Reminder: Suppliers Can't Set A Minimum Price

In Australia, it's illegal for a supplier to specify a minimum price at which its goods can be advertised or sold. Given that, it's not surprising that the Australian Competition and Consumer Commission (ACCC) has issued a draft authorisation which would stop retailers including JB Hi-Fi, Bing Lee, David Jones and Radio Rentals from setting minimum advertised prices on some electrical goods they source.

Last September Narta, a buying group comprising 30 electrical retailers, applied for authorisation to specify a minimum advertised price for some products it imported, including whitegoods from Turkish manufacturer Beko (with which it has an exclusive Australian supply arrangement). Companies can seek authorisation for behaviour that would generally be considered illegal because of its anti-competitive effects. In this case, while the judgement isn't final, the ACCC doesn't seem predisposed to allow it, citing the potential for reduced competition and the likelihood of consumers paying higher prices. (Narta members account for about 25 per cent of the local market.)

One interesting point that ACCC chairman Rod Sims makes in the announcement makes is that specifying a minimum price is likely to reduce online competition:

This is particularly a concern for competition with online retailers, which generally do not negotiate their selling prices down from the advertised price like bricks and mortar retailers might do.

That appears to be one reason Narta was keen to pursue this approach; its submission notes that " the norm in the relevant markets is for the selling price to be discounted from the advertised price at point of sale", However, it doesn't seem the strategy is likely to succeed, which is good news for bargain hunters.


Comments

    How does this differ from what they do in the digital space where the suppliers are setting a minimum price for games?

      Or music and videos. Suppliers set the price on pretty much all online stores.

    Yawn. There are many ways for suppliers to deal with retailers selling below what they would like them to....like stop selling to them. simple as that.

      Beep. Wrong. Try again.

      ACCC will happily throw some support punches if anyone is found to be doing that.

      http://www.accc.gov.au/content/index.phtml/itemId/1001845

      If they're willing to do it for something as mundane as aquariums, they would be jumping all over something like consumer electronics which is far more likely to get media attention.

        I'll be more impress when they actually go after these big companies using these tactics. 2K Australia are openly forcing retails to sell at a minimum price. No action from the ACCC.

          Openly you say, provide a link or other proof.

            http://blog.greenmangaming.com/2012/12/australianew-zealand-pricing.html

        Legally? No they can't. They can however not realise emails like the examples and come up with another reason like another retailer or they don't think there that store fits in line with their strategy etc. good luck dragging that through the courts.

    tell that to Apple and Miele.

    How is this legal then? - http://blog.greenmangaming.com/2012/12/australianew-zealand-pricing.html

    MIele has a different business model. They own all the stock you see at various stores. The store is just acting as an agent. That way Miele can set what ever price they want to and the store can't sell the product for less than that.

Join the discussion!

Trending Stories Right Now