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Distributor warned about anti-competitive conduct

11 September 2006/no 038

Distributor warned about anti-competitive conduct

The Commerce Commission has warned Digitalblue Ltd that it risked breaching the Commerce Act when it told Dick Smith Electronics not to advertise an iPod accessory below a certain price.

In November 2005, a Digitalblue employee sent an email to an account manager at Dick Smith Electronics saying that the IM7 iPod accessory should not be advertised for sale at less than 95% of Digitalblue’s suggested retail price. The email said that, if Dick Smith Electronics advertised the product at more than 5% discount, Digitalblue would stop supplying it to them.

After receiving a complaint from Dick Smith Electronics, the Commission investigated and concluded that the email placed Digitalblue at risk of contravening, or attempting to contravene, section 37(3)(b) of the Commerce Act.

Section 37(3)(b) prohibits a supplier from inducing or attempting to induce a reseller not to sell goods supplied by the supplier for less than a price specified by the supplier.

Commerce Commission General Manager Geoff Thorn said the warning was a serious matter for the company.

“Digitalblue should consider very carefully the implications of any future communications with retailers regarding retail prices for goods. This kind of communication must not occur again.”

The Commission’s warning is not a ruling of law as only the Courts may determine whether conduct is in breach of the Commerce Act.

ENDS

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