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Suppliers restricting retailers’ prices

The Competition and Markets Authority (CMA) has written an open letter to businesses alerting them that, if suppliers restrict their retailers’ prices, they could be breaking the law.

Resale price maintenance (RPM) occurs when a supplier and a retailer agree that the retailer will not resell or advertise the supplier’s products below a specified price.

RPM can also be achieved indirectly, for example as a result of restrictions on discounting or where there are threats or financial incentives to sell at a particular price. Merely setting a ‘recommended’ retail price is not, however, against the law, provided that there are no attempts to enforce compliance with the recommended retail price. RPM agreements are usually illegal as they can prevent retailers from being able to offer lower prices to attract customers, or to sell off surplus stock. The CMA has produced a short video to explain what RPM looks like in practice.

This is a particularly important issue as online sales channels develop, with restrictions on discounting for internet sales capable of being illegal RPM.

You can access user-friendly advice on the law, how to comply and what to do if you suspect another business is breaking the law on the GOV.UK website.

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