Guitars make up a significant part of the wider musical instrument sector, which has an estimated turnover of around £440m per annum in the UK. Online sales of musical instruments now account for around 40 per cent of total sales, making it even more important that musicians have access to competitive prices online.

From 2013 to 2018, Fender required its guitars to be sold at or above a minimum price. This kind of illegal practice, known as resale price maintenance (RPM), often leads to customers missing out on good deals because even if they shop around, they find that all retailers are selling the item in question at a very similar price.

During the course of its investigation, which began in April 2018, the CMA found evidence that Fender on occasion pressurised retailers to raise their online prices, having been tipped off that they were not adhering to Fender’s price stipulation.

The CMA also found that certain Fender employees deliberately tried to cover up their actions by recording as little as possible in writing. However, the investigation uncovered emails and texts from Fender’s IT servers and mobile phones, which proved the illegal behaviour.

Andrea Coscelli, CMA chief executive, said: “It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price. This is especially important for expensive and popular items like guitars and so Fender’s actions could have had a big impact on customers.

“Quite simply, this behaviour is against the law. The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences”.

As a result of the investigation, and Fender’s offer to settle the matter in December 2019, the CMA has fined Fender Europe £4.5 million – the largest fine imposed in the UK for resale price maintenance. This comes only a few months after the CMA fined Casio £3.7 million for similar behaviour in relation to digital pianos and keyboards.

The CMA presented its provisional findings on the Fender case in October 2019. The guitar manufacturer admitted breaking competition law by pursuing a policy aimed at restricting UK retailers from discounting their online prices. The firm confessed under the CMA’s ‘leniency’ and ‘settlement’ procedures. Under these procedures, a company admits acting illegally and co-operates in return for a reduced fine, which helps make the CMA’s investigation more efficient.

The fine amount was discounted by 60 per cent under the CMA’s Leniency Programme and by a further 20 per cent to reflect Fender’s agreement to a settlement. As the parent company of Fender Europe for the relevant period, Fender Musical Instruments Corporation is jointly and severally liable for Fender Europe’s fine.

The CMA has produced guidance for businesses about RPM so they can make sure they play by the rules and avoid fines. Businesses can also watch the CMA’s short film that explains what RPM looks like in practice.

A public version of the CMA’s final infringement decision on Fender Europe’s RPM transgressions will be published in due course.

The CMA has a further three ongoing antitrust investigations, looking into the actions of other companies in the musical instruments and equipment sector.

The CMA has so far fined companies for online RPM in four cases: one in August 2019 in the digital pianos and digital keyboards sector; one in August 2016 in the light fittings sector, and two in May 2016 – one in the bathroom fittings sector and one in the commercial refrigeration sector.

The legal position on RPM is enshrined in the Chapter I prohibition of the Competition Act 1998, which covers anti-competitive agreements, concerted practices and decisions by associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition within the UK or a part of it and which may affect trade within the UK or a part of it.

In a statement on the company website, Fender says: “The Board of Directors and senior management of Fender Musical Instruments Corporation (“Fender”) are fully committed to ensuring that Fender and its subsidiaries and employees comply at all times with antitrust and competition laws. The Board of Directors and senior management of Fender will regularly monitor Fender’s adherence to such antitrust and competition laws.”

Guitars make up a significant part of the wider musical instrument sector, which has an estimated turnover of around £440m per annum in the UK. Online sales of musical instruments now account for around 40 per cent of total sales, making it even more important that musicians have access to competitive prices online.

From 2013 to 2018, Fender required its guitars to be sold at or above a minimum price. This kind of illegal practice, known as resale price maintenance (RPM), often leads to customers missing out on good deals because even if they shop around, they find that all retailers are selling the item in question at a very similar price.

During the course of its investigation, which began in April 2018, the CMA found evidence that Fender on occasion pressurised retailers to raise their online prices, having been tipped off that they were not adhering to Fender’s price stipulation.

The CMA also found that certain Fender employees deliberately tried to cover up their actions by recording as little as possible in writing. However, the investigation uncovered emails and texts from Fender’s IT servers and mobile phones, which proved the illegal behaviour.

Andrea Coscelli, CMA chief executive, said: “It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price. This is especially important for expensive and popular items like guitars and so Fender’s actions could have had a big impact on customers.

“Quite simply, this behaviour is against the law. The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences”.

As a result of the investigation, and Fender’s offer to settle the matter in December 2019, the CMA has fined Fender Europe £4.5 million – the largest fine imposed in the UK for resale price maintenance. This comes only a few months after the CMA fined Casio £3.7 million for similar behaviour in relation to digital pianos and keyboards.

The CMA presented its provisional findings on the Fender case in October 2019. The guitar manufacturer admitted breaking competition law by pursuing a policy aimed at restricting UK retailers from discounting their online prices. The firm confessed under the CMA’s ‘leniency’ and ‘settlement’ procedures. Under these procedures, a company admits acting illegally and co-operates in return for a reduced fine, which helps make the CMA’s investigation more efficient.

The fine amount was discounted by 60 per cent under the CMA’s Leniency Programme and by a further 20 per cent to reflect Fender’s agreement to a settlement. As the parent company of Fender Europe for the relevant period, Fender Musical Instruments Corporation is jointly and severally liable for Fender Europe’s fine.

The CMA has produced guidance for businesses about RPM so they can make sure they play by the rules and avoid fines. Businesses can also watch the CMA’s short film that explains what RPM looks like in practice.

A public version of the CMA’s final infringement decision on Fender Europe’s RPM transgressions will be published in due course.

The CMA has a further three ongoing antitrust investigations, looking into the actions of other companies in the musical instruments and equipment sector.

The CMA has so far fined companies for online RPM in four cases: one in August 2019 in the digital pianos and digital keyboards sector; one in August 2016 in the light fittings sector, and two in May 2016 – one in the bathroom fittings sector and one in the commercial refrigeration sector.

The legal position on RPM is enshrined in the Chapter I prohibition of the Competition Act 1998, which covers anti-competitive agreements, concerted practices and decisions by associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition within the UK or a part of it and which may affect trade within the UK or a part of it.

In a statement on the company website, Fender says: “The Board of Directors and senior management of Fender Musical Instruments Corporation (“Fender”) are fully committed to ensuring that Fender and its subsidiaries and employees comply at all times with antitrust and competition laws. The Board of Directors and senior management of Fender will regularly monitor Fender’s adherence to such antitrust and competition laws.”