The UK government’s Competition & Markets Authority (CMA) has handed out fines totalling £5.5 million to Korg, Roland, and instrument retailer GAK in the latest development in its investigation into price-fixing in the UK musical instrument retail sector, which has now resulted in fines of over £13.7 million being levied.
The fines relate to the practice of Retail Price Management (RPM), which is an agreement between a supplier and a retailer that restricts the retailer’s ability to reduce prices, preventing them from offering lower prices to attract customers and drive competition in the market.
The investigation into Korg (who also own or distribute Takamine and Vox in the UK) and Roland (which also owns Boss) was first revealed back in March, and the two companies now join Fender and Casio in “the culmination of five separate investigations, covering major players across the musical instruments sector” according to the CMA.
Brighton-based retailer GAK has also been fined more than £250,000 in a separate investigation, becoming the first musical instrument retailer to been fined for RPM-related activities. The judgement was levied after a price-fixing agreement between GAK and Yamaha was disclosed to the CMA by Yamaha in exchange for the latter’s immunity from fines in exchange for being the first to bring the conduct to the Authority’s attention.
The CMA has also announced that it has sent warning letters to dozens of other instrument suppliers and retailers in the UK where it claims to, “already have sufficient evidence to suspect they have broken the law by engaging in RPM”, and published an open letter to the wider industry reminding them of their legal responsibilities regarding RPM.
“We continue to receive complaints suggesting that some industry participants think that, because they were not investigated, they may have ‘got away with it’.” the letter reads. “Therefore, we have sent warning letters to almost 70 other musical instruments suppliers and retailers where we already have sufficient evidence to suspect they have broken the law by engaging in RPM. If you are one of the firms who receives a CMA warning letter you should take it very seriously.”
To back up this claim, the CMA has created an online tool that automatically monitors price levels amongst musical instrument retailers, in order to alert them of any suspicious pricing activity in the future.
“During the coronavirus outbreak, people are shopping online more than usual, including for musical instruments. Even before the pandemic, the CMA estimated that an average of around 40 per cent of musical instruments were sold online so it’s important that manufacturers and retailers do not illegally work together to keep prices high,” said Michael Grenfell, the CMA’s Executive Director of Enforcement.
“Today’s announcements make clear the CMA’s determination to protect shoppers from illegal attempts to restrict discounting.”
Read the full open letter from the CMA to the UK musical instrument sector here.
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