Stanley Black & Decker Australia Pty Ltd
Australian Competition and Consumer Commission
Notification RPN10000455
4 June 2020
Commissioners
Sims, Keogh, Rickard, Court, Ridgeway
Overview
From ACCC notification register
On 17 October 2019, Stanley Black and Decker Australia Pty Ltd (SBD) lodged a resale price maintenance (RPM) notification for its Dewalt branded power tools, accessories and attachments (the Notified Products). SBD proposed to stipulate a minimum advertised price for the Notified Products below which authorised SBD dealers could not advertise to sell the notified products (the Notified Conduct).
On 4 June 2020, the ACCC issued SBD with a final notice revoking the RPM notification. As a result, from 5 July 2020, SBD does not have statutory protection from legal action to engage in the Notified Conduct.
Reasons for revocation
Summary of reasons from ACCC final notice (page 1)
On 17 October 2019, Stanley Black and Decker Australia Pty Ltd (SBD) lodged a resale price maintenance (RPM) notification with the Australian Competition and Consumer Commission (the ACCC) for its Dewalt branded power tools, accessories and attachments (the Notified Products).
SBD proposes to stipulate a minimum advertised price (MAP) for the Notified Products below which authorised SBD dealers could not advertise to sell the notified products (the Notified Conduct).
The ACCC is satisfied that the likely benefit to the public from the Notified Conduct will not outweigh the likely detriment to the public and therefore gives this notice to SBD. The notification ceases to be in force on the 31st day after the date of this notice. The effect of giving this notice to SBD is to revoke the notification.
The notification ceases to be in force on 5 July 2020.
When businesses lodge a notification for RPM arrangements, they receive legal protection for those arrangements automatically after 14 days. For RPM notifications, the initial decision for the ACCC is whether to take steps to remove that legal protection 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.
Legal protection for the Notified Conduct commenced on 31 October 2019. However, SBD agreed to not engage in the Notified Conduct until after the ACCC completed its assessment of the notification.
On 27 March 2020, the ACCC issued SBD a draft notice proposing to revoke the notification.
SBD submits that the Notified Products, which are marketed to professional users, require a high level of pre- and post-sales services. Due to aggressive pricing behaviour dealers are often not prepared to invest in high levels of service if they are unable to earn a sufficient margin on the Notified Products. Margins on the Notified Products are low and as a result dealers are deciding to de-range them. The Notified Conduct would support SBD's investments in improving customer service, particularly through its dealer training initiatives.
The ACCC considers that SBD stipulating a MAP below which dealers cannot advertise the Notified Products is likely to result in public detriments. It will reduce price competition and increase prices for the Notified Products. Suppliers of competing products are likely to increase their prices in response to increases in the prices for the Notified Products.
The ACCC considers that the Notified Conduct is likely to result in some public benefit by increasing consumer choice where dealers are able to sell more of the Notified Products without de-ranging other brands of power tools.
The ACCC considers that any increase in price for the Notified Products or other brands of power tools is likely to impact a wide range of consumers and any benefit is likely to be smaller and experienced by a narrow group of buyers.
Accordingly, the ACCC is satisfied the likely benefit to the public will not outweigh the likely detriment to the public from the Notified Conduct.
ACCC media release
ACCC, ‘Proposal to set minimum advertised prices for Dewalt power tools rejected’ (4 June 2020)
The ACCC has issued a final notice rejecting a proposal by Stanley Black & Decker to set a minimum advertised price for Dewalt brand power tools, accessories and attachments.
The ACCC has assessed Stanley Black & Decker’s resale price maintenance notification and concluded that any public benefits that resulted from setting minimum advertised prices for the Dewalt products would not outweigh the likely detriments.
Stanley Black & Decker lodged the resale price maintenance notification with the ACCC on 17 October 2019.
On 27 March 2020, the ACCC issued a draft notice proposing to revoke the notification and requested submissions from interested parties. No submissions were received.
“We accept that Stanley Black & Decker’s proposal would have resulted in retailers earning higher margins on Dewalt products, which may have led to some retailers selling a bigger range of these products. This potential increase in consumer choice was a possible public benefit of Stanley Black & Decker’s proposal,” ACCC Commissioner Stephen Ridgeway said.
“However, we do not believe that the proposed conduct would have resulted in a net public benefit overall. Stanley Black & Decker’s proposal to set minimum prices related only to prices displayed in advertisements, so consumers would, in theory, have been able to negotiate for lower prices in store. But consumers would also have a harder time identifying which retailers were prepared to offer the best price.”
“Consumers would also lose bargaining power through being unable to ask one retailer to match another’s advertised price. In all likelihood, consumers would have, overall, ended up paying more for Dewalt branded power tools,” Mr Ridgeway said.
“This may also have led to retailers of other power tool brands increasing their prices, again to the detriment of consumers.”
In 2018, the ACCC did not object to a resale price notification from Tooltechnic for its Festool and Fein brands of power tools.
“In the Tooltechnic matter, we concluded that while the loss of discounting through resale price maintenance was a consumer detriment, this was outweighed by the benefits to consumers,” Mr Ridgeway said.
“Festool and Fein power tools are complex and highly differentiated in terms of their attributes and quality, meaning there was a benefit from Tooltechnic providing pre- and post - sales services to customers.”
“Without resale price maintenance, the provision of these services by Tooltechnic was unlikely to be sustainable due to discounting by on-line retailers. The circumstances are different for Stanley Black & Decker’s notification because Dewalt tools are not highly differentiated,” Mr Ridgeway said.
The ACCC will continue to investigate claims that some other wholesalers in the power tool market may be attempting to set minimum prices for power tools.
“We remind businesses that any attempt to set minimum prices without lodging a notification with the ACCC is a serious breach of the Competition and Consumer Act,” Mr Ridgeway said.
“We are ready to take action if we find evidence that this conduct is occurring.”
Further information about the resale price maintenance notification is available on the ACCC’s public register at Stanley Black & Decker
Background
Resale price maintenance occurs when a supplier of goods or services (for example, a manufacturer or wholesaler) specifies a minimum price below which a reseller must not on-sell, or advertise for sale, those goods or services.
It is illegal for a supplier to attempt to set a minimum price, or a minimum advertised price for their products or services. However, businesses may obtain legal protection for resale price maintenance conduct by lodging a notification with the ACCC.
Once lodged, protection for the notified resale price maintenance conduct begins 14 calendar days after the notification was lodged, unless the ACCC issues a draft notice objecting to the notification within those 14 days.
In this case, Stanley Black & Decker agreed to not commence its resale price maintenance conduct until after the ACCC had assessed its notification.
The ACCC may revoke a resale price maintenance notification where it is satisfied that the likely benefit to the public from the conduct will not outweigh the likely detriment to the public from the conduct.
Before issuing a revocation notice, the ACCC must issue a draft notice setting out its reasons for proposing to revoke the notification.
Revocation of the notification takes effect 31 days after the notice is provided to Stanley Black & Decker, on 5 July 2020.
Release number:
110/20
Solicitors for Stanley Black & Decker
Baker McKenzie (c/- Georgina Foster)
Attribution
ACCC press releases, register and reasons for revocation
Attribution: ACCC, © Commonwealth of Australia. Licenced CC BY 3.0 AU