Dar Lighting Fined After Ignoring Warnings on Restricting Discounts
- The lighting supplier failed to take sufficient action after 2 written warnings from the CMA relating to allegations of illegal price fixing, known as resale price maintenance
- Dar still restricted the discounts certain retailers could offer customers online
In its second investigation into the lighting industry in recent years, the Competition and Markets Authority (CMA) has found that Dar Lighting – which supplies domestic lighting products – restricted retailers’ freedom to set their own prices online between 2017 and 2019.
Instead, the company required retailers to sell at or above a minimum price, which prevented them from offering discounts beyond a certain level. This kind of practice, known as resale price maintenance (RPM), is illegal because it can lead to shoppers paying more for products.
Dar uses selective distribution agreements (SDAs) which allow it to make its products available to only a limited number of selected retailers that meet certain criteria. SDAs do not usually lead to competition concerns, but they can make it easier for suppliers to control pricing or carry out RPM. In this case, Dar gave retailers the impression that the terms of its SDAs prevented them from offering online discounts.
In 2 separate ‘warning letters’ sent prior to its investigation, the CMA warned Dar of its suspicions that the company was restricting retailers’ ability to discount products – and that this would amount to illegal RPM. The CMA requested that Dar check it was not breaking the law in this way. Dar did not take adequate steps to comply with the CMA’s warnings and has now been fined, with the CMA applying a 35% increase as part of the fine calculation for failing to act on these warnings.
Separately, having admitted to acting illegally and having co-operated with the CMA’s investigation, Dar’s fine was discounted by 20% under the CMA’s settlement procedure.
Ann Pope, Senior Director of Antitrust at the CMA, said:
Selective distribution agreements are a legitimate way for suppliers to choose the retailers they want to stock their products – but suppliers must take particular care to ensure that they are not used or implemented in a way which breaches competition law.
Dar Lighting gave retailers the impression that the terms of these agreements allowed it to prevent discounting online, which was not the case. By doing so, Dar was able to stop price reductions, meaning that shoppers lost out on the possibility of better deals.
Dar ignored not one but two warnings and is now paying the price for its failings. The CMA will take action against firms who refuse to play by the rules, particularly where they have been previously warned.
The CMA has issued millions of pounds worth of fines in recent years to firms including in the lighting and musical instrument sectors for preventing retailers from offering discounts online.
For businesses wanting to know more about RPM, the CMA has published guidance to help suppliers and retailers across all sectors, with information about what to do if they are, or may have been, involved in RPM or similar practices.
Businesses can also watch the CMA’s short film that explains what RPM looks like in practice.
24 Mar