ITW found guilty of preventing online discounting of its Foster refrigeration

Manufacturer of the Foster brand of catering fridges ITW has been fined £2,298,820 by the Competition and Markets Authority (CMA) after restricting dealers from online discounts.

The fine was reduced by 10% after ITW set up a training programme for its staff to comply with competition law and a further 20% to reflect the company’s admission and co-operation.

The CMA had issued a formal allegation against ITW in January 2016, and the business has now admitted that it engaged in resale price maintenance (RPM) in internet sales of its Foster commercial fridges from 2012 to 2014.

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RPM is vertical price-fixing in which a supplier restricts the ability of a retailer to determine the price at which it will resell the supplier’s products, for example by requiring the dealer to sell at a particular price or only above a minimum price. The practice is illegal because it stops dealers setting their prices independently to attract more customers. 

Foster Refrigerator operated a ‘minimum advertised price’ policy and threatened dealers with sanctions, including threatening to charge them higher cost prices or stopping supply if they advertised below that minimum price. It found that Foster’s minimum advertised price policy constituted RPM because it prevented dealers from deciding the resale price for those goods. 

The CMA has sent warning letters to 20 other businesses in the commercial catering equipment sector which it suspects may have been involved in similar internet sales practices, including manufacturers and their dealers. However, the CMA pointed out a warning letter does not itself mean that a company has been found to have broken competition law.