The guitar maker Fender has been fined £4.5m for price fixing by the UK’s competition watchdog as part of its clampdown on the musical instrument industry.
The Competition and Markets Authority imposed the penalty on Fender Europe for breaking competition law by preventing online discounting for its guitars. It is the biggest fine issued in Britain for this type of price fixing, which is known as resale price maintenance.
The penalty would have been £14.2m had Fender not admitted to the offence under the CMA’s leniency and settlement procedures. The firm said it had pursued a policy designed to restrict UK retailers from cutting their online prices.
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Fender Europe is the UK-based arm of the Arizona guitar manufacturer, which makes about $500m (£380m) in annual revenues. Its electric models include the Fender Stratocaster and Telecaster, as well as the cheaper Squier range.
The CMA started its investigation in 2018. Fender has already been fined £25, 000 for concealing notebooks at its European headquarters in East Grinstead.
The CMA said the firm pressured retailers to sell its guitars at or above a minimum price between 2013 and 2018, meaning customers shopping around for the best deal found little difference in cost. The guitars start at about £500 (£109 for Squier) but limited edition sets can cost up to £45, 000.
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The watchdog said Fender sometimes pressured retailers to raise their online prices, after being tipped off that the stockists were not toeing the line.
The investigation also found that certain Fender employees deliberately tried to cover up their actions by recording as little as possible in writing. But the CMA uncovered emails and texts from Fender’s IT servers and mobile phones, which helped to prove the illegal behaviour.
About £440m of musical instruments are sold in the UK every year, with guitars accounting for a significant proportion of that. About 40% of musical instruments are now sold online.
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Andrea Coscelli, the CMA’s chief executive, said: “It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price. This is especially important for expensive and popular items like guitars, and so Fender’s actions could have had a big impact on customers.
“Quite simply, this behaviour is against the law. The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences.”
Japan’s Casio was fined £3.7m last August for price fixing in relation to digital pianos and keyboards. The European commission fined four sound system manufacturers for similar behaviour in July 2018 – Philips, Pioneer, Asus and Denon.Fender has responded to the fine levied by CMA. A spokesperson for the company said in a statement: “Fender is committed to ensuring its business and employees comply at all times with anti-trust and competition laws and we co-operated fully with the Competition and Markets Authority in its investigation. The conduct identified by the CMA fell well below the highest standards we set ourselves and this is a matter of deep regret.
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“As a result of the investigation, we have taken additional steps to enhance our compliance procedures and our new EMEA executive team will continue to rigorously monitor the business’ adherence to anti-trust and competition laws.”
Fender Musical Instruments Europe Limited has been fined £4.5 million by the UK’s Competition and Markets Authority (CMA) for “preventing online discounting for its s”.
It’s the largest fine the CMA has issued for such an offence since keyboard maker Casio was fined £3.7 million last year. This penalty follows CMA’s provisional findings on the Fender case, which the authority revealed in 2019.
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In a new statement, the CMA says the manufacturer “has admitted to breaking competition law by pursuing a policy aimed at restricting UK retailers from discounting their online prices”. It is understood that Fender confessed under CMA’s “leniency and settlement procedures”.
From 2013 to 2018, the CMA reported that Fender “required its s to be sold at or above a minimum price”. The practice, known as as Resale Price Maintenance or RPM, is unlawful in the UK. Often times, it causes consumers to miss out on the best possible deal because, even after shopping around, they find most retailers are selling products at similar prices.
The CMA also reported that during the course of its investigation, “certain Fender employees deliberately tried to cover up their actions by recording as little as possible in writing”. However, the investigation brought to light emails and texts from Fender’s IT servers and mobile phones, proving the offences did in fact occur.
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This is not the first time Fender has been fined for breaking the CMA’s rules. In 2018, during an inspection of one of its sites, an employee was found to have been hiding relevant documents, resulting in a £25, 000 fine.
Andrea Coscelli, CMA Chief Executive, said: “It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price. This is especially important for expensive and popular items like s, and so Fender’s actions could have had a big impact on customers.
“The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences.”We use some essential cookies to make this website work. We’d like to set additional cookies to understand how you use , remember your settings and improve ernment services. We also use cookies set by other sites to help us deliver content from their services.
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Guitars make up a significant part of the wider musical instrument sector which has an estimated turnover in the UK of around £440 million annually. Online sales of musical instruments have grown to around 40% of total sales, making it even more important that musicians have access to competitive prices online.
Today’s move follows the Competition and Markets Authority’s (CMA) provisional findings on the Fender case in October 2019. The guitar manufacturer has admitted breaking competition law by pursuing a policy aimed at restricting UK retailers from discounting their online prices. The firm confessed under the CMA’s ‘leniency’ and ‘settlement’ procedures. Under these, a company admits acting illegally and co-operates in return for a reduced fine, which helps make the CMA’s investigation more efficient.
From 2013 to 2018, Fender required its guitars to be sold at or above a minimum price. This kind of illegal practice, known as resale price maintenance, often leads to customers missing out on the best deals because, even when they shop around, they find all retailers tend to be selling at a similar price.
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During the course of its investigation, the CMA found evidence that Fender on occasion pressurised retailers to raise their online prices, after being tipped off that they were not toeing the line.
Exploring the case further, the CMA also found that certain Fender employees deliberately tried to cover up their actions by recording as little as possible in writing. But the investigation uncovered emails and texts from Fender’s IT servers and mobile phones, which helped to prove the illegal behaviour.
It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price. This is especially important for expensive and popular items like guitars, and so Fender’s actions could have had a big impact on customers. Quite simply, this behaviour is against the law. The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences.
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As a result of Fender’s illegal actions, the CMA has fined it £4.5 million, which is the largest imposed in the UK for resale price maintenance. This comes just months after the CMA fined Casio £3.7 million for similar behaviour in relation to digital pianos and keyboards.
The CMA has produced guidance for businesses about RPM so they can make sure they play by the rules and avoid fines. Businesses can also watch the CMA’s short film that explains what RPM looks like in practice.
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