Fender fined £4.5 million for flouting UK competition rules

It is the largest fine for such an offence since Casio was fined £3.7 million last year.

UPDATE (23/1): Fender has responded to the fine levied by CMA. A spokesperson for the company said in a statement: “Fender is committed to ensuring its business and employees comply at all times with anti-trust and competition laws and we co-operated fully with the Competition and Markets Authority in its investigation. The conduct identified by the CMA fell well below the highest standards we set ourselves and this is a matter of deep regret.

“As a result of the investigation, we have taken additional steps to enhance our compliance procedures and our new EMEA executive team will continue to rigorously monitor the business’ adherence to anti-trust and competition laws.”

Fender Musical Instruments Europe Limited has been fined £4.5 million by the UK’s Competition and Markets Authority (CMA) for “preventing online discounting for its guitars”.

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It’s the largest fine the CMA has issued for such an offence since keyboard maker Casio was fined £3.7 million last year. This penalty follows CMA’s provisional findings on the Fender case, which the authority revealed in 2019.

In a new statement, the CMA says the guitar manufacturer “has admitted to breaking competition law by pursuing a policy aimed at restricting UK retailers from discounting their online prices”. It is understood that Fender confessed under CMA’s “leniency and settlement procedures”.

From 2013 to 2018, the CMA reported that Fender “required its guitars to be sold at or above a minimum price”. The practice, known as as Resale Price Maintenance or RPM, is unlawful in the UK. Often times, it causes consumers to miss out on the best possible deal because, even after shopping around, they find most retailers are selling products at similar prices.

The CMA also reported that during the course of its investigation, “certain Fender employees deliberately tried to cover up their actions by recording as little as possible in writing”. However, the investigation brought to light emails and texts from Fender’s IT servers and mobile phones, proving the offences did in fact occur.

This is not the first time Fender has been fined for breaking the CMA’s rules. In 2018, during an inspection of one of its sites, an employee was found to have been hiding relevant documents, resulting in a £25,000 fine.

Andrea Coscelli, CMA Chief Executive, said: “It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price. This is especially important for expensive and popular items like guitars, and so Fender’s actions could have had a big impact on customers.

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“The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences.”

More information on the case here.

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