Resale Price Maintenance
Section 48 of the TPA prohibits a corporation from engaging in the practice of resale price maintenance. Resale price maintenance is defined in Part VIII. It captures various forms of minimum RPM (see s 93(3)), both in relation to goods and services (including withholding supply as a result of failure to agree to or adhere to a RPM requirement). Maximum RPM is not prohibited (even if it substantially lessens competition!) A person does not engage in RPM merely by providing a statement of recommended prices (s 97)
The Law
Section 48
Resale price maintenance
A corporation or other person shall not engage in the practice of resale price maintenance.
Part VIII
Resale price maintenance
Section 96
Acts constituting engaging in resale price maintenance
(1) Subject to this Part, a corporation (in this section called the supplier) engages in the practice of resale price maintenance if that corporation does an act referred to in any of the paragraphs of subsection (3).
(2) Subject to this Part, a person (not being a corporation and also in this section called the supplier) engages in the practice of resale price maintenance if that person does an act referred to in any of the paragraphs of subsection (3) where the second person mentioned in that paragraph is a corporation.
(3) The acts referred to in subsections (1) and (2) are the following:
(a) the supplier making it known to a second person that the supplier will not supply goods to the second person unless the second person agrees not to sell those goods at a price less than a price specified by the supplier;
(b) the supplier inducing, or attempting to induce, a second person not to sell, at a price less than a price specified by the supplier, goods supplied to the second person by the supplier or by a third person who, directly or indirectly, has obtained the goods from the supplier;
(c) the supplier entering into an agreement, or offering to enter into an agreement, for the supply of goods to a second person, being an agreement one of the terms of which is, or would be, that the second person will not sell the goods at a price less than a price specified, or that would be specified, by the supplier;
(d) the supplier withholding the supply of goods to a second person for the reason that the second person:
(i) has not agreed as mentioned in paragraph (a); or
(ii) has sold, or is likely to sell, goods supplied to him or her by the supplier, or goods supplied to him or her by a third person who, directly or indirectly, has obtained the goods from the supplier, at a price less than a price specified by the supplier as the price below which the goods are not to be sold;
(e) the supplier withholding the supply of goods to a second person for the reason that a third person who, directly or indirectly, has obtained, or wishes to obtain, goods from the second person:
(i) has not agreed not to sell those goods at a price less than a price specified by the supplier; or
(ii) has sold, or is likely to sell, goods supplied to him or her, or to be supplied to him or her, by the second person, at a price less than a price specified by the supplier as the price below which the goods are not to be sold; and
(f) the supplier using, in relation to any goods supplied, or that may be supplied, by the supplier to a second person, a statement of a price that is likely to be understood by that person as the price below which the goods are not to be sold.
(4) For the purposes of subsection (3):
(a) where a price is specified by another person on behalf of the supplier, it shall be deemed to have been specified by the supplier;
(b) where the supplier makes it known, in respect of goods, that the price below which those goods are not to be sold is a price specified by another person in respect of those goods, or in respect of goods of a like description, that price shall be deemed to have been specified, in respect of the first-mentioned goods, by the supplier;
(c) where a formula is specified by or on behalf of the supplier and a price may be ascertained by calculation from, or by reference to, that formula, that price shall be deemed to have been specified by the supplier; and
(d) where the supplier makes it known, in respect of goods, that the price below which those goods are not to be sold is a price ascertained by calculation from, or by reference to, a formula specified by another person in respect of those goods or in respect of goods of a like description, that price shall be deemed to have been specified, in respect of the first-mentioned goods, by the supplier.
(5) In subsection (4), formula includes a set form or method.
(6) For the purposes of subsection (3), anything done by a person acting on behalf of, or by arrangement with, the supplier shall be deemed to have been done by the supplier.
(7) A reference in any of paragraphs (3)(a) to (e), inclusive, including a reference in negative form, to the selling of goods at a price less than a price specified by the supplier shall be construed as including references to:
(a) the advertising of goods for sale at a price less than a price specified by the supplier as the price below which the goods are not to be advertised for sale;
(b) the displaying of goods for sale at a price less than a price specified by the supplier as the price below which the goods are not to be displayed for sale; and
(c) the offering of goods for sale at a price less than a price specified by the supplier as the price below which the goods are not to be offered for sale;
and a reference in paragraph (3)(d), (e) or (f) to a price below which the goods are not to be sold shall be construed as including a reference to the price below which the goods are not to be advertised for sale, to the price below which the goods are not to be displayed for sale and to the price below which the goods are not to be offered for sale.
