of competition law among their employees. One way of doing this is to devise and actively implement a robust and tailored competition compliance policy. Not only a compliance policy that minimises the risk of breach in the first place, but if the company is investigated for anti-competitive behaviour, evidence of a compliance policy may be taken into account by the CMA and can lead to a reduction in fine,”

The CMA has also sent warning letters to 20 other businesses in the commercial catering equipment sector, which it suspects may have been involved in similar internet sales practices.

The warning letters have been sent to suppliers of commercial catering equipment that may have implemented minimum advertising price polices and also to dealers that may have agreed to apply the policies imposed by their suppliers.

The warning letter explains the CMA’s concerns about their business practices and recommends that a self-assessment of their practices is carried out to ensure compliance with competition law. It also requests suppliers to write to the CMA with details of what they have done, or are planning to do, to comply with the law.

More about Pinsent Mason’s views on UK competition law can be found on its dedicated legal guidance website HERE.

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