Decision of the Competition and Markets Authority Online resale price maintenance in the digital piano and digital keyboard sector Case 50565-2 1 August 2019 © Crown copyright 2019 You may reuse this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit nationalarchives.gov.uk or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. Confidential information in the original version of this Decision has been redacted from the published version on the public register. Redacted confidential information in the text of the published version of the Decision is denoted by []. The names of individuals mentioned in the description of the infringement in the original version of this Decision have been removed from the published version on the public register. Names have been replaced by a general descriptor of the individual’s role. 1 Contents Page 1. Introduction and Executive Summary ................................................................... 4 A. Glossary ........................................................................................................ 6 2. Investigation .......................................................................................................... 8 3. Facts ................................................................................................................... 14 A. Addressees .................................................................................................. 14 I. Casio Electronics Co. Limited .................................................................. 14 II. Casio Computer Co., Limited .................................................................. 14 B. Piano and keyboard sector overview ........................................................... 15 I. UK pianos and keyboard sector .............................................................. 15 II. Casio UK’s involvement in the UK piano and keyboard sector ................ 16 III. Other UK piano and keyboard suppliers .................................................. 17 IV. UK MI resellers ........................................................................................ 17 V. Casio UK’s sales and distribution network............................................... 18 VI. Importance of internet sales as a retail channel to the MI sector ............. 21 C. Casio Pricing Policy ..................................................................................... 22 I. Introduction and overview........................................................................ 22 II. Aims, content and duration ...................................................................... 26 III. Monitoring and enforcement of the Casio Pricing Policy ......................... 35 IV. Illustrative examples of Casio UK’s monitoring and enforcement ............ 46 V. Casio UK’s awareness about illegality of enforcing the Casio Pricing Policy 57 VI. Consequences for resellers of non-compliance ....................................... 60 D. Market Definition .......................................................................................... 63 I. Purpose of and framework for assessing the relevant market ................. 64 II. Relevant product market ......................................................................... 64 III. Sales through different distribution channels ........................................... 66 IV. Relevant geographic market .................................................................... 67 V. Conclusion on market definition .............................................................. 68 4. Legal Assessment ............................................................................................... 68 A. Introduction .................................................................................................. 68 B. Undertakings ............................................................................................... 70 I. Key legal principles ................................................................................. 70 II. Conclusion on undertakings .................................................................... 71 C. Agreement and/or concerted practice .......................................................... 71 I. Key legal principles ................................................................................. 71 II. Agreement ............................................................................................... 72 III. Concerted practice .................................................................................. 74 2 IV. Agreement and/or concerted practice between Casio UK and [Reseller 1] . ................................................................................................................ 75 D. Object of Preventing, Restricting or Distorting Competition ....................... 104 I. Key legal principles ............................................................................... 104 II. Legal Assessment of the Agreement ..................................................... 112 E. Appreciable Restriction of Competition ...................................................... 115 I. Key legal principles ............................................................................... 116 II. Legal assessment ................................................................................. 116 F. Effect on Trade between EU Member States ............................................ 117 I. Key legal principles ............................................................................... 117 II. Legal assessment ................................................................................. 119 G. Effect on Trade within the UK .................................................................... 122 I. Key legal principles ............................................................................... 122 II. Legal assessment ................................................................................. 123 H. Exclusion or Exemption ............................................................................. 123 I. Exclusion ............................................................................................... 123 II. Block exemption/Parallel exemption ...................................................... 123 III. Individual exemption .............................................................................. 124 I. Attribution of liability ................................................................................... 125 I. Key legal principles ............................................................................... 125 II. Liability for the Infringement .................................................................. 128 III. Conclusion on joint and several liability ................................................. 128 J. Burden and standard of proof .................................................................... 129 I. Burden of proof ...................................................................................... 129 II. Standard of proof ................................................................................... 129 5. The CMA’s Proposed Action ............................................................................. 130 A. The CMA’s Proposed Decision .................................................................. 130 B. Directions................................................................................................... 131 C. Financial Penalties .................................................................................... 131 I. General.................................................................................................. 131 II. Intention/negligence .............................................................................. 133 III. Calculation of Penalties ......................................................................... 135 IV. Payment of penalty ................................................................................ 143 3 1. INTRODUCTION AND EXECUTIVE SUMMARY 1.1 This Decision is addressed to Casio Electronics Co. Limited (Casio UK) and to its ultimate parent company, Casio Computer Co., Limited (Casio Japan) (together, the Addressees). 1.2 By this Decision,1 the Competition and Markets Authority (the CMA) has concluded that: • Casio UK infringed the prohibition in section 2(1) of the Competition Act 1998 (the Act) (the Chapter I prohibition) and/or Article 101 of the Treaty on the Functioning of the European Union (the TFEU) by entering into an agreement and/or participating in a concerted practice with [Reseller 1], one of Casio UK’s UK resellers: o that [Reseller 1] would not advertise or sell online digital pianos or digital keyboards supplied to it by Casio UK (the Relevant Products) below a price specified by Casio UK from time to time (the Minimum Price); o which amounted to resale price maintenance (RPM) in respect of online sales of the Relevant Products by [Reseller 1]. • The agreement and/or concerted practice: o had as its object the prevention, restriction or distortion of competition within the UK and/or between EU Member States; o may have affected trade within the UK and/or between EU Member States; and o lasted from 4 February 2013 to 5 April 2018 (the Relevant Period) (referred to below as the Infringement). 1.3 The CMA has