July 6, 2017: A top UK lighting manufacturer has been fined £2.7 million, and some other companies are receiving official warnings in a major price fixing probe in the industry.
The Competitions and Market Authority in UK, who probed the matter, fined one of UK’s leading companies, National Lighting Company, and its subsidiaries Saxby Lighting Limited, Endon Lighting Limited, and Poole Lighting Limited, for fixing light prices. It was found that National Lighting Company asked its distributors and retailers to use a minimum price while selling its luminaires online, which is a direct breach of competition laws. They have breached Chapter 1 of the Competition Act 1998 and/or Article 101 of the TFEU.
As a result, the distributors and retailers had to retail goods at, or above, this price. CMA, therefore, fined the companies a total of £2.7 million and this included an extra penalty due to their failure to respond to an earlier warning letter from the CMA. However, the companies also benefitted from a reduction in the fine as they applied for and were granted leniency and entered into settlement with the CMA.
This illegal practice is known as resale price maintenance, says the CMA. It means customers miss out on the best possible prices and cannot shop around for a better deal on that supplier’s products.
The penalty includes violations in relation to its commercial lighting brand Saxby and decorative lighting brand Endon and also an extra fine because the company ignored an earlier warning from CMA.
A warning letter is sent to a company when CMA have reasonable reasons to suspect anti-competitive behaviour. The warning should be taken seriously and it requires a considered response.
CMA is also in the process of sending a number of official warning letters to other companies in the light fittings domain, because it has found reasonable reasons to suspect they are also engaging in retail price fixing.
To help stop resale price maintenance, CMA has re-issued its advice to help lighting industry companies, and ensure that they do not breach law. This includes an open letter, a film on RPM and case studies, explaining how businesses can stay withing the limits of law.
In June 2017, CMA has also fined Automotive Lighting and Hella a total of €26.744 million for their participation in maintaining prices at a high level or low level, and restricting competition. This was related to their lighting systems. A third light system producer, Valeo, also participated in the cartel but received full immunity under the 2006 Leniency Notice for revealing the existence of the cartel.
The cartel concerned the supply of spare parts such as headlamps and daytime running lights to manufacturers of passenger and commercial vehicles. The Commission found that the three companies coordinated the prices and other trading conditions for the supply of the vehicle lighting systems across the European Economic Area (EEA) for over three years. The companies admitted to being involved in the cartel and agreed to settle the case. The fines imposed on Automotive Lighting and Hella therefore include a reduction to reflect their cooperation with the investigation.