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Here is the announcement published on the gov.uk website by the CMA:
Guitars make up a significant part of the wider musical instrument sector which has an estimated turnover in the UK of around £440 million annually. Online sales of musical instruments have grown to around 40% of total sales, making it even more important that musicians have access to competitive prices online.
Today’s move follows the Competition and Markets Authority’s (CMA) provisional findings on the Fender case in October 2019. The guitar manufacturer has admitted breaking competition law by pursuing a policy aimed at restricting UK retailers from discounting their online prices. The firm confessed under the CMA’s ‘leniency’ and ‘settlement’ procedures. Under these, a company admits acting illegally and co-operates in return for a reduced fine, which helps make the CMA’s investigation more efficient.
From 2013 to 2018, Fender required its guitars to be sold at or above a minimum price. This kind of illegal practice, known as resale price maintenance, often leads to customers missing out on the best deals because, even when they shop around, they find all retailers tend to be selling at a similar price.
During the course of its investigation, the CMA found evidence that Fender on occasion pressurised retailers to raise their online prices, after being tipped off that they were not toeing the line.
Exploring the case further, the CMA also found that certain Fender employees deliberately tried to cover up their actions by recording as little as possible in writing. But the investigation uncovered emails and texts from Fender’s IT servers and mobile phones, which helped to prove the illegal behaviour.
Andrea Coscelli, CMA Chief Executive, said:
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.
Quite simply, this behaviour is against the law. The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences.
As a result of Fender’s illegal actions, the CMA has fined it £4.5 million, which is the largest imposed in the UK for resale price maintenance. This comes just months after the CMA fined Casio £3.7 million for similar behaviour in relation to digital pianos and keyboards.
The CMA has produced guidance for businesses about RPM so they can make sure they play by the rules and avoid fines. Businesses can also watch the CMA’s short film that explains what RPM looks like in practice.
A public version of the CMA’s final infringement decision will be published in due course.
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Comments
Call me cynical but I bet they did some calculation and work out the cost of a potential fine vs profit and just budgeted for it.
Could have ordered fender to give away 4.5k Strats instead
Interesting that the musical instrument sector has a total UK turnover of £440M, which is very modest indeed.
Whilst Joe Public are happy to sacrifice quality of service for a few quid in savings, nothing will change.
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Just because you're paranoid, don't mean they're not after youI suppose should qualify that for legal reasons. I’m not accusing those companies of price fixing. But anybody making that accusation could ask questions about why their UK pricing is remarkably constant across all their outlets.
It won't include used sales, be it via e-bay, reverb, FB or dealers who sell used
But yes it shows what a small industry we are - Was it mentioned earlier on FB, and via an Anderton's interview, back in 2019, that they achieved around £40 million (might have been more) - But around 10% of the UK sales - Add major accounts like PMT, GuitarGuitar, GAK for starters and you can see how polarised sales are now, to a few large accounts
Then add that Thomann sales are around 600 million Euros, might be closer to 700 million now - So one EU dealer is bigger than the UK
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Just because you're paranoid, don't mean they're not after youI'm not going to hazard a guess on the operating profit of that £53m, but if retail price maintenance has netted them an extra 10% over and above what most of the guitars would have sold for, that's close to an additional £5m turnover per year - or ~£30m from 2013-18.
Again, I'm completely making the numbers up here, but it's an interesting little exercise to do and, given that there are no costs beyond the court case, this might have been their most successful marketing campaign of the 21st Century to date.