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You cannot set the sale price

Posted by Elizabeth Gore-Jones on 14 June 2019

Did you know you can't set the retail price or a minimum price that a franchisee, distributor or a retailer must charge?

Many people are surprised about this.

Australia's competition laws want competition in the market place.  If a fanchisor, manufacturer, wholesaler etc sets a retail price or says you can't charge below a minimum price then that will not encourage competition.

You can set a maximum price because that will encourage competition and get a better bargain for consumers.

Even being a party to an agreement allowing price fixing can be unlawful!

I often read franchise and distribution agreements which could potentially fall afoul of the law.

It is possible to make an application to the ACCC to allow certain action including retail price fixing in some circumstances.  This is done by a notification.  If the ACCC does not object within 14 days then the parties may engage in the action outlined in the nofication.

I strongly suggest you obtain legal advice and assistance with these notifications.

A recent example*:

  • Meredith Dairy was concerned that smaller retailers advertising lower prices on their goats cheese was causing retailers to demand lower wholesale prices
  • MD wanted to set a minimum price retailers could sell the goats cheese for
  • ACCC rejected the proposal because the reduction in retail competition resulting from the proposal would not be outweighed by any public benefit - the ACCC thought the conduct would result in consumers paying higher prices.

*ACCC media release No. 93/2019

Author: Elizabeth Gore-Jones
About: Elizabeth specialises in franchising law. She lectures at Bond University PLA in franchising, she sits on the Queensland Law Society Franchising Committee, she is a past member of the Women in Franchising committee and a past member of the Franchise Council of Australia.
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Tags: Business Franchisee Franchisor

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