A major Australian kitchen blender company attempted to engage in price fixing and resale price maintenance, according to the Australian Competition and Consumer Commission.
The ACCC has instituted proceedings in the Federal Court against OmniBlend Australia, alleging the business attempted to engage in price fixing with a competitor.
The competition watchdog says when this failed, OmniBlend “induced” the other company to engage in resale price maintenance by refusing to supply the competitor unless it stopped offering discounts on certain blenders.
Resale price maintenance is when a distributor agrees to sell or advertise a manufacturer’s product for a certain price.
In a statement, ACCC chairman Rod Sims said the consumer watchdog takes price fixing seriously.
“Price fixing and resale price maintenance affect consumers by increasing prices, reducing consumer choice and distorting the competitive process,” said Sims.
“The ACCC views these types of anticompetitive conduct very seriously and will not hesitate to investigate and where appropriate take enforcement action against businesses who engage in this behaviour.”
Sally Scott, partner at Hall & Wilcox Lawyers, told SmartCompany if the ACCC can prove of the alleged breaches, OmniBlend could be facing “huge” penalties.
“Unlike the penalties for consumer law breaches – such as misleading conduct – the penalties of competition law breaches can be linked to the company’s turnover or benefit obtained from the breach,” says Scott.
“This means that the penalties can be extremely large, such as the penalty of $36 million imposed on Visy a few years back.”
Scott says the maximum penalty for competition offences can be more than $10 million if 10% of the benefit obtained from the offence is more than $10 million. This maximum penalty also applies if 10% of the business’s annual turnover for the relevant period is greater than $10 million.
“This allows the ACCC and the court to ensure that the penalty sufficiently hurts the company that has done the wrong thing and sufficiently deters others from doing the same thing,” Scott says.
“Otherwise, there would be a risk that businesses would treat the potential for a penalty as just a cost of business.”
Scott says businesses cannot force their resellers not to sell or advertise their goods below a minimum price.
“They can certainly recommend a minimum resale price, provided it is in fact a genuine recommendation and nothing more,” says Scott.
“Businesses can’t threaten to stop supply if a reseller sells below a minimum price. The goal is to ensure that competition is unrestricted in relation to price.”
SmartCompany attempted to contact OmniBlend Australia’s lawyer for comment but did not receive a response prior to publication.