Hitting the right note? The CMA's Casio decision

Video | October 2019 | 05:23

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Hitting the right note? The CMA's Casio decision
Clio Angeli  Hi Richard, thank you for being with us today. So earlier this year, on 1 August, the UK CMA adopted a decision against Casio. They were fined £3.7 million for their practice of imposing minimum resale prices on their retailers that were in charge of selling online their musical instruments. The infringement lasted from 2013 to 2018. It appears that Casio had a very strong system in place to ensure that retailers would comply, that included monitoring software and also relying on retailers telling on each other basically. Could you tell us a little bit more about the case?
Richard Whish QC
Well, no, I think that outlines the facts of it perfectly. I suppose what one could add is the fine here was £3.7 million, so that’s the biggest fine that the CMA has imposed in an RPM case yet. There have been three earlier ones, the first was Bathroom Fittings, that was £786,000 and there was Commercial Refrigerators, £2.3 million, then the next one was Light Fittings, £2.7 million. So, you know, it’s part of a progression of cases. And clearly the CMA does not like this type of behaviour, it just regards it as resale price maintenance and it will be punished. 
Clio Angeli It actually seems to be a larger enforcement trend. The European Commission last year, against a few consumer electronics manufacturers, also adopted a fine for RPM. Why do you think this is becoming a trend after years of having very few cases on the topic?
Richard Whish QC
Well, if you look around the ECN generally, over many years, you’ll find that something like 90 per cent, I think, of Article 101 enforcement cases are at NCA level. And if you then look at the 101 cases enforced by NCAs you’ll find that a significant proportion are vertical cases. So I think what’s been going on is that the Commission has concentrated on the big abuse of dominance cases, the big cartel cases, and the vertical enforcement has been at NCA level. And, of course, companies do tend to have national distribution policies, so there is a certain kind of inevitability, I think, that the enforcement is more national then European. The case you referred to there – or cases – were those four electronics manufacturers and they were fined in four different decisions but cumulatively that was €110 million. And I think that just grew out of the e-commerce sector study that the Commission did, so it identified this particular problem and then has moved on to enforcement in individual cases. But I’m sure in the future there will continue to be a lot of enforcement at national level.
Clio Angeli
And as you were just explaining, now the CMA seems to be particularly active in enforcing against RPM practices.
Richard Whish QC Apart from these fines, of course, the CMA is now using its power to seek company director disqualification in a lot of cases and it may well be in the future that in a case like this they might go for that option as well.
Clio Angeli
Going back to Casio, in the specialised competition law press, it’s been reported that that case could show that competition authorities, going forward, will struggle to keep up with companies and their progress in the digital area. Because here Casio used, kind of, a software to monitor prices adopted by the retailers to make sure that the retailers were compliant. This still seems to be quite a few steps away from AI taking over and doing infringements on their own motion.
Richard Whish QC  Well, people love to get over excited about competition law and AI and, one of my maxims in life is keep calm and carry on. I don’t see any difference between, you know, many years ago the producer of tennis balls imposing RPM in shops and then sending human beings around to the shops to find out what the price was, and in this day and age, instead of sending a human being to look at what’s happening, using an algorithm to find out what’s happening. I don’t see any conceptual difference between the two, actually. That’s a totally different question from whether algorithms will start colluding with one another, I mean, let’s wait for such a case and decide how to deal with it. I would just make the point though that just as an employer is responsible for what its employee does, the owner of software is responsible for what its software does, so that’s a fairly key point to bear in mind for the future, I think.
Clio Angeli
Thank you very much, Richard.