The Office of Fair Trading’s (OFT) investigation into alleged price fixing by three of the UK’s biggest department stores is “a warning shot for retailers”, with the potential for further cases, lawyers have warned.
Last week the OFT issued a “statement of objections”, saying it believed John Lewis, House of Fraser and Debenhams had infringed competition law.
The OFT claims the retailers entered into nine anti-competitive agreements with lingerie manufacturer DB Apparel over its Shock Absorber sports bra range between 2008 and 2011.
The OFT said the “alleged agreements had the aim of increasing the retail prices” on products in the range. If proved, the retailers could be fined up to 10% of annual worldwide turnover and possibly face criminal charges.
Stephen Sidkin, partner at law firm Fox Williams, told Drapers the case followed a rise in investigations in the retail sector and, depending on the outcome, could see further cases follow.
“If there was some form of sanction imposed I could see this resulting in an increase in the number of whistleblowers, aggrieved consumers or competitors alerting the OFT to other such issues,” he said.
Sidkin noted that high-profile businesses were “low hanging fruit” for the OFT when it was seeking to deter others from similar practices.
“If the OFT believes either the issue at stake or parties involved are sufficiently high profile then we will see more cases of this kind,” he said.
Simon Barnes, competition and EU law partner at law firm Shoosmiths, described it as “a warning shot for retailers”.
“The OFT is particularly sensitive to retail because competition law is there to protect consumers and anti-competitive behaviour in retail is very close to consumers’ pockets.
“This may be a situation where the OFT has gone after a big-hitting case in the hope they can send out a strong message to the rest of the industry, but the message to retailers should be to take this stuff seriously. The OFt is looking at you and the fines are very big.”
The retailers under investigation are now looking to respond formally to the OFT’s claims.
A Debenhams spokeswoman said the business “disputes these provisional findings of the OFt but is
not in a position to comment further at this stage”.
A John Lewis spokeswoman said: “John Lewis always strives to operate within the law and comply with regulations. We are fully cooperating with the OFT and will respond in due course.”
A spokeswoman for House of Fraser said: “We are confident that we have been operating within all laws and regulations.”