Retailers and wholesalers are being urged to review their responsibilities under the Competition and Consumer Act 2010 after a jewellery wholesaler was heavily penalised for engaging in resale price maintenance.
Resale price maintenance occurs when suppliers prevent independent retailers from advertising or selling products below a specified price.
Global Enterprises, trading as Allure Gold, came to the attention of the ACCC in May 2010 when it sent an email to its retailers directing them not to sell Allure Gold products for less than 18% off the recommended retail price.
ACCC chairman Graeme Samuel says while you can recommend prices, it is illegal to instruct independent resellers not to discount a product below a certain price.
“Businesses must allow independent distributors of their products the freedom to determine the prices at which they sell,” he says.
Samuel says the Allure Gold example should serve as a timely reminder for businesses to ensure they comply with relevant legislation at all times.
According to an ACCC spokesperson, resale price maintenance carries a maximum penalty of $66,000 for ASX-listed corporations, $6,600 for other corporations and $1,320 for individuals.
“It happens from time to time and it’s to the detriment of consumers who put the work into shopping around, and that’s why we frown upon it,” she says.
“Traders should be aware of their rights and responsibilities under the Australian Competition and Consumer Act 2010.”
“If retailers suspect a wholesaler of engaging in resale price management, they should report it to the ACCC and say, ‘This supplier is telling me I can’t sell X below this price’. Obviously, you’d need to have evidence of it and then we would look at it.”
In addition to engaging in resale price management, Allure Gold made a number of misrepresentations regarding the thickness of gold on some of its products, its offer of an unconditional lifetime guarantee, and the manufacturer of Allure Gold products.
Allure Gold has provided a court enforceable undertaking to the ACCC. As part of the undertaking accepted by the ACCC, Allure Gold will tell retailers that they can set their own prices and provide a full refund to any customers who feel that they have been misled.