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Digital piano manufacturer sanctioned to the tune of £3.7 million for not playing by the rules

Posted: 05/08/2019

The Competition and Markets Authority (CMA) has fined Casio Electronic £3.7 million for breaking competition law by preventing downstream retailers from setting their own online prices for Casio products.

The CMA found that, between 2013 and 2018, the well-known manufacturer of digital pianos and keyboards had instructed retailers that their online sales had to be at, or above, a certain price. The resale price maintenance (RPM) was then enforced by Casio’s adoption of online software to monitor prices in real time, allowing it to pressurise its retailers to change their online prices when they fell below a certain level. Retailers were also encouraged to report on each other to Casio if they suspected that discounts were being applied.

While the CMA has in recent years enforced RPM decisions against manufacturers in other sectors (including online sales of light fittings and commercial refrigeration), the fine imposed on Casio is the largest by the CMA to date for this type of illegal anti-competitive behaviour. This is indicative of an increased readiness on the part of both the CMA and the European Commission (EC) to take action against suppliers who seek to control the market price of their products, especially when sales are conducted online. In July 2018, in its first RPM decision in 15 years, the EC fined four electronic consumer manufacturers – Asus, Denons & Marantz, Philips and Pioneer – a combined €111 million for having restricted the ability of online retailers to set their own retail prices for consumer electronic products.

The decisions also highlight the growing and complex interaction between e-commerce and competition law. Digital marketing and sales have undoubtedly had huge benefits for consumers. Yet, on the flip side, the rapid expansion of artificial intelligence, in particular self-learning pricing algorithms, has also enabled businesses not only to price signal to each other, but also to enforce illegal vertical agreements such as RPM. In seeking to regulate such fast-moving developments, the CMA will need to rise to the challenge, particularly in the post-Brexit world where it will have to stand largely independent of the EC. The Casio decision, combined with the launch of a data, technology and analytics unit last year and the publication of its Digital Markets Strategy policy paper this July, clearly indicate that it is has the appetite to do so.

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