The Competition and Markets Authority (CMA) has fined Fender Europe £4.5 million for breaking competition law by illegally preventing online discounts for its guitar products in the UK.
According to the CMA, Fender Europe required its guitars to be sold at or above a minimum price, formally known as resale price maintenance. This resulted in customers unable to shop around for the best price, the UK regulator confirmed.
The ruling follows the CMA’s provisional findings on the Fender case in October 2019. Fender said it cooperated with the investigation and has changed its practices.
The fine is the largest penalty the regulator has ever handed down for such behaviour. It follows a £3.7m penalty for keyboard maker Casio Electronics for similar practices.
Guitars account for a large part of the UK's £440m in total instrument sales - 40% of which take place online, the regulator stated.
“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,” said Andrea Coscelli, CMA chief executive.
What the CMA ruling against Fender means for affiliate?
The voucher code ecosystem continues to shift as consumer behaviour and buying habits constantly change. Online discounts in the affiliate space remains a key driver for affiliate and publisher types and particularly has a major influence in the customer buying journey online.
Sharing her thoughts on the CMA Fender ruling, Groupon Reach Network’s client services manager Jessica Brown commented that the figure for stopping online discounts is significantly huge and something the affiliate industry should take notice of.
“A £4.5 million fine for stopping online discounts is a huge figure - but in context (depending on whether Fender prices have changed since the ruling or not) you’re only actually looking at 3,000 guitars,” she said.
“For everyone else in the industry, that fine is something to sit up and take notice of. What’s really interesting is that a blanket ban of discounting in any shape or form by suppliers has led to this fine by the CMA. According to them, it comes down to “anti-competitive” behaviour.”
“Shoppers expect to be able to find the best possible deals when they make a purchase - it’s one of the key research points behind a significant buying decision.”
Brown added that retailers looking to maintain margins and price perception have access to more legal options aside from discount codes to maintain their margins and price perception, such as gift card incentives as they don’t include discounting at all.
“The issue here, of course, is suppliers artificially maintaining a specific price. This means consumers aren’t getting the best deal because that competition doesn’t exist,” Brown concluded.