CMA publishes decision in Ping online sales ban case
The full non-confidential version of the decision of the Competition and Markets Authority (CMA) in the Ping case was published just before Christmas. The CMA found that Ping's ban on retailers selling its golf clubs online infringed the prohibition on agreements which restrict competition, imposing a fine of £1.45 million. The decision will be of interest to companies operating selective distribution systems and confirms the CMA's strict approach to restrictions on online sales.
The decision is available here.
Ping argued that the online sales ban was objectively justified and therefore did not infringe the prohibition on agreements which restrict competition. In particular, Ping argued that the online sales ban:
- promotes the legitimate aim of custom fitting;
- preserves Ping's brand image as a manufacturer of customised clubs; and
- prevents free riding by retailers who do not invest in custom fitting facilities.
The CMA considered the first two arguments together and concluded that the promotion of custom fitting/Ping's brand image was a legitimate aim.
However, the CMA concluded that the online sales ban was disproportionate: Ping could have achieved its aim by adopting less restrictive measures than an outright ban on online sales (which the CMA considered to be a serious restriction of competition). These measures included requiring retailers to:
- include a prominent notice on their websites recommending custom fitting;
- offer consumers all of the potential Ping custom fit options on their websites (eg through drop down menus when ordering);
- offer online features that allow for personal advice (eg a live chat facility); and
- include a tick box for consumers to confirm they understand the importance of custom fitting before being able to purchase online.
The CMA also rejected the free riding argument, on the basis that all Ping's authorised accounts are required to have a bricks and mortar store and a commitment to custom fitting.
Overall, therefore, the CMA concluded that the online sales ban was not objectively justified.
Looking at the decision, the CMA appears to have considered the following factors in particular to weigh against Ping's arguments:
- Ping allows its US retailers to sell custom fit clubs online;
- Ping allows its UK retailers to sell soft goods online; and
- other manufacturers promote custom fitting and allow online sales of their custom fit clubs by UK retailers.
Ping has appealed the CMA decision to the Competition Appeal Tribunal. Its main arguments are that:
- the decision is wrong to characterise Ping's online sales ban as a restriction by object (ie a serious restriction of competition), since it pursues a legitimate aim (custom fitting) which benefits consumers and has no material adverse effect on competition; and
- the decision is wrong to find that Ping's online sales ban is disproportionate, as the CMA's proposed alternative measures would be impractical and less effective than the online sales ban at maximising custom fitting rates.
The appeal is due to be heard in May and it is possible the judgment will be issued before the end of 2018.
This article was written by Paul Stone. For more information, contact Paul on +44 (0)20 7203 5110 or at email@example.com.