The Australian Competition and Consumer Commission grants first resale price maintenance authorisation to a power tools manufacturer (Tooltechnics)
Julie Clarke
e-Competitions Bulletin March 2015, Art. N° 72020
Abstract/summary
On 5 December 2014 the Australian Competition and Consumer Commission (ACCC) granted its first authorisation in relation to resale price maintenance (RPM). RPM is per se prohibited in Australia. Although an authorisation (exemption) mechanism for RPM, determined on public benefits grounds, has been available in Australia since 1995, this application was the first to be made to the ACCC.
The authorisation application was made by Tooltechnic Systems (Aust) Pty Ltd (Tooltechnic), an importer and wholesaler of Festool power tools in Australia. Tooltechnic claimed that the specialised and complex nature of its products necessitated high levels of service and that this service provision was being put at risk by the ‘free riding’ practices of some of its retailers.
The ACCC accepted that there was market failure caused by the free riding of some existing Festool retailers. It concluded that, while there was public detriment associated with the proposed RPM conduct, this was likely to be limited (in particular due to Tooltechnic’s limited market share and the highly differentiated nature of the products) and, on balance, the likely public benefits associated with improved pre-and post-sales services (which would be encouraged by the proposed RPM conduct) would outweigh this detriment. On this basis authorisation was granted for a period of four years, subject to some reporting obligations.
