Unlawful Price-Fixing: Brighton Music Shop, To Be Fined Up To £250,000, Pledges "Never Again"

The government's Competition and Markets Authority says it's expecting to fine a Brighton-based musical instrument retailer "GAK" up to around £250,000 for an apparent price-fixing agreement.

According to the authority, the shop had co-operated with instrument and technology company Yamaha to restrict on-line discounting of its musical instruments — a practice known as resale price maintenance (RPM).

The Competitions and Markets Authority (CMA) said it made a "provisional finding" that GAK would not reduce the Internet price of certain Yamaha products below a minimum price.

The law, according to the CMA, states that such behaviour is illegal under Chapter 1 of the Competition Act 1988, which prohibits agreements that are anti-competitive.

Any fine the company must pay has been increased by 15%, after the authority believed the price-fixing activity continued after GAK received an advisory letter from the authority, detailing its evidence that RPM might be taking place.

However, Yamaha avoided a fine, because the manufacturer was the first to bring the conduct to the CMA's attention.

The CMA said it also wanted to address the bigger picture, as it believes many other companies selling musical equipment and instruments are continuing to illegally fix prices in agreement with manufacturers.

The authority claimed it had developed automatic processes to monitor for this, by using music stores' websites:

"Building on its extensive efforts to monitor and address suspected RPM, the CMA has launched its own in-house price monitoring tool aimed at deterring companies from entering into agreements restricting online discounting.

"The new software will allow the CMA to automatically monitor price levels amongst musical instrument retailers, enhancing its market intelligence and benefitting consumers in the long-term.

"The CMA intends that this tool will be used to monitor suspicious pricing activity in other sectors in the future to help protect more customers purchasing online."

GAK has now promised to put in place new monitoring measures in the hope of ensuring such price maintenance does not happen again.

A spokesperson for the store said:

"Since the period covered by the CMA’s investigation, GAK has worked hard to become better informed and has put in place stricter monitoring, reporting and compliance processes.

"Yamaha terminated its Pricing Policy in early 2017, and GAK regrets implementing it across the highlighted period.  

"As a company, we are committed to giving all our customers the best prices and service possible across a wide range of products.

"Going forward, we believe the industry will be better for customers and retailers alike following the CMA’s action to terminate all such policies."