On 13 June 2014, the Competition and Markets Authority (the “CMA”), the Office of Fair Trading’s successor, closed its investigation into allegations of illegal pricing agreements between sports bra manufacturer DB Apparel and three UK department stores. Having carefully reviewed the evidence in the case, including the representations of the parties concerned, the CMA decided that there are no grounds for further action.
On 20 September 2013, the OFT issued a Statement of Objections (the “SO”) to DB Apparel, John Lewis plc, Debenhams Retail plc and House of Fraser (Stores) Limited alleging that, between 2008 and 2011, DB Apparel entered into nine resale price maintenance agreements with the three retailers. It was further alleged that by setting fixed or minimum resale prices, the aim of the alleged agreements was to increase the retail prices of DB Apparel’s Shock Absorber brand of sports bras in each of the three department stores. Between 2008 and 2011, DB Apparel’s Shock Absorber brand of sports bras had a market share of approximately 15% and was one of the leading brands on the UK market.
After the SO was issued and on re-examination of the evidence in light of the written and oral submissions by the parties, the CMA concluded that it could no longer rely on the documentary evidence used by the OFT to reach its finding of infringement. In particular, the CMA considered that the explanations provided by the parties in relation to their e-mail correspondence were credible, and materially undermined its ability to rely on that evidence. Accordingly, the CMA closed the case.
In closing the case the CMA reiterated that it continues to view resale price maintenance to be a serious offence, that it will continue to investigate such arrangements, as appropriate. Beyond this, the course of this investigation has highlighted the importance of ensuring that communications between brand holders and distributors are clear, such that they cannot be misconstrued or misinterpreted.