HP PPS Australia Pty Ltd
Australian Competition and Consumer Commission
Notification: RPN10000456
2 October 2020
Commissioners
Sims, Keogh, Rickard, Court, Ridgeway
Overview
On 20 July 2020 HP PPS lodged a resale price maintenance notification with the ACCC. According to the ACCC summary on its register:
Under the notification, HP proposes a new model for HP Online Marketplace Stores (the HP eBay Store and any prospective HP stores on online market places) whereby HP proposes to supply HP products to a third party, which will on-sell direct to customers and receive payments from customers through HP's eCommerce platform. The third party will also be responsible for the physical supply of HP products to customers. Under this arrangement, HP will specify the prices for which the third party will sell the goods.
The ACCC issued a Statement of Reasons on 2 October 2020 explaining that it would allow the notification to stand at this time.
See ACCC media release: ACCC allows resale price maintenance for HP PPS Australia’s online marketplace stores
ACCC Summary of Reasons
The ACCC’s Statement of Reasons contained the following summary at pages 2-3 [Attribution: ACCC, © Commonwealth of Australia. Licenced CC BY 3.0 AU]
The Australian Competition and Consumer Commission (the ACCC) has decided that the resale price maintenance (RPM) notification lodged by HP PPS Australia Pty Ltd (HP) on 20 July 2020 for the HP eBay Store and any prospective HP stores on other online marketplaces (HP Online Marketplace Stores) will be allowed to stand. HP Online Marketplace Stores are HP operated stores hosted on online market places, such as the HP store on eBay.
Based on the information before it, the ACCC considers that some public benefits are likely to arise from the RPM Conduct and that these public benefits will not be outweighed by the likely detriment to the public from the conduct. Therefore, the test to revoke the notification in section 93(3A) of the Competition and Consumer Act 2010 is not met and the legal protection provided by the notification will continue. Currently, HP directly manages all aspects of its Online Marketplace Stores. HP’s RPM notification proposes a new arrangement whereby the order fulfilment function for orders placed with HP Online Marketplace Stores would be undertaken by a third party distributor. Under this arrangement, the sale agreement will be between the distributor and the customer (rather than between HP and the customer). HP will still maintain control over all other aspects of operating the HP Online Marketplace Stores including product and marketing strategies and, in particular, setting the prices for which the third party distributor will sell the HP products to customers (the RPM Conduct). The RPM notification would allow this arrangement to apply to all current and future HP Online Marketplace Stores.
HP states it is seeking to combine the third party distributor’s expertise in logistics and delivery management with its experience in implementing product, place, price and promotional strategies for HP Online Marketplace Stores. For example, greater website functionality, improved services including wider delivery options and faster delivery and a wider range of payment options. The RPM Conduct will only apply to products sold by HP’s third party distributor through HP Online Marketplace Stores.
The RPM conduct will not apply to any sale of products by the operator of the relevant online market place or by any other third party selling HP products on the online market place. Presently, eBay is the only online market place where HP operates an Online Marketplace Store. However, HP submits that it will seek to establish additional HP stores operating on online marketplaces in the future.
For RPM notifications, the decision for the ACCC is whether to take steps to remove the protection from legal action by revoking the notification. The ACCC can only revoke a notification if it is satisfied that the likely benefit to the public from the notified conduct will not outweigh the likely public detriment from the conduct.
The ACCC notes that the RPM Conduct applies only to sales by its third party distributor through HP Online Marketplace Stores, which represent a very small portion of total sales of HP products. Other suppliers of HP products, and competing products, are likely to constrain any attempt by HP to use the RPM Conduct to raise retail prices.
The ACCC also considers that the RPM Conduct is likely to allow HP to realise public benefits in the form of efficiencies through appointing a third party distributor with expertise in logistics services to fulfil orders placed through its Online Marketplace Stores while maintaining control over the operation of other aspects on the Online Marketplace Stores, including pricing and promotional strategies, which HP is likely to be best placed to manage.
The ACCC may revisit this assessment at any time and take steps to remove the protection provided by the notification.
In October 2019 the ACCC allowed to stand a similar notification allowing HP to set the prices for which the third party distributor sells HP products to customers on HP’s own online store. The current notification extends this arrangement to HP branded stores that it operates on online market places such as eBay.
The RPM Conduct notified by HP is different to most other RPM conduct the ACCC has considered. It only applies to the third party distributor that will fulfil orders placed through Online Marketplace Stores operated by HP. The likely benefits and detriments resulting from RPM conduct will be assessed on a case by case basis. Accordingly, the ACCC’s decision in this matter should not be seen as indicative of its views about RPM conduct more broadly. The ACCC considers that under many circumstances, RPM is likely to result in significant public detriments, particularly where the parties concerned have higher market shares, or in markets where there is not vigorous competition. RPM will often not result in sufficient public benefits to offset the detriment from potentially higher prices. The ACCC will require any party seeking legal immunity for RPM conduct to provide substantial evidence to demonstrate that the extent of public detriment will be limited and there are clear public benefits.
Solicitors for HP PPS
K&L Gates