The Commerce Commission has issued a draft determination on HP New Zealand’s application to engage in resale price maintenance, saying HP New Zealand Limited (HP) should be allowed to engage in resale price maintenance (RPM) in relation to its proposed HP online stores and HP online marketplace stores.
Resale price maintenance means a supplier of goods enforces, or tries to enforce, a minimum price at which the reseller must on-sell those goods.
Resale price maintenance prevents resellers from setting their prices independently and can lead to increased prices for consumers. The Commission says “It is a form of anti-competitive conduct and is unlawful.”
The Commission made an example of Morning Star Computer Ltd in 2006 when the wholesaler of computer parts and systems told its resellers not to advertise six products for sale below the recommended retail price.
Morning Star Computer had threatened to increase wholesale prices to the resellers if they advertised the products below the recommended retail prices, and the Commerce Commission issued proceedings in the High Court leading to a $50,000 fine.
On 22 March 2021, HP applied for authorisation to engage in RPM in relation to its HP stores. The conduct for which HP sought authorisation involved HP specifying the prices for which a third-party distributor will sell HP products to consumers on the HP Stores. The Commission has reached a preliminary view that authorising RPM, in this case, is likely to lead to a net public benefit and that it would be appropriate to grant authorisation for 5 years.
HPNZ is a member of the HP group. Its US-listed parent company, HP, is a manufacturer of HP-branded technology products including desktop computers, notebooks, printers and related accessories. While HPNZ imports, distributes and supplies HP products in New Zealand through its network of authorised distributors, resellers and retailers, HPNZ does not currently sell direct to consumers in New Zealand through an online platform.
In April, the Commission sought feedback on competition issues resulting from the RPM.
The 22-page draft determination can be read in full on the Commerce Commission website.
The Commission’s preliminary view is based on its assessment of the likely benefits and detriments. The Commission considers that the HP stores are likely to provide many of the customer-experience benefits claimed by HP, while the RPM for which HP seeks authorisation is unlikely to cause any detriments and will only apply to products sold through the HP stores.
Interested parties are welcome to make submissions on the draft determination. Submissions are due by 5 pm on 20 August 2021 and can be sent to [email protected], with the reference “HP Authorisation” in the subject line.