The OFT found that Argos, Littlewoods and Hasbro had entered
into agreements to fix the prices of Hasbro products between 1999
and May 2001, breaching the UK Competition Act from 1st March 2000,
when it came into force.
The Act prohibits "agreements between undertakings, decisions by
associations of undertakings or concerted practices which have the
object or effect of preventing, restricting, or distorting
competition within the UK, and which may affect trade within the
UK."
The Act further prohibits "conduct by one or more undertakings
which amounts to the abuse of a dominant position in a market which
may affect trade within the UK."
The Act allows the OFT to impose a penalty of up to 10% of a
company's turnover for a maximum of three years for infringement of
the Act. The fines imposed on Argos and Littlewoods are the largest
financial penalties ever imposed under the Act.
In calculating the fines, the OFT took into account the "serious
nature of price-fixing, the need for deterrence and the turnover of
the parties concerned." Argos, which has the highest turnover, was
fined £17.3 million, whilst Littlewoods was fined £5.4 million.
Hasbro, which was potentially facing a penalty of £15.6 million,
was granted full leniency on the basis that it had co-operated with
the investigation and provided "crucial evidence."
In November 2002, Hasbro had a £9 million fine reduced to £4.95
million for similar reasons. In that instance, Hasbro was fined for
entering into agreements with 10 distributors which prevented them
from selling its products below list price.
John Vickers, Director General of Fair Trading, said that
"price-fixing is a serious breach of the Competition Act, as the
fines imposed in this case reflect."
Both Argos and Littlewoods have reportedly rejected the ruling
as "unfounded and unjustified" and have said they will appeal.
According to BBC News Online, Argos has also questioned Hasbro's
credibility as a witness, since it has previously been found guilty
of similar conduct.
Hasbro, on the other hand, reportedly claims that the
price-fixing involved only a small number of sales and marketing
employees who have since left the company.
The Competition Act 1998 is available at:
www.hmso.gov.uk/acts/acts1998/19980041.htm
