Tooltechnic Systems (Aust) Pty Ltd - RPM20181
Australian Competition and Consumer Commission
Notification: RPN10000450
25 July 2018
Notification number
RPM20181
In brief
In November 2017 ‘notification’ became available for RPM conduct. Parties could therefore notify the ACCC of proposed RPM conduct and that conduct would be permitted after 28 days unless and until the ACCC provided a draft notice objecting within that period and continues unless and until the ACCC revokes notification or the notification is withdrawn. The ACCC can only revoke RPM notifications were satisfied the public benefit will not outweigh the public detriment.
Tooltechnic lodged an application in February 2018. It had previously received authorisation for some the notified conduct that relating to Festool products). The conduct proposed requiring dealers not to sell Fein or Festool products below a nominated price.
The ACCC concluded that while there was detriment, there were countervailing benefits that outweighed that detriment. It therefore allowed the notification to stand.
Summary
[from ACCC notification register]
On 12 February 2018, Tooltechnic lodged a resale price maintenance notification. Tooltechnic is proposing to:
require dealers to not sell any Fein product below a price(s) nominated by Tooltechnic (this is a new arrangement)
require its dealers to not sell any Festool product below a price(s) nominated by Tooltechnic (this continues an existing arrangement authorised by the ACCC in 2014).
The legal protection provided by Tooltechnic’s notification automatically commenced on 12 March 2018. The ACCC can revoke a notification if it is satisfied that the likely benefit to the public from the notified conduct will not outweigh the likely public detriment from the conduct.
The ACCC sought submissions from interested parties and conducted discussions with a number of dealers. Public submissions are available from the Submissions link. In considering this notification, the ACCC has had an unusual opportunity to closely review evidence as to the effects of Tooltechnic’s Festool RPM conduct since 2014.
On 24 July 2018 the ACCC issued a Statement of Reasons explaining its decision to take no further action at that time. This means that the legal protection provided by Tooltechnic’s notification will continue unless it is revoked.
The ACCC concluded that the loss of discounting entailed by RPM is a clear detriment to consumers. However, in the unique circumstances of Tooltechnic’s notification, the ACCC considered that the information it had obtained did not enable it to be satisfied that this clear detriment to buyers of Fein and Festool products would not be outweighed by benefits arising from the conduct.
In particular, feedback from dealers suggests that setting a guaranteed minimum price for these products has given a large network of Festool/Fein dealers the certainty they need to invest in facilities and staff to provide better levels of pre- and post-sales retail services. This results in consumers being able to make more informed decisions about the purchase and maintenance of these relatively complex products. The ACCC considers that this may also be likely to result in increased service-based competition between Festool/Fein power tool dealers (particularly enabling smaller dealers to better compete with larger dealers) and promote inter-brand competition.
Further, while there is clear detriment in this case, it is likely to be reduced by the fact that Festool and Fein have relatively low market shares and face numerous competitors.
On balance, the ACCC concluded that it was not satisfied that the legal test to revoke the notification was met at that time. The ACCC may revisit this assessment at any time and take steps to remove the protection provided by the notification.
Solicitors for Tooltechnic
MinterEllison
Attribution
[Attribution of quotes/extracts: ACCC, © Commonwealth of Australia. Licenced CC BY 3.0 AU]