Money

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.


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