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27/08/2020

Competition Law: Lessons to be learned from the Roland price fixing case

In July 2020 the Competition & Markets Authority fined supplier of electronic musical equipment, Roland, £4million for enforcing Resale Price Maintenance on its electronic drum kits.

The case

The CMA found that between 7 January 2011 and 17 April 2018, Roland set minimum prices for its electronic drum kits and related products, instructing sellers to not sell below these prices. According to UK law, this goes against the nature of healthy commercial competition, restricting customers from being able to shop around and being forced to pay a set fee. 

Roland had used price monitoring software to ensure that retailers were complying with the minimum set price. In addition to this, to prevent retailers from selling below the minimum price, the CMA states that “Roland threatened – and sometimes applied – sanctions against those who advertised and sold at lower prices. For example, Roland removed key discounts off the trade price for certain resellers”. The report continues: “Many resellers understood that Roland’s pricing policy meant that they could not sell below the minimum price and that this may breach competition law. For example, in response to a request from Roland to price at the minimum price, a reseller replied ‘#notallowedtomapbutkindado lol x’.” 

The CMA also found evidence that senior management knew they were acting illegally and took steps to cover this up. 

The consequences

Roland were fined £4million by the CMA and the fine was increased due to the evidence that senior management knew what they were doing and the illegal behaviour had been intended. 

Senior management of Roland fully cooperated with the CMA’s investigation and their fine was reduced to reflect this. 

Valuable lessons

  • It is illegal for a supplier to interfere with a reseller’s ability to set their own prices independently.
  • The consequences of breaking competition law can include fines of up to 10% of a business’s global turnover.
  • The CMA has the means to gather evidence even where companies have tried to hide their actions by deleting communications.
  • Directors and senior staff have a special responsibility to be well informed on competition law and make sure their companies are behaving legally.
  • Attending compliance training isn’t enough to demonstrate compliance – you must actively comply with the law.
  • Resellers can also be investigated for breaking the law if they are found to have co-operated with a minimum pricing policy and may also face enforcement action such as fines.

For any commercial law matters contact Chris Taylor on 01484 821 300.