CAT increases fine after musical instrument firm breaks settlement bargain
The CMA has welcomed a Competition Appeal Tribunal judgment dismissing an appeal against a fine it imposed, instead increasing the fine from 拢4m to 拢5m.
In June 2020, the Competition and Markets Authority (CMA) fined the musical instrument firm Roland just over 拢4 million for restricting online discounting of its electronic drum kits between 2011 and 2018. This was one of several fines imposed by the CMA on leading musical instrument suppliers for requiring retailers to sell their products online at or above a minimum price, a practice known as 鈥榬esale price maintenance鈥� (RPM).
The fine imposed by the CMA had been reduced under its leniency and settlement programmes to take account of the fact that Roland had admitted acting illegally and cooperated with the CMA鈥檚 investigation. In a highly unusual move, Roland appealed to the Competition Appeal Tribunal against the level of the fine which it had itself agreed to pay as part of its settlement with the CMA.
In today鈥檚 judgment, the Tribunal unanimously upheld the CMA鈥檚 decision in its entirety, dismissing Roland鈥檚 arguments that its conduct was not sufficiently serious to justify such a high fine and that the CMA should have awarded it a higher leniency discount.
The Tribunal also agreed with the CMA that, by appealing against the CMA鈥檚 decision, Roland had breached its bargain with the CMA to accept a lower fine in return for agreeing not to appeal. It decided that Roland should therefore lose the benefit of its 20% settlement discount. As a result, Roland鈥檚 fine was increased to just over 拢5 million, an increase of more than 拢1 million.
Michael Grenfell, the CMA鈥檚 Executive Director of Enforcement, said:
鈥淭his is an important judgment from the Tribunal and sends a strong message that when a company agrees to end an investigation through a settlement, it cannot reopen the question by appealing without losing its discount. This reinforces the CMA鈥檚 view that settlements should be final.
鈥淭he judgment also shows that conspiring to keep prices high by restricting discounting of products is a serious breach of competition law and can result in significant fines.鈥�
Further details are available on the Electronic drum sector: anti-competitive practices 50565-5 case page.
Notes to editors
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The CMA鈥檚 decision was addressed to Roland (U.K.) Limited which was directly involved in the infringement, and to Roland Corporation as its parent company (together referred to as 鈥楻oland鈥�).
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The CMA decided that Roland (U.K.) Limited operated a policy restricting online price competition and required its electronic drum kits, related components and accessories to be sold at or above a minimum price between 7 January 2011 and 17 April 2018.
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Under the CMA鈥檚 leniency programme, companies which come forward with information about cartel activities (including RPM) may qualify for a reduction in the penalty, provided that they meet certain conditions. In this case, the CMA reduced Roland鈥檚 fine by 100% for the period from 2011 to 2012 and by 20% for the period from 2013 to 2018.
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Under the CMA鈥檚 settlement policy, companies may also benefit from a fine reduction of up to 20% by admitting the breach of competition law and accepting a streamlined procedure. Details of the CMA鈥檚 settlement process can be found in the CMA鈥檚 investigation guidance.
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The CMA has published聽advice聽to help businesses understand more about illegal RPM practices and compliance with competition law.