UK Gov't Group Alleges Fender Broke Competitive Pricing Law

The Competition and Markets Authority (CMA), a UK government department tasked with preventing businesses from engaging in anti-competitive behavior, has alleged that Fender Musical Instruments violated pricing laws when selling new guitars to UK retailers.

The allegation from CMA comes in the form of an official Statement of Objection, filed today. CMA states, "Between 2013 and 2018, Fender Europe operated a policy designed to restrict competitive online pricing, requiring guitars to be sold at or above a minimum figure."

Fixing retail prices in such a way is a violation of resale price maintenance (RPM), CMA says. This differs from both the manufacturer suggested retail price (MSRP) and what is known as minimum advertised price (MAP) policies in the United States.

As a rule, MAP policies in the US market do not set a minimum final sale price; retailers are allowed to sell any guitar or other good for whatever price they want. But MAP policies aim to prevent retailers from advertising prices below a certain threshold. On the whole, consumer protection laws are more strictly interpreted in the UK and European Union than they are in the US.

RPM is a practice by which companies restrict the final sale price of a good, often saying they will no longer do business with the retailer if a minimum sale price isn't enforced. If Fender is found to have violated RPM, CMA could issue a fine worth several million pounds. CMA fined Casio £3.7 million in August 2019 for online RPM, while Philips, Pioneer, and other music gear companies were fined a total of €111 million in 2018 by the European Union's equivalent government body.

CMA has been investigating Fender since April 2018, and assessed a £25,000 fine against Fender Europe in March 2019 for concealing notebooks during an inspection of the company's UK offices. Fender will have a chance to defend itself against the allegations in front of CMA officials, with an official decision to follow in the coming months.

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