Homebrew supplier in trouble with ACCC over resale prices

Posted by AFN Staff Writers on 29th February 2012

There are big legal risks for any food supplier who serves to maintain retail prices by arrangements with retailers.  This has been highlighted by a new legal action against a supplier this week.

Australian manufacturer and wholesaler of essences for alcoholic products to homebrew shops nationwide, Edwards Essences Pty Ltd, has acknowledged that it engaged in resale price maintenance in undertakings that is has now provided to the Australian Competition and Consumer Commission (ACCC).

Resale price maintenance is where a supplier requires a business customer to not sell goods below a minimum price specified by the supplier. This limits the ability of the retailer to advertise discounts for the products, which is essential for retailers who wish to engage in price competition.

“Businesses must be free to sell their products at prices below suppliers’ recommended retail prices if they wish,” ACCC Chairman Rod Sims said. 

“Consumers like to shop around in order to get the best deal. This encourages businesses to compete on price and enables consumers to buy at lower prices. The ACCC takes seriously any attempts by suppliers to prevent discounting of their products, which affects the fundamental right of traders to compete for business”.

In response to an ACCC investigation, Edwards Essences acknowledged that it had made known to a distributor on two separate occasions that it should not sell goods supplied to it by Edwards Essences at a price less than the recommended retail price specified.

The ACCC has accepted court-enforceable undertakings. Edwards Essences has undertaken that:

  • it will not engage in resale price maintenance;
  • it will write to all Edwards Essences distributors to advise them:
  • of their freedom to set their own prices for Edwards products, and
  • that they should not place pressure on other distributors who offer discounted prices on Edwards products, and should not seek to induce Edwards to take action against dealers who offer discounted prices.
  • its Director will attend trade practices compliance training.