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May 1, 2019

Australian’s competition regulator revokes minimum price-setting request from Meredith Dairy

Australia's competition regulator has issued a draft notice to cancel a minimum price request by Meredith Dairy. 

By Dean Best

Australia’s competition regulator has issued a draft notice to cancel a request by Meredith Dairy that would prevent retailers from selling its goat’s cheese products below a minimum price. 

Meredith Dairy submitted a so-called resale price maintenance (RPM) notification to the Australian Competition and Consumer Commission (ACCC) claiming that “smaller” retailers are advertising special deals to compete with “larger” retailers and major supermarket chains. The company also said discounting by some retailers is leading to demands from other retailers for lower wholesale prices so they can match the discounts.

Roger Featherston, the ACCC commissioner, said: “The proposed minimum retail prices would mean retailers who are currently offering cheeses at lower prices to consumers could no longer do so. It would also reduce the competitive pressure on other retailers to offer lower prices, including major supermarket chains.”

However, “we consider that the proposed conduct would not result in a net public benefit,” Featherston added. “We believe retailers should be allowed to charge customers prices as they see fit in a competitive market and not be forced to set prices according to Meredith Dairy’s wishes.”

Under Australian law, it is illegal for a supplier to attempt to set a minimum price for products or services, according to the ACCC. However, a supplier may recommend that resellers charge an appropriate price for particular goods or services. A supplier may also withhold the supply of goods when a retailer has sold the goods at a price below cost for the purpose of attracting customers.

In coming to its decision, the ACCC said “Meredith Dairy has not presented evidence that the ongoing price competition at the retail level will jeopardise ongoing investment in its business”.

Meredith Dairy and interested parties can comment on the draft notice before the ACCC makes a final decision.

Businesses may obtain legal protection for RPM conduct by lodging a notification with the ACCC. Once lodged, protection for the notified RPM conduct begins automatically 14 calendar days after the notification was lodged, unless the ACCC issues a draft notice objecting to the notification within those 14 days.  

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