Tooltechnic Systems (Aust) Pty Ltd
Application for authorisation in respect of resale price maintenance
Authorisation number A91433 (5 December 2014)
From ACCC register:
On 20 June 2014 Tooltechnic lodged an application seeking authorisation to amend its agreements with its Festool dealers to include a requirement for resellers to not sell any Festool product below a price(s) nominated by Tooltechnic (Proposed Arrangement). The implementation of the Proposed Arrangement will be the inclusion of a pricing clause in Tooltechnic's agreements with its dealers which will mandate dealers are not to sell any Festool product below a price(s) nominated by Tooltechnic.
On 21 October 2014 the ACCC issued a draft determination proposing to grant conditional authorisation in respect of the Proposed Arrangements for three years.
On 5 December 2014 the ACCC granted authorisation A91433 to Tooltechnic to set minimum retail prices on Festool products until 31 December 2018.
Despite the availability of authorisation for 20 years preceding this determination, this was the very first authorisation application to be lodged with the ACCC.
The key argument made in favour of granting authorisation was that it was necessary in order to prevent 'free riding' in relation to a product range which depended significant pre and post-sale service. The ACCC accepted that without the proposed RPM conduct free riding might occur and accepted that there was a 'market failure caused by free riding by some Festool retailers'. It considered the proposed conduct would limit free riding and this would result in public benefits which included customers making more informed decisions and ensuring customers would continue to be offered the choice of premium tool products accompanied by high level post-sales service.
The ACCC granted conditional authorisation for the conduct until 31 December 2018. The condition requires Tooltechnic to provide the ACCC with certain information on an annual basis to allow the ACCC to monitor the impacts of the RPM conduct over the period fo the authorisation.
Media and commentary
There has been considerable commentary on this decision, including the following:
- Corrs Chambers Westgarth: Mark McCowan, Alistair Newton and Asa Lam, 'ACCC issues first-ever draft determination proposing to authorise resale price maintenance' (23 October 2014)
- Gilbert + Tobin: Elizabeth Avery, Luke Woodward, Matt Rubinstein and Morelle Bull, 'The Tooltechnic authorisation or how we learned to stop worrying and love resale price maintenance' (Updates in Competition and Regulation, 9 December 2014)
- Johnson Winter & Slattery: Sar Katdare, 'Landmark decision by ACCC to authorise resale price maintenance on public benefit grounds - will this open the floodgates?' (February 2015)
- King&Wood Mallesons: Pam Cue, 'Nailed it ...' (In Competition, 28 November 2014)
- Lander & Rogers: 'ACCC grants first-ever authorisation for resale price maintenance' (Competition Law eBulltetin, 9 December 2014)
- Norton Rose Fulbright: Nick McHugh, Claire Forster, Joanna MacKenzie, 'Authorisation of Resale Price Maintenance in Australia: a long time coming' (November 2014)
- Tooltechnic Systems (Aust) Pty Ltd - Authorisation - A91433 (Draft and final determinations)
- Tooltechnic Systems (Aust) Pty Ltd - Authorisation - A91433 Correspondence
Includes correspondence to interestered parties and between applicants and the ACCC
- Tooltechnic Systems (Aust) Pty Ltd - Authorisation - A91433 Submissions
- Five submissions were made prior to the draft decision
- By the applicant (two separate submissions providing further information)
- By Fremantle Power Tools
- By Total Tools Penrith
- By Carba-Tec
- The only submissions made following the draft decision were by the applicant