The Australian Competition and Consumer Commission (ACCC) is taking action against a second Australian distributor of digital set-top boxes over alleged resale price maintenance.
The regulator has accused Sydney-based Digital Products Group (DPG), which trades under the Topfield Australia brand, of attempting to induce a retailer to not advertise some of its digital set-top box products below recommended retail prices between October 2003 and June 2005.
This practice, referred to as 'resale price maintenance', is banned under section 48 of the Trade Practices Act (1974).
The ACCC has initiated proceedings against DPG's sole director, Jai Kemp, and national sales manager Mark Dopson, who are both accused of being party to the contraventions.
The ACCC is seeking declarations that the company and the two named individuals contravened the act; the issuing of fines and payment of costs; the training of DPG staff in trade practices compliance; and injunctions to restrain the parties from engaging in such practices in the future.
The matter will be heard in Melbourne's Federal Court on October 27.
DPG is the second set-top box supplier to be targeted by the ACCC over price fixing as smaller players buckle under intense price pressures.
In July 2005, hardware manufacturer, Humax, was fined $150,000 for attempting to fix the price of its digital set-top boxes. The company and its manager, Andrew Song, were accused of contacting several retailers in September 2005 to induce them to not sell their products at prices below $599. Song also copped a $7500 fine for his part in the affair.
Managing director of Sydney-based home entertainment specialists The Lifestyle Store, Vinod Christie-David, said distributors could be resorting to price fixing to maintain the support of independent retailers struggling to compete with larger, price-slashing discount chains. But he was surprised Topfield had been targeted over price maintenance.
"We tend to sell a lot of Topfield products. In comparison to other vendors, their prices don't get discounted [by large retail chains] too often," he said. "Some of the discount stores are selling so cheap, independents can no longer support a given brand from a margin perspective.
"I've got a lot of sympathy for smaller retailer - the issue is whether it's the distributors place to help them."
But managing director of Melbourne-based set-top box specialists Hantrex, Matthew Ren, said competing with discount chains was the reality of running a business. He attributed price pressure to the fact that until recently, set-top boxes sold in Australia tended to be manufactured by Korean vendors with as much focus on quality as price.
"Today, Chinese manufacturers simply make these products cheaper," he said. "Boxes that used to be sold to the distributor for $US60 to $US100 are now $US20 to $US30."