Court hits cosmetics company with $100,000 in fines for heavy-handed “resale price maintenance” tactics

An entrepreneur who pressured online retailers into selling her cosmetics products at higher prices, and then suggested they could lose business if they did not, has been slammed with a massive total of $100,000 in fines by the competition regulator.

The fine is the latest attempt by the Australian Competition and Consumer Commission to clamp down on so-called “resale price maintenance” where wholesalers have been pressuring retailers to either sell goods at certain prices or risk being cut off altogether.

Penny Rider, who was the sole director for Eternal Beauty Products, was contacted this morning but no reply was available before publication.

The ACCC said in a statement that Rider had communicated with online retailers over nine months and attempted to stop them from discounting products on their websites.

“Businesses are free to sell their products at prices below suppliers’ recommended retail prices if they wish,” chairman Rod Sims said in a statement.

“The ACCC takes seriously any attempts by suppliers to prevent discounting of their products, which affects the fundamental right of traders to compete for business.”

Eternal Beauty was targeted by the ACCC earlier this year. It isn’t the first company to be hit, either – the regulator even said earlier this year the topic continues to be a high priority.

Justice Murphy of the Federal Court handed down a pecuniary penalty of $80,000 to the company, while Rider was ordered to pay a pecuniary penalty worth $10,000. A further $10,000 was also ordered to cover the ACCC’s costs, while the company was also ordered to establish a trade practices compliance program.

The ACCC pointed out that prior to the order being handed down, Rider voluntarily sent letters to the retailers explaining resale price maintenance is illegal.

Resale price maintenance is an ongoing issue, magnified by the continued spread of online retail. Many retailers have complained to SmartCompany about being bullied by wholesalers, which have attempted to demand they sell goods at certain prices.