Vermont Sales (Pty) Ltd (“Vermont”), a wholesaler of imported power tools and power tool accessories, has agreed to pay a R900 000 administrative penalty in settlement of a case involving alleged minimum resale price maintenance.
 
Minimum resale price maintenance is a species of price fixing. This practice normally occurs when a supplier imposes on its distributors a price at which its goods are to be re-sold and the distributors are thereby induced to comply with this minimum price on pain of a sanction for noncompliance.
 
The administrative penalty forms part of the terms of a consent agreement which has been confirmed as an order by the Competition Tribunal (“Tribunal”). Although Vermont does not admit liability in relation to the conduct as alleged by the Competition Commission (“Commission”), it agrees to the following terms, among others, as part of the consent agreement:

• Desist from conduct in contravention of section 5(2) of the Competition Act;
• Develop, implement and monitor a competition law compliance programme incorporating corporate governance designed to ensure that none of its employees, management, directors and agents who are involved in any commercial activities in South Africa engage in future contraventions of the Competition Act. In particular, the compliance programme will include the following:
  • A competition policy to be drafted and implemented by Vermont;
  • Specific training on competition law aspects particularly relevant to the prohibited practice of minimum resale price maintenance, which training has already commenced; and
  • Ensure that such training will be made available to all new employees joining Vermont. Furthermore, Vermont will update such training annually to ensure on an ongoing basis that it and its members cannot engage in any anti-competitive activities.

 Background
 
In 2023, Integrity Tools (Pty) Ltd (“Integrity Tools”) lodged a complaint with the Commission. It alleged that Vermont had a trading policy that required dealers who did not physically hold stock of Festool products to not advertise Festool products at a discount to the recommended list price. Integrity Tools later withdrew its complaint.
 
The Commission initiated an investigation into Vermont for allegedly engaging in minimum resale price maintenance. The Commission’s investigation included allegations that Vermont required dealers to offer customers a maximum of 15% discount in respect of Festool products. During the investigation, Vermont approached the Commission with a view to resolving the matter amicably. The parties agreed to settle the matter through the consent agreement.