Resale Price Maintenance and Dealer Pricing Directions: Competition Exposure

Manufacturers often want consistent retail prices across a dealer network. They may issue price lists, threaten loss of rebates for discounting or demand that dealers report competitors who sell below the stated amount. Such arrangements can cross the line from independent pricing guidance to restrictive market conduct.

A recommended price is not always mandatory

A supplier may publish a suggested retail price to assist dealers or communicate market positioning. The legal question is whether retailers remain genuinely free to determine their selling prices. Contractual penalties for discounting, threats of supply suspension and organised monitoring of dealer prices can establish a different commercial reality from the wording of a price list. Section 4 of the Competition Act, 2010 and the relevant enforcement framework should be examined. A company should not assume that using the word 'recommended' resolves the issue.

Indirect restraints can achieve the same result

Resale restrictions can be imposed through rebates, minimum advertised price policies, incentives or pressure exerted by other dealers. A supplier may receive complaints that a particular retailer is undercutting the network and respond by limiting that retailer's supply. Internal emails, dealer portals and pricing reports may be important evidence of how the policy operated. It is therefore insufficient to review only the signed dealership agreement. The compliance assessment should test operational instructions and whether dealers have a genuine ability to compete on price.

Different products and channels pose different risks

The significance of an arrangement may depend on market concentration, brand power, alternative suppliers, online distribution and the duration of restrictions. A narrowly designed campaign funded by a supplier may have a legitimate commercial context; an indefinite prohibition on discounting across a substantial network may raise more serious concerns. Agreements should distinguish a dealer's freedom to price from the supplier's own decision about wholesale prices. Retailers should not be required to share competitively sensitive future pricing plans unless a lawful and legitimate basis exists.

Compliance should change sales behaviour

A written competition policy offers limited protection if commercial teams are rewarded for disciplining discounters. Training should address actual examples: calls from dealers demanding action against another retailer, circulated screenshots of lower prices and requests to coordinate promotional timing. The company should establish a process for reviewing proposed pricing schemes and document why restrictions are necessary. Where an arrangement appears problematic, remedial action should be considered against the current legal framework without altering historical records or misleading the regulator.

Independent dealer pricing is the baseline

The sound legal position is to allow independent resale pricing unless a particular, carefully assessed arrangement is legally permissible. A dealer network should compete on service, availability and value, not rely on covert mechanisms to enforce a common retail price.