The Australian Competition and Consumer Commission has issued legal proceedings against national supplier of beauty products, Dermalogica Pty Ltd. The ACCC alleges the company engaged in resale price maintenance in contravention of section 48 of the Trade Practices Act 1974.
The ACCC alleges that in a meeting and by telephone, between July and September 2002, Dermalogica attempted to induce two retailers to stop discounting Dermalogica products below Dermalogica’s suggested retail prices. On 16 September 2002, Dermalogica Pty Ltd wrote to the two retailers which had been offering discounts on Dermalogica products stating:
“It has come to our attention that your website is offering the Dermalogica product range for sale lower than the recommended retail price. Our web guidelines and policies clearly states that ‘in order to maintain Dermalogica’s premium brand image and consistent pricing strategy, we strongly discourage the selling of Dermalogica products for more or less than their suggested retail prices.’
“I would ask you therefore to please adjust your prices for online retailing with immediate effect”.
Dermalogica’s web guidelines also stated that a violation of its policy could result in account termination and legal action.
The ACCC is seeking declarations, pecuniary penalties and injunctions restraining Dermalogica from:
- representing to any person that it will not supply Dermalogica products to that person unless that person agrees not to sell the Dermalogica products at a price less than a price specified by it
- attempting to induce any person not to sell Dermalogica products below a price specified by it
- representing to any person that the price of the Dermalogica products must not be discounted below a price specified by it
- making a statement of price or prices that is likely to be understood as the price or prices below which Dermalogica products cannot be sold.
A directions hearing for the matter is listed for Wednesday, 18 December 2002 at 9.30 a.m. in the Federal Court, Melbourne.
*Section 48 of the Trade Practices Act 1974 prohibits ‘resale price maintenance’. A company engages in resale price maintenance in part where it tries to stop a reseller from discounting a product or where it attempts to stop a reseller from advertising products below a specified price.