Section 96A
Resale price maintenance in relation to services
(1) This Part applies to conduct in relation to services in a way that corresponds to the way it applies to conduct in relation to goods.
(2) For the purposes of subsection (1), this Part is to be read with appropriate modifications, including the following modifications:
(a) references in this Part to goods are to be read as references to services;
(b) references to the sale of goods are to be read as references to the re-supply of services.
Section 97
Recommended prices
For the purposes of paragraph 96(3)(b), the supplier is not to be taken as inducing, or attempting to induce, a second person as mentioned in that paragraph in relation to any goods:
(a) by reason only of a statement of a price being applied to the goods as mentioned in paragraph 99(1)(a) or being applied to a covering, label, reel or thing as mentioned in paragraph 99(1)(b), provided that the statement is preceded by the words “recommended price”; or
(b) by reason only of his or her having given notification in writing to the second person (not being a notification by way of a statement being applied as mentioned in paragraph (a)) of the price that he or she recommends as appropriate for the sale of those goods, provided that there is included in the notification, and in each writing that refers, whether expressly or by implication, to the notification, a statement to the following effect:
“The price set out or referred to herein is a recommended price only and there is no obligation to comply with the recommendation.”.
Section 98
Withholding the supply of goods
(1) For the purposes of paragraph 96(3)(d) or (e), the supplier shall be deemed to withhold the supply of goods to another person if:
(a) the supplier refuses or fails to supply those goods to, or as requested by, the other person;
(b) the supplier refuses to supply those goods except on terms that are disadvantageous to the other person;
(c) in supplying goods to the other person, the supplier treats that person less favourably, whether in respect of time, method or place of delivery or otherwise, than the supplier treats other persons to whom the supplier supplies the same or similar goods; or
(d) the supplier causes or procures a person to withhold the supply of goods to the other person as mentioned in paragraph (a), (b) or (c) of this subsection.
(2) Paragraph 96(3)(d) does not apply in relation to the withholding by the supplier of the supply of goods to another person who, within the preceding year, has sold goods obtained, directly or indirectly, from the supplier at less than their cost to that other person:
(a) for the purpose of attracting to the establishment at which the goods were sold persons likely to purchase other goods; or
(b) otherwise for the purpose of promoting the business of that other person.
(3) For the purposes of subsection (2), there shall be disregarded:
(a) a genuine seasonal or clearance sale of goods that were not acquired for the purpose of being sold at that sale; or
(b) a sale of goods that took place with the consent of the supplier.
Section 99
Statements as to the minimum price of goods
(1) For the purposes of paragraph 96(3)(f), if:
(a) a statement is applied to goods, whether by being woven in, impressed on, worked into or annexed or affixed to the goods or otherwise;
(b) a statement is applied to a covering, label, reel or thing in or with which goods are supplied; or
(c) a statement is used in a sign, advertisement, invoice, catalogue, business letter, business paper, price list or other document or otherwise in a manner likely to lead to the belief that it refers to goods;
the statement shall be deemed to have been used in relation to those goods.
(2) For the purposes of subsection (1), covering includes a stopper, glass, bottle, vessel, box, capsule, case, frame or wrapper and label includes a band or ticket.
Section 100
Evidentiary provisions
(1) Where, in proceedings under this Act by a person (in this section referred to as the plaintiff) against another person (in this section referred to as the defendant), it is claimed that the defendant has engaged in the practice of resale price maintenance and it is established that:
(a) the defendant has acted, in relation to the plaintiff, as mentioned in paragraph 98(1)(a), (b), (c) or (d);
(b) during a period ending immediately before the time when the defendant so acted, the defendant had been supplying goods of the kind withheld to the plaintiff or to another person carrying on a business similar to that of the plaintiff; and
(c) during the period of 6 months immediately before the time when the defendant so acted, the defendant became aware of a matter or circumstance capable of constituting a reason referred to in paragraph 96(3)(d) or (e) for the defendant’s so acting;
then, subject to subsection (2), it shall be presumed, unless the contrary is established, that that matter or circumstance was the reason for the defendant’s so acting.
(2) Subsection (1) does not apply where the plaintiff establishes the matter mentioned in paragraph 98(1)(b) or (c) but the terms disadvantageous to the plaintiff, or the less favourable treatment of the plaintiff, consisted only of a requirement by the defendant as to the time at which, or the form in which, payment was to be made or as to the giving of security to secure payment.
(3) In the application of this section in proceedings by the Commission for an injunction, references to the plaintiff shall be construed as references to a person specified in the application for the injunction as the person in relation to whom the defendant is claimed to have acted as mentioned in paragraph (1)(a).
Cases relating to RPM
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