A Melbourne-based skincare retailer has been hit with $100,000 in fines for engaging in resale price maintenance, prompting the competition watchdog to issue a stern warning to suppliers.
Based in the Melbourne suburb of St Kilda, Eternal Beauty Products is a wholesaler and retailer of skincare products. The company’s director is Penny Rider.
It is the sole Australian distributor of eye and face creams “Eyesential” and “The Lift”.
Resale price maintenance occurs when a supplier asks a business customer not to sell or advertise goods below a minimum price specified by the supplier.
This limits the ability of traders to engage in price competition.
For a period of nine months, Eternal Beauty attempted to stop two online retailers discounting its products on their websites. It did this via a series of telephone and email communications.
The business was ordered by consent to pay a pecuniary penalty of $80,000 while Rider – who admitted to being knowingly concerned in each contravention by Eternal Beauty – was ordered to pay a pecuniary penalty of $10,000. The business was also ordered to pay legal costs of $10,000.
The penalties were imposed by Justice Murphy of the Federal Court of Melbourne following action by the Australian Competition and Consumer Commission.
Justice Murphy acknowledged the seriousness of resale price maintenance, but said the respondents’ conduct was at the lower end of the scale.
In addition to the penalties, Justice Murphy made declarations that Eternal Beauty and Rider engaged in specific acts of resale price maintenance in breach of section 48 of the Competition and Consumer Act.
Justice Murphy also ordered Eternal Beauty to pay a contribution to the ACCC’s costs of $10,000 and establish a trade practices compliance program.
The declarations and orders were made by consent.
Prior to the orders, Eternal Beauty voluntarily sent letters to all of its retailers, informing them retailers were entitled to independently set the price at which they offer those products for sale.
Meanwhile, ACCC chairman Rod Sims has issued a warning to suppliers.
“Businesses are free to sell their products at prices below suppliers’ recommended retail prices if they wish,” Sims said in a statement.
“The ACCC takes seriously any attempts by suppliers to prevent discounting of their products, which affects the fundamental right of traders to compete for business.”
“If not for the cooperation and early admissions by the company and Ms Rider, the ACCC would have sought higher penalties.”