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Price Fixing - Courts send out warning - Heavy penalties have been imposed, highlighting the seriousness of price fixing |
In a recent case, a wholesaler of skincare products was penalised $250,000 for trying to prevent retailers from discounting its products. |
The company sells products to over 700 retailers in Australia. It describes its products as a 'premium brand', pitched in price towards the higher end of the market. Sold and used by professional beauty salons, the products are unavailable for purchase in supermarkets or other stores. Retail prices are recommended to retailers on the company's order forms and on price lists. |
Two Australian beauty salons had offered the company's products for sale on their websites at prices lower than that recommended. The company's response to the salons' discounting led to allegations that it was breaking the law by engaging in price fixing. |
Sales representatives for the company said to staff at one salon, "I would hate to see this problem cause the company to cancel your account". She also provided staff with a print-out of the website policies of the parent company. These included, "Deviating from current suggested retail prices is strongly discouraged," and "A violation of this policy can result in account termination and legal action". Company representatives made similar comments to the second retailer, saying: "Yeah, we can even cut off supply and close your account". |
The judge described the company's conduct as "somewhat aggressive" and noted that the penalty imposed, which is a quarter of the company's profits in Australia for the year, would have been considerably higher but for its cooperation with authorities. |
In another case, a number of petrol companies in country Victoria were found to have been involved in a long-standing arrangement to fix retail petrol prices. Penalties of over $23 million have been imposed, including penalties of up to $200,000 against company directors and area managers. |
Companies must comply with trading laws, and have programs in place to ensure staff are aware of them. |
