Ooops! Guitar maker Fender fined £4.5m for price fixing in UK

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Ooops! Guitar maker Fender fined £4.5m for price fixing in UK

Unread post by Saul »

Fender_fined.jpg
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.
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Re: Ooops! Guitar maker Fender fined £4.5m for price fixing in UK

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Quite right!

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Re: Ooops! Guitar maker Fender fined £4.5m for price fixing in UK

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So, what now?

In some way the amount of that fine will be passed on in the wholesale prices, so either the consumers will have to pay more or the retailers will have to lower their margins...


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Re: Ooops! Guitar maker Fender fined £4.5m for price fixing in UK

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EXer wrote: Thu Jan 23, 2020 10:31 am So, what now?

In some way the amount of that fine will be passed on in the wholesale prices, so either the consumers will have to pay more or the retailers will have to lower their margins...
Exactly! All this does is give Fender a very light slap on the wrist for being caught doing it. You can be sure they are not the only ones. Casio got caught out also. Who is next? And how does all this affect the consumer. Will we see lower prices from Fender? Definitely not.


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Re: Ooops! Guitar maker Fender fined £4.5m for price fixing in UK

Unread post by shelly0624 »

It seems that when I look at the cost of instruments on music websites, they all have the same prices straight across the board, with the exception of some who charge more. The only ones that go below are the "open box" or "scratch and dent" items. I've read user reviews on those websites where the customer bought one that was supposed to have a small cosmetic flaw and there wasn't one. (They were delighted of course). Makes you wonder if there is an expectation placed on retailers to stay at the price point. by a LOT of brands. Unofficially. There are always sales, of course. Guitar Center has good ones, but for the most part, I rarely see anything below "suggested" retail price. Maybe I'm not looking in the right places.


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Re: Ooops! Guitar maker Fender fined £4.5m for price fixing in UK

Unread post by Saul »

In the USA you have a think called 'MAP' which is the "minimum amount that resellers agree not to advertise below". That is the reason they all seem to be selling for the same price...or more.

There a loophole though. But it advantages online stores over the bricks and mortar variety.

Online stores advertise the MAP price but once you get to the checkout they can legally add a discount at that point.

Naturally there are people trying to close that loophole because it gives online stores an unfair advantage over the b&m stores.

In the UK it is very different. We have a RRP (recommended retail price) but it is entirely up to the reseller to decide what price they will sell for. Makes it a much more competitive market and often results in some genuine bargains for the buyer.

We also have massively stronger consumer protection laws here. (Y)


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Re: Ooops! Guitar maker Fender fined £4.5m for price fixing in UK

Unread post by balston11 »

I understand that Yamaha are also being investigated
see https://www.telegraph.co.uk/news/2018/0 ... facturers/


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