Legal Update: Resale Price Maintenance – A Hidden Risk That Could Cost Millions
Do you think your pricing strategy is airtight? Think again! Resale price maintenance (RPM) is one of the few business practices that is automatically illegal under Australian competition law. If your business supplies goods or services to resellers, even well-intentioned pricing controls could expose you to substantial penalties.
Here is what you need to know to stay compliant and protect your business.
What Is RPM and Why Does It Matter?
RPM occurs when a supplier tries to control the minimum price at which a reseller sells, advertises, or promotes goods or services. This includes requiring resellers to sell at or above a set price, threatening to withhold supply or offering less favourable terms if the reseller discounts, and offering incentives conditional on maintaining a minimum resale price. While recommended retail prices and maximum resale prices are allowed, they must not be enforced as minimum prices.
The Legal Bite: Penalties Can Be Severe
RPM is a strict liability offence under section 48 of the Competition and Consumer Act 2010 (Cth) (Act). That means if you do it, you are liable, regardless of intent. Penalties include for corporation, the greater of $50 million, three times the benefit obtained, or 30% of annual turnover and for individuals up to $2,500,000. This is a priority area for enforcement for the Australian Competition and Consumer Commission (ACCC).
Can You Get Immunity? Yes—But Act Early
Notification to the ACCC is the primary method by which businesses seek immunity. Once the notification has been lodged with the ACCC, businesses have immunity after a waiting period, unless the ACCC withdraws the notification. The ACCC can authorise RPM, but this does not happen much as the ACCC needs to be satisfied that the conduct delivers a net public benefit, which is high hurdle.
If a business has commenced conduct that may fall within the definition of RPM, it will be too late to explore either of these alternatives.
Recent Enforcement: The ACCC Is Watching
The ACCC has ramped up enforcement, with recent enforcement actions including:
last month when Connected Audio Visual Pty Ltd, a supplier of dash cam and car audio products, admitted to engaging in RPM, gave an enforceable undertaking to the ACCC and agreed to implement a compliance program to comply with the Act (see link); and
in 2024 when MSA 4x4 Accessories Pty Ltd (see link) and Offroad Animal Pty Ltd (see link) suppliers in the offroad vehicle market also admitted to engaging in RPM and they each gave enforceable undertakings to the ACCC; and
in 2023 when Techtronic Industries Australia Pty Ltd fined $15 million for RPM involving ‘Milwaukee; branded power tools (see link).
These examples of enforcement action from the ACCC show that even the practices of niche or specialist suppliers are not immune from scrutiny.
What Should You Do Now?
If your business supplies products or services to resellers, now is the time to review your pricing policies and communications, train staff on RPM risks and consider seeking authorisation or lodging a notification if you are contemplating conduct that may raise concerns.
Need Help?
We regularly advise suppliers on RPM compliance and ACCC engagement. If you would like a pricing policy review or assistance with authorisation or notification, Winston Lay and Michael Truelove from our commercial team are here to help.