The guitar maker Fender has been fined £4.5m for price fixing by the UK’s competition watchdog as part of its clampdown on the musical instrument industry.
The Competition and Markets Authority imposed the penalty on Fender Europe for breaking competition law by preventing online discounting for its guitars. It is the biggest fine issued in Britain for this type of price fixing, which is known as resale price maintenance.
The penalty would have been £14.2m had Fender not admitted to the offence under the CMA’s leniency and settlement procedures. The firm said it had pursued a policy designed to restrict UK retailers from cutting their online prices.
Fender Europe is the UK-based arm of the Arizona guitar manufacturer, which makes about $500m (£380m) in annual revenues. Its electric models include the Stratocaster and Telecaster, as well as the cheaper Squier range.
The CMA started its investigation in 2018. Fender has already been fined £25,000 for concealing notebooks at its European headquarters in East Grinstead.
The CMA said the firm pressured retailers to sell its guitars at or above a minimum price between 2013 and 2018, meaning customers shopping around for the best deal found little difference in cost. The guitars start at about £500 (£109 for Squier) but limited edition sets can cost up to £45,000.
The watchdog said Fender sometimes pressured retailers to raise their online prices, after being tipped off that the stockists were not toeing the line.
The investigation also found that certain Fender employees deliberately tried to cover up their actions by recording as little as possible in writing. But the CMA uncovered emails and texts from Fender’s IT servers and mobile phones, which helped to prove the illegal behaviour.
About £440m of musical instruments are sold in the UK every year, with guitars accounting for a significant proportion of that. About 40% of musical instruments are now sold online.
Andrea Coscelli, the CMA’s chief executive, said: “It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price. This is especially important for expensive and popular items like guitars, and so Fender’s actions could have had a big impact on customers.
“Quite simply, this behaviour is against the law. The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences.”
Japan’s Casio was fined £3.7m last August for price fixing in relation to digital pianos and keyboards. The European commission fined four sound system manufacturers for similar behaviour in July 2018 – Philips, Pioneer, Asus and Denon.