Kitchen mixer discount threat prompts regulator warning

One of Kitchen Aid's high end mixers. The Commerce Commission has reminded the distributor of such mixers about 'resale price maintenance' - where retailers feel they cannot discount. Photo / Janna Dixon

A kitchen mixer supplier has been warned by the Commerce Commission about the perils of trying to keep retailers from discounting products.

The behaviour of Peter McInnes Ltd, which supplies the Kitchen Aid brand of mixers prompted a complaint to the regulator from a retailer, saying it had been told that if discounts were offered on the mixers supply would be stopped.

"The commission has made preliminary enquiries into this allegation and is concerned that some retailers are afraid that if they discount Kitchen Aid Mixers below the recommended retail price Peter McInnes will stop supplying to them," says an official compliance letter sent to the company.

"The commission also is concerned about what we understand to be Peter McInnes' practice in this country of not providing advertising support to retailers that consistently discount Kitchen Aid Mixers."

Based on the information it had, the Commerce Commission said it was its view that the practice might constitute "inducing, or attempting to induce retailers not to discount the price of Kitchen Aid Mixers.".

In its letter, the Commission says it is not going to investigate the matter further, but "would like to take this opportunity to ensure Peter McInnes is aware of its obligations under the Commerce Act.

A compliance advice letter like that sent out in this case should not, says the Commerce Commission, be taken as "evidence that there was any wrongdoing on the part of the recipient".

It is a breach of Section 37 of the Commerce Act if a supplier of goods specifies a minimum resale price and "takes certain actions to enforce that specified price."

Suppliers are allowed to recommend retail prices, but are not allowed to do anything or try to enforce that as a minimum price. This is known as "resale price maintenance".

The Commerce Commission says that suppliers cannot:

- enforce a recommended price for goods
- pressure a retailer to stop discounting
- refuse to supply or punish a purchaser who sells goods below the recommended retail price
- offer a retailer an incentive or special deal if the retailer agrees to stop offering discounts for goods.

- NZ HERALD ONLINE