The Kings-Lynn-based company, a division of ITW Ltd, is alleged to have introduced a minimum advertised price for internet sales, which effectively limited the ability of retailers of their products to make online sales below a specified price level. The CMA alleges that this is a form of resale price maintenance and infringes competition law.
The CMA’s findings are provisional and no final conclusion has been reached regarding whether there has been a breach of competition law. The CMA says it will carefully consider representations from Foster before reaching a final decision on whether the law has been infringed.
CMA director Ann Pope said: “The internet has driven innovation in retail markets. Where “traditional” businesses operating through bricks-and-mortar shops face intense price competition from online sales, suppliers may be tempted to respond by introducing practices, like minimum advertised prices, that restrict such competition.
“Retailers should be free to set their own sales prices online. This drives competition among rival retailers because they compete to attract consumers who are using the internet to shop around for the best deals.
A statement from the company this morning said: “Foster is committed to complying with relevant competition law and is cooperating fully with the Competition and Markets Authority. Whilst the investigation is ongoing Foster will make no further comment at this time.”
The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
The allegations relate to infringements of the Chapter I prohibition of the Competition Act 1998 and/or Article 101 of the Treaty on the Functioning of the European Union (TFEU) between 2012 and 2014.
The Chapter I prohibition covers anti-competitive agreements, concerted practices and decisions by associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition within the UK or a part of it and which may affect trade within the UK or a part of it. Article 101 of the TFEU prohibits such anti-competitive agreements, concerted practices and decisions by associations of undertakings which may affect trade between EU member states.
A company found to have infringed the Competition Act 1998 could be fined up to 10% of its annual worldwide group turnover.
The CMA first opened investigations into suspected anti-competitive practices in the commercial catering equipment sector at the end of August 2014.