The Competition and Markets Authority has fined electronic musical instrument maker Korg £1.5 MILLION for breaking the law after instructing resellers to fix minimum prices on items sold online.
The report states that between June 2015 and April 2019, Korg instructed resellers to fix prices and not sell their goods below those prices. The Competition and Markets Authority report says Korg had a policy of monitoring their online resellers; to make sure they stuck with the pricing policy as part of the illegal practice known as Resale Price Maintenance (RPM).
Korg threatened its resellers with ‘sanctions’ if they did not comply and sold goods at lower prices, with sanctions including restricting resellers from accessing popular product ranges, and ‘considering’ to close reseller accounts or withholding financial support.
The report details how Korg used a combination of price-monitoring software to monitor all product prices to ensure resellers were selling items for a higher price than Korg. The instrument manufacturer also relied on resellers reporting on one another, with witnesses telling the authority that anyone found to be undercutting Korg, or other resellers, could be reported.
Price monitoring software is legal. When used correctly these systems are designed to encourage reseller competition; However, Korg was found to be misusing the tools in attempts to keep their own prices lower than their reseller’s prices.
The Competition and Markets authority fined Korg £1.5 million for engaging in RPM practices. The report states the fine was increased due to senior management involvement and because the illegal behaviour was considered intentional; with staff knowing the practice was illegal and trying to hide it.