Trying to stop discounting of promotional beer costs DB Breweries $115,000
Published28 Nov 1997
In the Auckland High Court today DB Breweries Limited admitted breaching the Commerce Act by trying to prevent a tavern discounting promotional packs of beer, and the Court imposed a penalty of $110,000 plus $5,000 costs.
Commerce Commission Chairman Dr Alan Bollard said that the Commission took court action alleging that DB Breweries had tried to prevent the Whitehouse Tavern in Papakura from selling promotional packs of 16 and 20 cans of beer at less than DB Breweries recommended prices.
The Commission began court action against DB Breweries following an investigation carried out earlier this year after a complaint to it by the proprietor of the tavern.
DB Breweries admitted that in May and June this year a sales representative induced or attempted to induce the Whitehouse Tavern not to sell the promotional packs for less than the brewery's recommended retail prices.
Dr Bollard said that the actions of DB Breweries were an attempt to stop the retailer setting a lower price to attract customers.
He said the Commerce Act prohibits such activity, which is known as resale price maintenance, because it can limit competition in a most fundamental way - it can limit customers' ability to influence prices.
The Commission acknowledged that DB Breweries had ceased the practice and had co-operated with the Commission. DB Breweries agreed to having judgment entered against it and the Court accepted the suggested penalty of $110,000 as appropriate.
"There is no evidence in this case that DB Breweries' actions were effective or that there was damage to consumers," Dr Bollard said. "The proprietor of the Whitehouse Tavern went ahead and set his own price for the promotional packs.
"This penalty is a clear warning to any business considering resale price maintenance. The Commission and the courts view such breaches very seriously.
"Resale price maintenance is anti-competitive and can lead to considerably higher costs for consumers. The Commission will take action against it wherever necessary.
"DB Breweries' actions in assisting the Commission in achieving a early resolution of the court proceedings were commendable. But for that co-operation, it is possible that the penalty would have been even higher."
